SUMMARY OF JUNIOR YEAR

Our “Junior Year” is complete now, with the main focus being on understanding investing and taxes.  While these have been heavier topics than in other “years”, it is vital that you understand each in order to build your wealth and achieve your financial goals.

To summarize what we’ve learned this “year”, we’ve covered:

• SA301: Bank Accounts-Checking, Savings, CD’s and TBills – The basic bank accounts and a few other short-term savings vehicles that offer higher interest rates than a standard checking or savings account.
• SA302: Investing Basics: Time Value of Money – How to calculate present and future values of sums, cash flows, and payments.  These are the basic elements to investing (compound interest is how to grow your wealth!) that are essential to understanding.
• SA303: Investing Basics: Stocks, Bonds, Mutual Funds & ETF’s – What exactly it means to have investments in stock, bonds, mutual funds & ETF’s including what they are and the advantages and disadvantages of investing in each type of investment vehicle.
• SA304: Investing Basics: Risk Assessment & Allocation – A step-by-step guide to investing as well as a description about how to determine your risk and thereby determine an appropriate allocation of your portfolio between stocks and bonds.
• TX301: Income Tax Basics – The basic income tax formula from income to deductions and tax credits.  Taxes apply to everyone so it’s super important to understand how taxes work!
• TX302: Payroll Withholding Tax Essentials – How to calculate withholding taxes (Federal, Social Security & Medicare) as well as adjusting Federal withholding allowances.
• TX303: Intermediate Income Taxes – More advanced tax issues such as capital gains and dividends, net investment tax, alternative minimum tax and how to project your taxes for the current or future tax year.
• ST301: Saving for Medical Expenses (HSA and FSA Accounts) – When you can use an HSA vs. an FSA account as well as rules about contributions, distributions, and other special features of each savings account.
• ST302: College Saving Essentials – Some great ways to save for college including a Coverdell ESA, 529 plans, and a Roth IRA.  Also, how to calculate how much you need to save to meet rising future tuition costs.

REVISE YOUR FINANCIAL GOALS

It’s now time to go back and revise your financial goals that are related to investing or taxes.  The specific questions that you should ask yourself at this time include:

• Should I be considering different or additional accounts (online money market accounts, CD’s, etc.) to help increase my return on my short-term cash investments?
• Is there anything that needs to be updated in my financial goals based on adding investments or adjusting my current investing plan or portfolio allocation based on what I’ve learned in these classes?
• Can I adjust or clarify any goals about taxes (for example, minimizing taxes in a specific area of your finances)?
• Should I adjust my federal withholding taxes to more accurately represent my actual full year tax liability?
• Can I adjust, clarify or add any goals about paying for medical expenses through the use of an HSA or FSA account?
• Can I adjust or clarify any goals about saving for college through tax-advantaged accounts such as a 529 savings plan?

EXAMPLE: THE SMITH FAMILY

The Smith family (used as an example family in each class), makes the following changes (in red) after looking at their investments, taxes and current college saving goals.  Highlighted in blue font are tasks/goals that they’ve completed already.

Congratulations on completing the third year of learning about MAKING YOUR MONEY MATTER!

What did you learn during the junior year classes?