Financial Literacy

Inflation: The overall increase in the cost of products and services over time

Stewardship: God’s plan to fulfil our lives; it builds character

Luke 14:28 applies to financial decisions because it tells us to count the cost before trying to anything significant, ensuring we are prepared for the financial implications of our choices.

Proverbs 27:23-27 applies to financial record keeping, budgeting, and tracking one’s networth as it emphasizes the importance of knowing the state of our flocks and herds, which can be interpreted as understanding our financial situation and making informed decisions based on accurate and current information.

  • Education, career, income, and applying financial knowledge can help establish one’s overall well-being because it can help them make wise decisions and the career and income they receive determine the quality of their life

Malachi 3:10 discusses tithing

Skills to manage money effectively

WHY SMART: Written Harmonious Yours, Specfic, Measureable, Achievable, Relevant, Timely.

Budget: Spending plan (needs, wants, tithes, savings&debt)

Calculating Networth: Own - Owe. Assets - Liabilities. The sum of what you own minus what you owe.

  • Financial decisions can influence net worth by decreasing or increasing its value. one should pay off debt and save money

Spending: Using money for immediate wants or needs

Saving: Putting away money for a future purpose or for an emergency

Investing: Putting money into assets so that it can grow over time

First three financial stages: survival, stability, and quality of life

Gross Income: the amount of money you receive from a job before taxes

Net income: the amount of money you receive from a job after taxes

Fixed expenses: same amount of expenses each month

Variable expense: an expense that changes frequently

Banking tools, insurance, and work place benefits

Life insurance (provides financial protection for a family in the event of death), Auto Insurance (protection for driver and vehicle case of an accident), homeowners insurance (cover the costs of damage to a home or property), health insurance (financial protection for health care costs)

The purpose of insurance is to transfer the risk and make accidental loss manageable

Long Term (regarding Investing): generates higher returns by holding investments for a longer amount of time

It takes 10 years for the money to start growing

Investing Preparation: Financial Goals, Emergency Fund, Risk Tolerance

Things to Avoid: Lack of diversification, Emotional Investing, Ignoring fees

Credit Card: A card issued by a bank or other businesses for purchasing using borrowed funds to be payed back later

Debit Card: A card that allows consumers to make purchases using money from their checking account.

Online Banking: Allows customers to conduct financial transaction via the internet

Credit & Debt

Components of a Credit Score

  • Payment History: 35%

  • What you owe: 30%

  • Types of Credit: 15%

  • New Accounts: 10%

  • Length of Credit History: 10%

The highest credit card score is 850 and the lowest score is 300

It is important to avoid excessive spending debt and student loan debt because managing these effectively contributes to maintaining a healthy credit score and overall financial stability.

Good debt: investments that can improve your financial situation, such as mortgages or educational loans that lead to higher earning potential.

Bad debt: expenses that do not contribute to your financial growth, including high-interest credit cards, payday loans, and excessive personal borrowing.

Retirement & Preserving Assets

Asset: Anything of material value owned by an individual or company

Retirement: Leaving a job and ceasing to work; one can retire as early as age 62 but full retirement is typically between ages 66 and 67

One can prepare for retirement by contributing to retirement plans (like a 401k) and reduce or eliminate debt

Wealth: having enough assets to sustain and maintain your lifestyle no matter what

  • you can build wealth by prioritizing the purchasing of assets over liabilities

Extra

  • You can reduce unwanted expenses by only patiently making quality purchases that fit into every category

  • You can maximize savings by putting the savings into an interest bearing account that outpaces inflation

  • Debt is deficit spending, living above one's means, and not having a godly point of satisfaction. You can get out of debt by living below means, paying bills on time, not adding more debt

  • 5 5 10 budget (insurance, investments, cash)