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Long term planning

long term planning, retirement, college education

finlitgal
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Long term planning

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  1. Long-Term Planning • www.lifethenfinance.com

  2. Cash flow: • Cash flow is the difference between the available money at the beginning and end of an accounting period. • Positive cash flow: • Cash inflow is larger than cash outflow • Negative cash flow: • Cash outflow is larger than cash inflow • Breakeven cash flow: • Cash inflow and outflow are the same 2

  3. Net worth: • Net worth = Assets – Liabilities • Assets: • Are any item of economic value owned by a person or corporation e.g. real estate. Also includes intangible assets like copyrights and trademarks • Liabilities: • A company’s financial obligations or debts. 3

  4. What to include when calculating your Net worth: • Between age 20–34: • Career: • What type, work schedule, how many days off • Investments: • What type am I interested in, how much time will I devote to study • Net worth & cash flow: • How much I will have (net worth) and how much money will come from cash flow • Overall describe your lifestyle: • What are those things that you will have, list those things you’ll experience during this time, how you feel about your money situation, how you picture your day to day life 4

  5. What to include when calculating your Net worth: • At age 35–49: • Career – Be established in a career and move up in my position. • Net worth – I will have enough money to live comfortably • At age 50–64: • Overall – I will live a comfortable lifestyle and be able to travel when I want and spend money as I wish. • At age 65–84: • Overall – I would like to retire and live comfortable by 65 yrs old. • At age 80+: • Also, include your initial thoughts on some of the investments you may make – business, real estate, and stock market. 5

  6. Retirement: Why early planning is important. • Others that start planning early have the choice to work or not – freedom, independence. 6

  7. Relationships & Money • Relationships can greatly affect your long-term financial planning. • Money issues are the leading cause of divorce and fighting in a relationship so it’s important to discuss money issues as a part of getting to know each other 7

  8. Relationships & Money: Cont…. • If you are measurably more frugal than your partner, he or she can have an issue with you saving money. On the other hand, you may have an issue with your partner spending excessively. • Make sure when discussing money with a partner to ask about their credit history and debt situation. 8

  9. Relationships & Money: Cont…. • Other points to consider if you are in a relationship: • Do their parents and guardians have a plan to take care of their own retirement; or will it be something they need to take care of? • If you choose to get married, what size wedding do you both want? • The average weddings cost over $20,000. • If just invested that money while you’re young that can grow to over $300,000! • Share budgets and create a budget together 9

  10. What is a Will? • A will or a trust is a way to plan ahead. Just like when they created their financial plans for their immediate future. • A will or trust is a financial plan for someone when they are no longer here • Without a will, the court gets to decide where the assets of the deceased go without their input. 10

  11. Wills: • When a person passes away without a will or living trust a will, the state decides how to distribute their assets. If they have children under the age of 18 the state would also decide where the children go. 11

  12. What is a Living Trust ? • Living trusts may allow assets to be passed to heirs without going through probate. • Avoiding probate can save many costs associated with probate courts costs, avoid potential taxes and maintain privacy. 12

  13. Wills & Trusts: • A will and a trust is designed to make it easy for your relatives by providing all your account information and accounting for distribution of your assets. A lot of family fights are caused from fighting over who gets what. 13

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