hi
I think we're appalled by past one thirty eight
So I hope everybody
is already back and available
it would be great if you all could turn on your cameras
I know you're a little bit shy
would be great if you turned it on you them for a few
minutes
I can see who's there
I see a lot of familiar names
So that's good
That means
that means that you've already been at one of my sessions
There we go
You
I'm hanging
Thank you very much
I see you
That's great
I love Your background
Davis
very nice
Good
Thank you
Hope the rest of you will turn up at some point
It would be really nice to see you
All right
for those of you who I have not met.
My name is
Mayra Rodríguez Valladares.
And I have a couple of degrees
in Russian and Soviet studies，
and my MBA
my Masters in Business Administration
is from the Wharton School, in Finance and Emerging
Markets,
and I'm very excited to be here again with a New York
Institute of Finance,
where I have
delivered a lot of different training programs
over the years
on capital markets,
fixed income products
meaning bonds and short term paper.
I've done classes on financial derivatives.
I've done a lot of classes on bank regulations,
as well as emerging markets.
And in the last couple of weeks,
I've been very fortunate to be asked by the New York
Institute of Finance to participate in the Young
Finance Scholar,
which I really think is an absolutely brilliant idea
to get all of you
this young to start learning about
the very exciting and large world of financial markets
and money management.
Even if you never end up working as an economist,
a banker, an asset manager,
somebody in information technology in Finance. There's
so many different
professional opportunities in the broad world of
finance.
If you never go anywhere there.
I assure you that all of these classes
are unbelievably useful to you.
Because at some point you're going to have your own
money,
we hope,
and you are going to have to
manage it.
So those are some of the topics that we're going to
talk about today.
And I do hope that you'll jump in and asking me some
questions.
You're welcome to unmute yourself and ask your question,
and raise your hand,
write me via the chat box.
And I will periodically calling you as well
to make sure that we're not just going to be hearing
my voice for over two hours.
And somewhere in the middle
give you a quick break.
I know it's important to stretch out
and
rehydrate as well.
So thank you for being here with me this afternoon.
So we're going to talk about money management,
which is a pretty broad term,
and it's going to be kind of high level
because we're only together for two hours.
But I hope you'll learn something from this.
And I do want you to ask me any kind of question.
Money is kind of a tough thing.
There's a lot of sensitivity around talking about
money.
Often depending...
And this
of course
can vary from culture to culture.
But in the US
often,
unless you know somebody incredibly well,
you never asked them outright
and certainly not in public.
Hey
how much money do you have, or how much
do you earn, or how much you spending. In our culture
here in the US
these kinds of things are considered very private,
very personal.
But I've been in other countries where it's perfectly
acceptable to ask somebody how much money they make
or to talk about issues related to how you spend your
money.
And
often
even when people are talking about getting married,
they'll talk about all kinds of things.
But believe it or not,
it may seems odd to some of you,
but until recently,
you know,
there was a discussion about the fact that it's
a good idea before you marry somebody to actually
talk about money.
How do you feel about money?
What kind of habits do you have?
Do you like to spend / not spend?
Because even through we don't necessarily want to talk about
very concrete
personal things
about
how much money do we make and how do we spend it in public,
or with people we don't know.
It is obviously an incredibly important component
of how we choose
to live our lives.
Money does not buy you happiness
but it sure does buy you options,
meaning choices in life.
So first thing we'll talk about habits.
What kind of habits do
we have?
Right.
You probably aren't aware of it any more
because you're obviously already grown teenagers.
But even before you're able to speak and talk,
you know your parents around,
you start talking about things,
start getting
you used to certain routines.
Right.
And the later on you yourself realized right now
you have a routine.
You know,
maybe you get up and you turn on
your music of choice,
and you go brush your teeth and have tea or water
or whatever.
Even small
little mundane things like that that you don't even
think about.
You're probably just doing it on a regular basis.
You don't even think about it right.
Nobody has to tell you any more to brush your teeth and wash your hands.
Right?
Like I have to do with my smaller kids.
So these are all...
When you do them
time and time and again.
Those are habits
you just don't even think about it anymore.
And
many people don't necessarily realize that they
start to develop certain habits,
certain kinds of behavior with money.
How do they use it?
And so it's important to think about.
Can you think of a time when you bought something on
impulse,
or you spent more than you need it to.
Um...
When have you ever wasted money on something and
wished you hadn't.
And you did it.
Possibly because you had not already developed a
habit of what exactly
you're supposed to buy, and what it
because you need it,
and how much are you supposed to spend.
So maybe you...
when you did this,
you
didn't have a habit developed already.
Or actually your parents had already said,
hey,
these are the things you can spend money on.
This is how much you can spend.
But
you either forgot that you had already
been instructed on what to do,
and you already had a habit,
or you knew you should have done something that you
wouldn't have spent.
So one question
I quickly want to ask you
here,
and please
put it on the chat box if you don't want to raise your hand.
