How to Achieve Your Financial Dreams

Essential Question: “How can I use the tools available to reach my financial goals?” 

Investigate: Financial Resources and Recordkeeping

[Time Required: 20 minutes] 

1. What possessions do you value most? Is it your bike? Comic book or video game collections? Childhood photos or keepsakes? Where are they stored for safekeeping? Is it under the bed or in a locked drawer or safe? How are your possessions are organized? Are your books organized alphabetically or by subject category? Or are they jumbled together in no particular order?
2. Explain that just as it’s important to securely store valued possessions, so should your personal financial records be well-organized and stored safely—things like outstanding bills and payment receipts, bank and credit card statements, paystubs and other job-related paperwork, insurance policies, car loan documents—anything that has a financial component.
3. It is important to take extra care to protect certain important documents that contain confidential personal information such as your Social Security card, driver’s license, passport, credit and debit cards, and health insurance card. Where do you keep important documents like these? Are you taking enough precautions to keep your personal information safe? Remember some of the potential downsides of having this information lost or stolen.
4. Remember that by properly cataloging and storing your financial and legal paperwork, you’ll save a lot of time and anxiety when it comes to budgeting, tracking spending, paying bills, filing taxes—even gathering the information you’ll need to apply for college and financial aid. Quick access to important account information also makes it easier to contact banks or other institutions in the event of an emergency, like a stolen wallet or lost ATM card.
5. How long do you think financial paperwork should be retained before it can safely be tossed? Many financial records should be kept for at least seven years in case of an income tax audit down the road. Such records might include employer W-2 forms, year-end bank or investment statements showing interest or dividends earned, and proof of payment for charitable contributions; plus any other expenses being claimed as tax deductions. Some documents should be retained indefinitely, including mortgage and car loan documentation, records showing stock and mutual fund purchases, and personal documents like birth certificates, passports, and Social Security cards.
6. There are many systems for organizing financial paperwork. Many people maintain file folders in which they store hard copies of important documents. One good system is to keep a single folder for unpaid bills; once they’ve been paid, file the receipt in that company’s or subject’s folder (for example, have separate files for utilities, credit cards, bank accounts, health insurance, car insurance, etc.) You can also store financial records digitally, to save space. You can scan copies of important files and save them as PDF files on your computer. You should also keep a backup of your digital files on a flash drive, external hard drive or some other storage method, in case your computer crashes.
7. Download the My Recordkeeping Plan activity sheet and allow 10 minutes to fill in your account information and where you plan to keep your important financial records. Remember that it’s also important to maintain a schedule with bill due dates and to regularly review all budgets and incoming statements for accuracy. When will you review your paperwork? Monthly? Weekly? On the activity sheet, record the days when you usually receive your paychecks or allowance, and the dates when any bills you have are due. 

Student Preparation: Choosing Tools for the Job

1. [Time Required: 10 minutes] 

   1. There are many free and low-cost tools for tracking and managing your finances, including telephone banking, online budgeting tools (spreadsheets, calculators), tax preparation software, and more. Allow ten minutes to explore the following websites and the kinds of tools they offer, including budgeting spreadsheets, investment calculators, tools for tracking and categorizing tax deductions, etc. Indicate on your activity sheets which, if any, tools you would like to use to keep your finances organized: Quicken, Mint.com, Yodlee, Mvelopes. 
    

Challenge: Financial Advisors

[Time Required: 25 minutes] 

1. Think about your school counselor or advisor. What is their job? What advice do they give students? Like having a school counselor who helps and guides students on classes, homework and college goals, many people who need to start setting long-term financial goals seek the assistance of a professional financial advisor. Financial advisors offer guidance on things like:
   • Determining long-term financial goals (like college, home ownership, starting a family, retirement) and how to save to meet those goals.
   • Advice on investing your money, including determining your tolerance for risk (low-risk savings options like savings accounts and CDs have less potential for growth and keeping up with inflation)
   • Strategies for getting out of debt.
   • Changing financial goals as your family situation changes (for example, marriage, divorce, birth of a child, new job or layoff).
   • Structuring savings and investments tax-effectively. Estate planning.
2. Choosing the right financial advisor can take time. Look over these suggestions and see if you can think of any others:
   • Look for someone well-qualified in their field, whose ethics and professional approach match your own beliefs and with whom you can be comfortable discussing private financial details.
   • Seek someone who asks probing questions, listens to your needs and concerns, won’t try to sell you unneeded products or services, and can explain the potential risks and rewards of every action they recommend.
   • Ask for referrals from trusted friends and other professionals like accountants and lawyers.
   • Ask about their fee structure: are they paid an hourly rate, a flat fee per task, by commission, or a combination of fees and commissions.
   • Interview at least three candidates.

Reflection

[Time Required: 5 minutes] 

Write in your notebook about why it can be helpful to have support when managing your finances, whether through bookkeeping software or financial advisors