Finance Board

Financial goals are important because they help you achieve the things you want. Goals such as vacations, paying off a debt or buying a car all require planning, patience and the willingness to work hard at saving your hard-earned dollars. There are three types of goals you should sit down and consider:

Short-term goals: These are goals you should be able to accomplish within one month to a year.
Items such as: taking a vacation, buying a new car, or paying off a debt are all items that fit within this category.

Mid-term goals: These are goals you should plan to accomplish within one to five years. Goals such as paying of credit cards, making a major purchase, or remodeling your home can all fit within this category, based on your financial picture.

Long-term goals: These are goals that will take you five years or more to achieve, such as buying a home, saving for retirement or saving for college.

Your goals must be realistic and you must specify a completion date. For example, if you lease a vehicle and find that your lease payment is causing financial strain, a possible mid-term goal might be as simple as deciding ‘to buy a less expensive car in 3 years at the end of my lease.’ Also try reviewing your goals every now and then, and make adjustments. It is ok to be flexible with your goals. Simply taking the time to think about your goals and putting them on paper is the first step to making them a reality.

ABOUT ACCC:

American Consumer Credit Counseling (ACCC) is a non-profit 501 (c)(3) organization dedicated to empowering consumers to regain control of their lives through financial education, counseling and debt management. ACCC provides individuals with practical solutions for solving financial problems and recognizes that consumers’ financial difficulties are often not the result of poor spending habits but more frequently from extenuating circumstances beyond their control. As one of the nation’s leading providers of financial education and credit counseling services, ACCC works with consumers to help them with the best plan of action to reduce their debt and regain financial stability. For more information or to access free financial education resources log on to http://www.consumercredit.com

Tom Palange

Education Programs Specialist

American Consumer Credit Counseling

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Most people don’t start saving for retirement until they are in their fifties. They wait, and they can always find excuses to put it off for another year. My kids need to go to college, there’s a new baby, I need a new car. All these things are always going to exist - you could come up with a never ending chain of excuses not to invest. But the smart investors will do it young - and here’s why.

The reason not to wait until you are in your fifties is because of a simple principle called “compounding.” Investing a small amount now will get you a much larger amount later because you earn interest on the interest that you’ve already made. It’s like a snowball effect - as more money gets added to your portfolio, you make even more money in the next year. That means that the longer a period of time over which you’re investing, the more money you will end up with, even if you put in the same amount as a person who invests only in their fifties. The results can be dramatic over a forty year period, and you often only have to put in about a quarter to half as much into your retirement accounts to get the same amount as a person who waits. So start investing when you’re young. You’ll develop the right financial habits and you’ll end up with a healthy retirement fund, at a lot cheaper cost than the rest of us.

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Numbers are essential tools used in the decision-making process in a company. Effective management entails the proper use of financial figures. But a lot of people have a fear of numbers stemming from unpleasant experiences with them during their school years. In order to understand and use numbers fear must be overcome first. Understanding will then follow; you will know what numbers can tell and what they can not tell. You will know when it is appropriate to use them and when it is not. You will come to know their limitations. Only at this time will figures become a useful tool for making decisions and enhancing the quality of decisions.

Decision-making in a company usually involves presenting financial figures to several managers, not all of whom have backgrounds in finance. The objectives of presenting financial figures to them are to educate and inform them of the financial performance of the company and convince them of future trends that must be considered in order to give direction to the company. This means that the presentation must be clear and comprehensible to the audience. It is not enough to print out financial statements, hand them out and discuss them line by line. This will not accomplish understanding and clarity. Doing away almost completely with figures and financial terms and steering away from technical discussions is tempting because it may seem easier and simpler, but neither will it achieve the goals of educating, informing and convincing the audience.

A better approach to presenting financial figures is to try to level the financial understanding of the attendees. He should put himself in their shoes and think of ways to incorporate financial terms and figures in his presentation in an easily understandable manner, explaining along the way the terms that can not be replaced with layman’s terms.

To prepare for the challenge of presenting financial figures, the presenter must first select the most critical numbers, making sure that all assumptions or basis for each are explained. Decide also which financial terms and concepts are needed for the presentation and how these terms can be explained in layman’s terms.

It is a good idea to develop an outline of your presentation showing the objectives, critical financial concepts or principles and critical figures. This will serve as a guide for the flow of your presentation.

The presentation should start with an explanation of the objectives. Tell the audience what you wish to accomplish and give them a summary of the discussion points. Establish clearly the importance of understanding the critical concepts that you are including in your presentation. Tell the audience why they need to understand the concepts. To explain the concepts, you can relate them to some familiar and ordinary situations. Analogies can be used as a tool to accomplish this. To maintain your audience’s attention throughout the presentation, keep referring back to your familiar and ordinary situations that you used as examples so that your audience can keep up with the story that you are trying to tell. Take short breaks to let the audience absorb the ideas and figures and encourage them to ask questions.

Michael Russell
Your Independent guide to Finance

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