If you don't feel like answering that's fine.
One question I have for you is:
in your family
do you talk a lot about money?
Meaning what things you can spend on,
how much can you spend on,
or do you think it's not something that's part of your
day to day discussions.
Anybody want to jump in?
In case of somebody said
no,
somebody said
not really.
Okay
fair enough.
Somebody says
kind
yeah
that's right.
Thank you for answering.
Yeah
that's right.
It can really vary from family to family.
The decision as to do you discuss with kids.
Hey
we have a budget.
This is how much mom and dad earn
and this is how we use our money.
Right.
We spend this much on housing.
this much
on food,
clothing,
vacations.
Everybody has a budget.
Even the richest people,
Bill Gates,
any of these ultra wealthy people, you know, Carlos Slim
from Mexico
one of the wealthiest men in the world.
Everybody has a budget.
Right,
believe it or not.
So
another thing I want you to think about is,
was there ever a time that you bought something and
you later realize,
oh no
I spent too much money on it.
Or
you know what,
I bought something that I really shouldn't have bought.
Anybody can think of an example when you might have
done that.
That you're willing to share with us on the chat box.
There was ever a time that you said,
gee,
I really want to buy,
whatever.
I don't want to say a word.
I don't prejudice or bias you.
But it was ever a time you bought something
and then you realize later,
I spent too much time on it.
It wasn't really the best use of my money.
Anybody can think of anything like that.
Yes,
okay.
Is there an example
that anybody can provide me?
You bought x and then realize I don't even need this.
Games
right
Good example,
you got a video game, that's right.
you got a video game or some board game or some kind
of game,
and then you realize,
do I really... am I ever really going to use this,
if I ever needed.
And those are very normal things.
Adults do it.
Adults do this all the time.
So much less
yeah
from the youngest kid to teenagers,
et cetera.
Food
that's right.
All of a sudden you go
oh
I really want this burger,
I really want this
pasta,
et cetera.
And then you go
oh
I bought too much of it.
It was too expensive.
I could have bought it elsewhere.
All those kinds of things are very normal.
And with time
the good thing is that if you actually thought of it,
you know,
right now,
that's great.
Because it means you have the analytical capabilities
say
wait a minute,
what was I doing?
Why didn't I think of this better?
I could have used my money better.
But you can learn from
all these kinds of experiences.
So let's look at two people here.
We have Michael,
and we have Selena.
So Michael is senior.
He lives at home. He has a part time job.
He's responsible for his own expenses,
and he's trying to save for college.
Right.
So that's who Michael is.
And then we have Selena.
And she's a freshman.
She lives at home.
She has occasional jobs as well.
You know,
different kinds of part time jobs,
things like that.
And she gets money from her parents.
So these are the two...
These are the two people we have here.
So we're going to think about them later on.
That's the profile of these people.
So I'll put it back here again.
I realize you may not have the slides.
I think you will get them later.
So again
Michael
a little bit older.
He's a seniors,
he's probably around 17-18.
She's a freshman.
So she could be anywhere from 13-15, typically.
And he's already had a part time job and is responsible
for his own expenses.
He's trying to save for college.
And she's younger.
She lives at home and has occasional jobs, too,
and gets money from parents.
So
one of the things that's really difficult is to analyze
and think whether your habits,
the things that you do on a regular basis.
Are they sensible?
Or are they not really wise?
You know,
for example,
do you stop in every single day at a Starbucks
and buy some kind of a coffee or a tea or a soda
or do stop by and get an ice cream,
a burger,
now,
a taco, a chapati,
whatever your little snack food that you want.
And
another thing you have to think about as well.
I could do that stop by any time you feel like to buy
a little quick snack,
quick
fast food on way from home or on the way to school.
Or could you be using that money
and or any spare change from this shopping
to put it in a jar every night?
And so these are the kinds of things that most people
don't think about it,
even as adults
much less younger.
But the earlier you start to think,
wait a minute,
you know,
every time I go and buy that ice cream bar that costs
4 dollars,
right?
If you bought it less often
or not at all.
But even if you don't want to be that strict with
yourself.
But you said,
you know what,
instead of buying ice cream every day,
I'm
just going to buy it 2 days a week,
and I'm going to put that money in a jar,
piggy bank every night.
That's the first time you realize,
wait a minute,
I do understand that things have a value,
and that I actually want to develop money habits.
Money habits mean
what is it that I normally want to spend money on,
and where am I going to get the money from.
Right.
Well,
while you're up to certain age,
you can get money from parents,
grandparents,
maybe other relatives.
The older you get
and the expectation
in most cultures is that you are the one that's supposed
to get a job and earn your own money.
So
if you start stopping for fast food on the way home
every day,
is that
is that a smart thing
that would be a plus?
Is it a negative?
Or do you really not have a view,
most people would end up thinking that that's a negative,
because it really does add up.
A lot of people don't
do that calculation.
They don't think about it.
And so
the possible impact is,
oh
I'm really hungry.
