WHAT IS A FINANCIAL ROADMAP
What is the purpose of a budget?
To track income and expenses, helping individuals manage money effectively.
What is one expense people commonly overlook that can be reduced?
Subscription services (e.g., streaming, magazines, gym memberships).
What is the purpose of life insurance?
To provide financial security for dependents in case of death when you pass away.
Why is it important to set financial goals?
To ensure you are working toward financial stability and long-term success.
What is an annuity?
A financial product that provides regular payments over time, often used for retirement and typically lasting your entire life.
What is investing?
The act of putting money into assets like stocks, bonds, or real estate to grow wealth.
What is long-term care insurance?
Insurance that helps cover costs for extended medical and personal care services.
What is estate planning?
Preparing for the management and distribution of your assets after death.
What does discretionary income refer to?
The money left over after paying essential expenses like rent, food, and bills.
Name 3 types of accounts or funds everyone should try to have to become financially empowered?
1. Bill paying account 2. General Savings account for miscellaneous or irregular expenses 3. Emergency account or fund for unexpected emergencies 4. Dream or fun account 5. Short term savings account 6. Long term savings account 7. Retirement account 8. Investment account
How can you save money on insurance premiums?
Bundling policies (e.g., home and auto), increasing deductibles, and maintaining a good credit score.
What is a SMART financial goal?
A goal that is Specific, Measurable, Achievable, Relevant, and Time-bound.
What is an IRA, and what are the two main types?
An Individual Retirement Account; Traditional IRA and Roth IRA.
Who can invest in the stock market?
Anyone with a brokerage account and/or sufficient funds to buy assets.
What are two options for long-term care?
In-home care and assisted living facilities.
What is a will?
A legal document stating how you want your assets distributed after death.
Name 1 of 2 effective ways to pay down debt?
1. Balances for highest interest rate first commonly known as avalanche method OR 2. A strategy where you pay off your smallest debt first while making minimum payments on others, commonly known as snowball method
What is one way to cut down grocery expenses without sacrificing quality?
Meal planning and buying in bulk.
How much should an emergency fund ideally cover?
Three to six months of essential living expenses.
How can you balance saving for the future while still enjoying life today?
By budgeting for both short-term fun and long-term goals.
How does a pension differ from a 401(k)?
A pension is employer-funded, while a 401(k) is primarily employee-funded with employer matching options.
What is the main difference between stocks and bonds?
Stocks represent ownership in a company; bonds are loans made to a company or government.
Why is it important to discuss long-term care with family early?
To ensure plans are in place before a crisis occurs.
What is probate?
The legal process of validating a will and distributing assets.
What does the term “No Lazy Dollars” mean?
A budgeting method where every dollar is assigned to a specific expense or savings category, making sure that every dollar that you make is working harder for you than you are working for it. It’s either paying a bill or earning you interest.
How can automation help with saving money?
By setting up automatic transfers to savings accounts before spending money on other things.
What is the difference between term and whole life insurance?
Term life covers a specific period (e.g., 20 years), while whole life provides lifelong coverage with cash value.
Why are accountability partners and groups important?
To help you remember your goals, your why’s, stay motivated and have fun.
What is one pro and one con of annuities?
Pro: Can provide guaranteed income sometimes for life, or can be flexible to fit into a variety of situations Con: May not adjust for inflation or should be supplemental to keep pace with inflation or guaranteed interest rate is lower than you can average as an informed investor in the market.
What is dollar-cost averaging?
Investing a fixed amount at regular intervals to reduce the impact of market volatility.
What is a healthcare proxy?
A legal document allowing someone to make medical decisions on your behalf.
What is a living trust?
A trust that holds assets during your lifetime and transfers them to beneficiaries upon death, avoiding probate.
What are the first 3 Steps in the 8 Steps to Financial Empowerment?
1. Budgeting 2. Saving 3. Risk Management
Name a way to jumpstart your savings?
1. If you get paid every other week, save your 3rd paycheck the 2 months per year when that will occur 2. Save your tax return 3. Expense management 4. Delayed gratification 5. A season of minimalism or spending fasts
What is the main factor that determines life insurance premiums?
Age, health status, and coverage amount.
What does it mean to live in the black vs living in the red?
Living in the red is not managing expenses and income to cover expenses vs living in the black by using extra income in an intentional purposeful way to achieve your dreams.
What is the benefit of a Roth IRA over a Traditional IRA?
Roth IRAs allow tax-free withdrawals in retirement, whereas Traditional IRAs provide tax-deferred growth but are taxed upon withdrawal.
What is compound interest, and why is it powerful?
Interest that is earned on both the initial investment and previous interest, leading to exponential growth over time.
What is the biggest risk of not planning for long-term care?
Financial strain, emotional strain, and potential reliance on family for care who may not be prepared to provide financially, emotionally or physically in a safe manner for all involved.
What is one strategy to reduce estate taxes?
Gifting assets to family members or charities before death.