So I'm feeling the hunger pangs.
But the possible impact is
you know what,
if I could just wait another 20-30 minutes,
I'll be home.
I can eat there.
And then I can save the money and use it for something
else.
And putting spare change,
even if it's one penny,
a quarter, a dollar in a jar every night,
instead of having spent it on the fast food,
you can actually use it to buy something that you really
want.
And this is
this little bullet point here is one of the most important
things.
And it's difficult,
even for adults.
Which is
do you want that instant gratification right now?
I want the car.
I want the computer.
I want the video game.
I want it right now.
And I get immediate satisfaction of buying whatever
it is that I wanted.
Or can I discipline,
am I able to discipline myself,
and wait, and not buy a particular item right now.
And wait for a month,
2 months,
and I'm saving in the meantime.
And I might be able to buy something that's bigger,
better,
longer,
longer lasting.
So for example,
if you think of latte.
Okay.
So right here,
if Selena was to spend.
Let's say she decides,
you know,
it's really hot right now,
especially in the New York area,
and she was to spend
3 dollars on iced coffee after school every day.
And let's assume that school is on right now,
which I realize it isn't.
But let's assume that she is going to regular school,
which is typically 5 days a week.
And she's spending 3 dollars.
How much is that in a week?
Could somebody quickly
tell me on the chat box?
How much is she's spending on a weekly basis for the
iced coffee?
15
Right.
Because it's 5 days a week.
Right
If she happens to also be doing this on the weekend,
then of course it would be
it would be 21,
right.
And in a school year
in a school year,
roughly,
we're talking about 180 days,
give or take,
as you can see in the slide below.
So now it's not
it's not 15 dollars anymore.
It's 540 dollars,
right?
That's kind of a lot, right?
What else could she have done with that money?
If you are...
and remember
Selena is about
13-15 years old.
She's a freshman.
Anybody want to jump in and think at that age group?
That 13-15 year range.
What do you think?
How else could she have spent that money instead of
3 dollars on iced coffee?
Anybody wanna put in the chat box, with 540 dollars
what else do you think she can buy?
So 75 days of school Airpods.
Okey, good.
What else could she spent 540 dollars on
at that age group?
Iphone X,
yeah
probably.
That's right.
Now,
this is the difference between saying it's hard
or
you know what,
I really like coffee,
and I'll just buy it.
It becomes a habit every morning,
transportation.
Very good.
That's right.
Especially if you're not living in the suburbs,
let's say, you're living in New York City or Chicago,
somewhere else.
A lot of people will take... a lot of kids at that age,
students at that age will take public transport and
it's expensive.
You know,
the student reductions / discounts, all that.
Somebody wrote clothes and shoes.
Absolutely 540 dollars.
Unless you really buying top of the line,
high level,
high quality fashion,
luxury fashion, 540 dollars gets you a pair of nice
trousers and blouses and dresses and so on and so forth,
that she may want to buy.
So look at the difference.
Right now she wants that coffee.
She doesn't even think about it,
goes in after school every day.
She already knows the baristas,
the people who work at the coffee shop.
You do start to develop some of this human contact
to chat with these people.
Maybe she's meeting other friends there.
And guess what?
It becomes
a habit.
And you don't think about it,
because it's only 3 dollars,
right?
If somebody were to stop or say,
hey
are you aware you're spending 15 dollars a week?
Are you aware that you're actually spending 540 dollars
within the school year?
And that's just a nice coffee.
We don't know if she's also buying gum and candy and
all that.
So
it's hard to think about these things.
But it is important for you to start thinking about
is there something that you already have a habit of doing.
Are you ordering pizza
every day?
Are you spending money on buying lunch at school
rather than getting up 15 minutes earlier and making yourself
your own little lunch on your own,
or getting
some leftovers from last night
and packing that in and taking it to school.
Because you have to be thinking of
what does this all mean in totality.
What else could you be doing with that money?
So it really becomes a situation of disappearing
dollars,
right?
So I think it'd be good for you to do a little list for
yourself of
how much money are you spending.
I realize now
under Covid
it is very difficult
many of us are all home.
But if you think about yourself on a regular school
day before Covid,
how much money will you spend?
How much money do you think you were spending
every day? And I realized some of you may not have a job.
That's totally normal.
But let's say, your parents give you an allowance.
They've already given you a credit card,
debit card,
whatever.
How much
How much money do you think you're spending a week?
Any thoughts?
Give you a couple of minutes to think about it.
Did you have a habit where you were usually buying
some candy,
some pizza,
some healthy food on a weekly basis?
Somebody says 30 dollars.
Somebody says
5 dollars.
Somebody said
I was spending for food at school.
That's right.
And so of course
you need food,
right.
The question is
how much
and could you get a cheaper elsewhere.
And so you start to spend money every day.
Somebody said
10,
that's right.
If you think about it...
Somebody just wrote 4-5 dollars for lunch.
So if you're spending 5 dollars for lunch,
and then you
5 days a week,
that's 25 right there.
And then if you think of month,
that's one hundred and then it adds up.
Let's say you go to school
8 months,
now we are talking 800.
Some of you may have no choice
You have to spend that money to buy the lunch
either at the school cafeteria,
or maybe in a restaurant or something outside.
But think about it.
If you were able to bring food from home,
of course that costs money,
but it would be less than 5 dollars
a day.
And so these are things that normally we don't think
about,
but that's how you get into a situation of
disappearing dollars.
Your money that you could have possibly saved to buy
something bigger,
better,
et cetera.
I think you want to think about is,
do you need something
or do you want something.
So for example,
here,
we have Michael
and he's looking at various things.
He happens to see a jacket.
He likes it.
Do you need the jacket?
His argument as well.
Kind of, it depends.
That's right.
There's a lot of things we don't know about him.
Does he already have four jackets at home? Or does he
just have such old beat of jackets?
Is it time
to buy a new one?
Where is he?
Is he in Texas?
Maybe it doesn't need the jacket in the winter or that
particular jacket.
But if he is in the northeast,
even the jacket may not be enough.
So depending on where he is and what he wants,
you know,
why does he need the jacket,
maybe it is a need or is it just a want?
So here he's telling some other person,
yeah,
I do have a jacket.
It is getting kind of ratty.
It's old.
That beats up.
Okay.
But maybe it just needs a bit of a wash.
So one of the first things you want to think about when
you say,
oh,
I want that phone,
I want that video game, is it's something you need
or is it something you want.
Is it something you can put off and get later.
So
typically,
some of these things can sometimes end up being both.
So let's say glasses, right.
Yes,
I need the glasses because I need to see. I happen to
wear glasses.
Might be one of you might say.
On the other hand,
if
you're talking about sunglasses.
You need it
because the sun is bothering you.
But do you really need the absolutely super fanciest,
or is there just a simpler pair of glasses that you
can get?
Athletic shoes, do you need them?
Yeah, if you're running.
You're going to be walking a long distance.
You're playing some kind of sport.
Or if you don't do any of that,
then maybe just some simple sneakers will do.
You don't need the big
fancy athletic shoes.
Business suit,
most of you right now
probably don't need a business suit.
Or is it that you may just need one because
once in a while
you do have to go to some kind of family function.
You're getting close to go for an interview for work
if you're close to graduating.
Ok,
but then do you need
to buy one
that's just simply
and appropriate,
or do you need to buy something that's really fancy?
So I won't go through each of these.
But
you know, some of these
can often be just a want
as opposed to a need,
right.
A dog, is it something I really need?
Yes, maybe.
If I'm visually impaired,
I need the dog to help me.
Is it for a child
who is autistic or has some kind of a special need.
Then
yeah,
it is a need.
As opposed to
no,
I'm not visually impaired.
No,
I don't have any special needs.
But you know what
I just happen to love the idea of having a dog and
all that.
So with each of these,
they can be a need and they can be a want.
There's nothing wrong with wanting things.
But it is important to differentiate between need
and want.
Because if it's something you want
as opposed to need,
maybe it's something that you can put off
and not necessarily buy right now.
And you save the money to be able to buy it,
rather than constantly assuming that you need everything.
You're constantly spending money that
you may not end up,
you may not have,
and it may lead you later as you get older
to borrow money.
And now you've got
to pay it and with interests.
So it is good to kind of think about
what are the things that you really need
and what are the things that you want.
And
you can put it off and and buy it later
when you've actually saved up the money.
So things that are absolutely essential to your health
and security.
Water,
of course.
You need basic meals.
You need a place to live.
You need transportation either to go to school or
work.
Is there anything else that you need,
that you don't see on the list there?
So we have water,
basic meals,
place to live,
transportation to school.
Is there anything else in that list that you go...
Wait a minute,
I need something
that's not on the list.
Ok,
somebody put a cell phone.
Is that a need or a want?
Ok,
it depends.
Why?
Do you want to talk or do you want to
just chat?
But I would love to hear the
"it depends".
Because that's probably the right answer.
But I need you to flesh it out just a little bit more.
Olivia,
do you want to give me a few more details?
Ok,
because in our society is hard not to communicate
without one.
That's actually an interesting point,
meaning,
if you are in a situation where especially all of you
here
being teens,
you've got all kinds of after school activities.
Maybe you're an athletics.
Maybe you dance.
Maybe you play an instrument.
Maybe you work.
And it used to be that there would be a public telephone
in lots of different places
and you would go and use a dime, use a quarter and 50 cents.
And song is over
this
prices have gone up.
And you could call.
Now
other than Grand Central in New York City
I can't think of where else.
When was the last time I ever saw a public phone.
And so if you need to call your parents to pick you up
or you need to
tell somebody you running late,
phones have become a need.
So that's right.
So cellphone,
a mobile phone
could be on that list.
Internet,
very good.
That's right.
It used to be that internet was a real luxury.
It was a real privilege.
And guess what now
not to mention under Covid,
but even before Covid,
many assignments
even when you were in school full time and you
went home,
you would be given homework to write an essay,
or to complete some kind of math or science assignment.
And guess what?
You needed to get online to find
to get the files necessary,
or to do some more research.
So internet now has almost become a human right.
And so it's
very difficult
and very unfair to those who can't afford it,
don't have internet, because they're not getting
the same level of education,
and not getting the same level of information as those
of you.
Obviously
all of you have internet right now.
Or you are able to go over to a friend's house.
But somehow you had access
because all of you are on this class.
That's right.
Let me just stop here and see some of the comments.
I'm glad you're all participating.
Thank you for that.
Somebody put
very good on the telephone.
That's right.
As a security measure,
depending on how you have the phone set up,
having forbid you go missing or get lost.
That's right.
You have your phone and you could be
tracked so that your parents and loved
ones could find you.
That's right.
So more and more
the interesting thing now.
You Olivia,
thank you for bringing up this idea of a phone.
Is that, a phone is no longer just to make a phone call.
Right as you put there.
It's communication.
You can send emails.
You can text.
You can use the Apps to buy groceries, to buy clothes,
you can do your banking on it.
So it really becomes more of a need as something that
facilitates your day to day living,
as opposed to
just for fun.
That's right.
Let me see, what are the kinds of comments I'm getting here?
Air conditioning. Why is air conditioning on the want list?
You know really good question.
That's right.
So
air conditioning.
It really depends on where you live.
So let's look at this.
Let's look at the wants: music,
do we need music?
Can I live without music like the actual physical
act of living?
Yes
I can.
But I personally happen to love music.
I love listening to opera and salsa and pop and all
kinds of.
I have a wide range of likes of different kinds, also Chinese
music.
I listen to all kinds of stuff.
So for me, it's fun.
I'd rather have music in my life.
A snowboard,
right.
Is that a want or a need?
I think a lot of people would say it's a want.
But maybe those people who are really good athletes,
and they like the snowboarding,
they like the exercise,
they get out of it.
It becomes a need.
It becomes a habitual thing.
It becomes something that helps them.
Usually it be considered they want.
Yeah.
Okay. Can you listen to music
for free, like on the radio?
Sure
that's absolutely a good point.
I can.
In fact,
these days I don't even have in my home
or even have a radio.
I have to figure out.
I think
my husband might have one...
Um,
but yeah
I can...
I can listen to all kinds of music via the internet.
So in other words,
when I'm paying for the internet service
and just about...
That's right.
It's just about
every kind of...
once I pay for the internet,
I can get all kinds of radio stations,
all kinds of music services through YouTube and
everything else.
All kinds of other services.
So I'm not paying extra.
So there's a lot of free music out there.
That's right.
Somebody said, they have Apple Music.
Going back to this air condition.
That's right,
it depends.
I see
Tomas Hernandez
says
it depends if you're in Florida this summer,
you're really going to feel like it's a need.
That's right.
I mean
I grew up in Texas and we actually didn't have air condition.
And boy
let me tell you,
it was hot.
We're talking 100 degrees,
over 100 degrees.
So I would take like
2-3 showers a day just to be cool.
And I'd set out on the porch.
And so now there're parts of the country where
are even warmer.
Think Florida.
That's right.
I think Arizona,
et cetera.
Can I live without air conditioning?
Yes.
Is it very uncomfortable?
Yes.
Same thing with heat.
Do I need a heater?
If I'm in Texas or Florida,
et cetera.
I mean
I need it very often.
But let me tell you
in the northeast
not to mention northern Canada,
Russia,
where I spent a lot of time,
believe me,
it becomes a need,
or you could literally
in some situations
freeze to death.
Somebody says the snowboard could be a need, if you are
professional snowboarder.
Absolutely.
That's what you...
or even a...
you know,
a competitor who isn't getting paid to snowboard
but that's where you're spending
your time.
And so
yeah,
that's right.
So it's good to think about these things.
What may be
to me
a snowboard would be a want
because I can't ever imagine myself on one.
But to you
listening to me right now participated in this class,
maybe some of you
it is what you do as your sport,
as your way of relaxing.
So yeah,
it's important to think about these things.
And they can vary.
I'm glad I'm getting the comments you're giving me.
They can vary from person to person.
All right, as to whether there a need or a want.
But I think most people can agree that water,
basic meal,
you know
just something to give you the nourishment necessary
so that you're thinking in your healthy.
And some mode of transport to school or work
unless you're lucky enough that you can go to school
and work from home,
which is a lot of us these days.
or that you can walk to work or walk to school.
Not lot of
people have that fortune
that privilege.
All right,
so let's carry on.
And thank you for participating.
I want you to write down 5 things that you have spent
money on recently.
And I don't care what you come up with.
It doesn't matter.
It's your own list, so you can just write it down for
yourself or type it into
your chromebook,
your laptop.
And I want you to think of the last five things that
you bought.
And then I want you to tell me.
I want you to decide.
You can do like this little template that we have here.
Was it a need or a want?
So let's say that you actually...
if you want,
you can just do a little cheat sheet here
as we call it.
So you could say
yeah, I bought a jacket,
and I really did
use it to replace one that you've outgrown.
And maybe you bought a second jacket
that just looks good on you.
Or you can just give me five things that you yourself
literally bought sometime in the last...
I don't know.
6 months or whatever a year,
five things and then tell me,
or write down whether it was a need or want.
I'll give you a couple of minutes to do that
and then I'll just randomly pick on people to tell
me,
a recent item you bought,
and whether it was a need or want.
Okay,
if you're ready
somebody
ok
good.
So I see
yeah,
you can either put it...
good question
Somebody says
may we put it on the chat
or you can put it on the chat to share with everybody
or you can send it to me privately
Either way
it doesn't matter
and I won't name you anyway
it doesn't matter
so let me
I'm going to
arrange my little chat box and we can start talking
about
just some of the stuff that you guys are writing
I'm just going to.
Okay, so somebody wrote that
this person had bought a video game that every year
changes the name.
So,
is it FIFA19?
FIFA20, that's right.
I don't know how to pronounce that.
I'm obviously showing that video games.
So forgive me if I'm mispronouncing it.
So,
and even though it's more or less the same video game,
you want to buy it, because it's new.
That's right.
So that kind of a thing.
That video game is a want.
Right.
Unless you tell me
that you work
as a journalist,
as a blogger who reviews video games and makes recommendations,
which absolutely is a job that you could have.
It's a want, right?
And that game that FIFA19
or whatever,
is something that you probably could use for a couple
of years.
But as you put there,
it's you know,
you want it,
you want a new one
because it's the new one.
So that's a good example of something you bought recently.
It sounds like
and it would have been a want.
as opposed to a need.
Ok,
let me see who else is posting stuff. Okey, somebody wrote a pen and
it was a want.
Yeah,
maybe it was a fancy nice pen with multiple colors,
and maybe it had a picture of somebody or something
you like.
It wasn't something you really need it, right?
You could have used any cheap,
a big pan or something else.
But you wanted it.
Okay.
So that's an example.
A dog or a toy dog.
You wanted it and needed. A phone case.
You needed it
because you had no phone case.
Yeah.
So that's a good example,
because that's closer to being in need than a want.
Because you already have a phone
but you have a cover.
Because if you don't end up having it,
you're being precautionary.
In other words,
if you don't have it, you drop it, it breaks.
And now you're into a even bigger problem.
Because it'll cost more to replace it.
New riding chaps.
And you consider that a need
because the old ones were too small.
So this is already you could live without.
You could live without riding,
right?
But this is a sport
or this is something you do for an enjoyment.
And so now you're used to doing it.
You have a habit of doing it.
And you need new chaps.
Otherwise
these ones
don't fit anymore,
or too old.
Somebody wrote a laptop for school.
That's right. These days
especially now under Covid,
that really does become a need.
And if you don't have one,
if you're lucky enough to live in a district
where you can get one lent to you otherwise,
yeah,
it really does become a need.
Okay,
let's see what other people are posting.
Every 5-6 years
as the new gaming consoles.
So it sounds like somebody buys a new one every
5-6 years.
It's still...
It's still a want
not a need.
You're now buying it every year.
And then somebody else writes unless you're a pro gamer
or a video game tester.
That's right.
So if you are really somebody who's a professional
gamer or,
like I said,
your job is to test the game or your job is to review it
for a newspaper or magazine
or blog or whatever.
That's right.Otherwise,
it's a want.
It's a want.
Let's see
what other people writing.
Somebody wrote books.
That's right.
It's a want. I love books.
And can I live with them?
Yes.
But the quality of my life wouldn't be the same.
But that's right. It's a want.
It's food,
you need.
You bought food.
You bought a phone case.
That's right.
It's a want.
But I can certainly understand why people buy one.
Because it protects your phone. Clothes for school.
Yep,
that's the need.
Milk, yep,
that's the need.
What else do we have here that haven't been mentioned?
Shoes.
somebody mentioned shoes.
That's right.
It's a need.
Hair product, it's a need.
Um,
I don't know.
Some people might think it's just a want, all right?
But if you feel, wait a minute,
I need a hair product for a specific issue related
to my hair,
or just the way I wanted to look as part of my persona.
So these things
as you see
I'm glad I'm getting all these responses from you.
Sometimes some of these things are not as clear cut.
So thank you for that.
Thank you.
All right.
So let's move along.
And then I'll give you guys a break in a bit.
So
you know,
money can't buy you happiness.
I've met throughout my life
some people who are shockingly wealthy,
and little struck me is not very happy.
But I also met poor people who are not happy.
Either way,
here
the thing to consider is money can not guarantee you
happiness
but it does play
a very big role
in the quality of life.
That you want to have and to achieve
whatever goals you will develop as you grow.
And one of the ways to try to help you achieve those
goals is to be thinking of what are habits that you've
already developed at your age
that you might be able to break.
And
how are you going to figure out
how are you going to
save money?
So example attending the prom.
Right?
Many of you are already at the age that
this is going to be something that you're going to do.
And so if your family's really wealthy
and they've already told you,
oh,
of course it's not a problem. We're going to give you
the money for your
outfits and the cards to go there,
and the party before and after.
But if you don't
and you still want to do this.
Because in our culture
often seen
it's something that you do as a junior
especially senior.
Then if that's a goal for you,
then you need to think, well made a minute,
am I going to get some part time work or babysitting?
What am I going to do, so that I can have some of the money
myself,
right?
And somebody wrote
somebody wrote that for that person
the hair product is a need.
Because otherwise the hair dries out and breaks.
That's right.
And that's important that you're wrote that.
Yeah,
because all of us are different.
And we may need certain motions for our face or
what we call grooming.
And it's important at your age at all of us.
But to be thinking of what are the things that we need
to try to look as good as we can and to be comfortable.
Because we do live
and most of the world
people do start forming their impressions of us
when they...
when they see us.
So it's important to think about these things.
And so often
things like care products,
or a makeup or a certain kind of hairstyle,
do border on the need,
close to a need as
supposed to just a random want.
Thanks for those for that comment.
People can have all kinds of goals.
Your goals at your age bracket would be quite possibly
quite different from mine.
But some could actually overlap.
Right?
Some of you may be saying,
look,
I really wanted to take a dance lesson of some kind.
I want a guitar lesson.
I want to saxophone lesson.
I want to drum lesson.
So that's a goal.
And you need to figure out,
well, hang on,
how much is this going to cost?
Am I really going to do it ? If I say,
Mom, dad,
I want to take this dance lesson, this instrument lesson.
I'm going to band camp.
I really going to do it,
or am I going to make my parents waste money, because
I'm only going to show up one time. Going to college,
or vocational school,
or community college,
or some kind of training institute,
That's a bigger thing,
when I just talking about buying a phone
or
Now we're talking about a big investment.
And so
you know,
your parents,
believe me,
are thinking,
wait a minute,
is this something we can afford?
What can we do to try to figure out how we're going to
help you with this goal?
Eventually, as you get older,
you may have some of these goals.
You may decide,
you know,
I really want my own place.
I don't want to live with mom and dad any more.
So you going to have to figure out, well,
am I going to rent something?
And where will I rent it, because rent is pretty high.
Or do I actually want to own an apartment,
own a house?
At some point you may want to get married.
Do you just show up
to city hall, and with your
the loved
sign a piece of paper and you just pay a couple of dollars
for the administrative fees as you done?
Or are you going to want a big
fancy
elegant party?
Some of these weddings now can go out for days and days.
And so those costs a lot of money.
And you've got to think about it.
Lot of people don't realize.
Oh yeah,
I'll get married some day.
You don't realize
it's unbelievably expensive and
so you have to think about, well, hang on,
what do I want here?
How am I going to achieve those financial goals?
If you end up wanting to start a family,
let me tell you,
I'm sure your parents at some point or another
told you that raising kids is very expensive,
depending on how much you want.
How many of these phones you want to give them,
and the video games, and the books, and the trips.
And maybe even already right now.
You may have
different financial goals and we're just talking about.
We have a variety of things here.
Prom, lessons,
going to college,
getting married.
These are all things that you may choose not to have
as your goals or not.
These are just examples.
Some of you may say,
no,
I want to save the polar bears,
right?
You may decide,
you know what,
nature,
climate change,
animal protection,
all those things are important.
And I want to start right now periodically donating
a dollar,
2 dollars,
or whatever.
We just had these in the slide to give you an idea that
dreams actually costs money.
Right?
And so it's important to think about how you're going to...
How are you going to get there.
In the chat box,
can any of you have,
if you're willing to share either privately or
in the chat box.
Can you tell me of a particular dream or objective
that you have?
That you might want to put on there.
That is not on our slide here.
Don't be shy.
Some kind of an objective.
Some kind of a dream that you have
that you'd like.
You like.
Starting a business, excellent. That's right.
And starting a business
depending on just about everything.
You're going to need
some money.
You're going to need some money because you're going
to have, whatever the business is,
you are going to have to... Maybe
set up an office.
Or maybe even if you run it from home.
Let's say you want to start a business
and you can run from home.
You're still going to need the internet.
You're going to still need a laptop.
You're going to need the phone,
right?
Some basic things.
Maybe you already have all those things at home.
That's great.
But guess what?
When you start a business,
then all of a sudden,
and that's a different topic for a different class,
frankly.
But when you start a business now,
the use of the phone,
what you pay for the phone? What you pay for the computer?
What pay for internet?
Now you can get what's called a tax deduction.
So you'll actually be able
to get a reduction on the taxes that you have to pay
for the money that you're earning on your business.
But that's a separate class.
But that is
a dream.
It's an objective that's fantastic.
Thank you for putting that there.
And you would,
as you think about it,
if this is something you want to do?
That's one thing that I highly encourage you to be
thinking.
Well,
wait a minute,
what exactly... what kind of business
I'm trying to develop?
You'd have to write a business plan.
So you can think of...
wait a minute,
what is it that I'm trying to do?
Is it going to be just you running the business?
Are you going to need to get some help?
Are you going to have to hire somebody eventually?
How much money will you have to spend to get the business
running?
But that's a great example.
You're going to need some money,
right?
You'll need some money for it.
Somebody else wrote being a soccer player.
Fantastic dream.
Great objective.
Is it going to be free?
At some point,
right?
You may want to take soccer lessons.
You may want to go to soccer camp.
You may want to go to a soccer match.
So it's hard to become a soccer player without spending
some money along the way.
And so that requires a plan.
How much money is going to take
to join the soccer leagues,
the traveling leagues?
All of that.
So that's a good example.
Somebody else wrote being a professional basketball
player.
That's right.
And guess what?
Usually to be a professional basketball player
not only do you need all the basketball lessons, and
the basketball camps, and joining the different basketball
teams, and traveling teams and all that,
you also often have to go to college, right?
Community college.
Or some kind of vocational institute or something
before you become a professional players.
So these are
good examples of dreams that you have.
And it's important to think about those dreams already.
And say,
well,
what might I do?
Or how could I discuss this with my parents and relatives
and loved ones to figure out
how are you going to get there in terms of money?
And so what we were talking about,
when I say "talk about it" and "getting there",
when I use terms like that,
what I'm really saying is
how do we set goals?
How do I set up very specific goals?
One
two goals.
And how am I going to measure how much money I need for them?
Is it really something that I think I can attain?
For example.
If I right now it might my age said,
you know,
I'm going to make this up.
I want to be a professional skater,
right.
Let's be realistic here.
I would need
to...
it would really be practically impossible.
I would need to do...
I would need to quit everything I'm doing and how we need to
go to Colorado or Russia
and Canada
or somewhere like that.
First of all, I don't even know how to skate.
And I have to learn how to skate and then practice and try
and I'd have to exercise. So that is not really attainable.
But for you all,
you're all young.
And maybe you're already sporty.
And maybe you already takes skating lessons.
So it's important to think about how realistic
some of these goals are.
And depending on where you are in your age, and
things like that.
As getting a different job or moving to some other
country,
for me
those things are pretty attainable.
Are they relevant,
that I have this goal of...
I want to listen to my music.
Okay,
that's fine.
That's a goal.
It's specific.
I can attain it.
But
you know,
it's not something that I really need to spend a lot
of money on.
And I don't really have to worry about how much time
it's going to take.
But it's important what you think of your goals.
To write them down occasionally
in a little booklet and kind of revisit them.
And once you say I have a goal, like right now
we were doing this example,
soccer player,
professional basketball player,
starting a business.
You need to sit down and say, all right,
what do I need to do
to get there?
OK,
starting a business.
Well,
you would need to think of all kind of business,
Is it?
And
are there supplies that I need?
Do I need computers?
Do I need books?
Do I need paper?
Do I need to buy a car?
What is it that you need to be able to start your business?
And like I said,
is anybody else going to be involved?
Could you right now start your business on your own?
Or do you need to ask some help from your parents
or friend, an older sibling?
And where will this business take place?
To use that example, is something you can do from your
basement?
From your room?
Or is it a kind of business that, you know what
no,
you're going to have to have an office in midtown Manhattan,
or Chicago,
or Hong Kong.
And why is it that you really want that goal?
I think it's important to say
why do you really want to start a business?
Why do you really want to
be a soccer player?
And all of that helps to figure out
what is my goal.
So here
even a simple goal.
Here in our example,
Mike needs to replace all four tires on his car because
the treads are worn out.
That's a very simple,
specific goal.
Hey
I identified a need.
My tires aren't in great shape.
I got to go buy
those four.
So then the next thing will be
well hang on,
where's he going to get the money.
Whereas when you talk about it.
I want to be a soccer player,
basketball player and start a business.
That's a long term
goal.
In other words,
it's not that you just go right now
and the business is set up.
Or it's not that you go right now kick a couple of balls
then you are a soccer player.
But it's a goal.
And worthy goals.
But so you have short term goals
and you have long term goals.
How will you know if you succeeded?
How do we measure? How we're coming along with that goal?
With Mike
it's easy,
right?
He needed tires.
He said
ok.
You know,
it's first thing he had to do to try to achieve his goal
is go ask somebody
call somebody check on the internet,
how much do these tires cost.
Then he realized, oh, I don't have the money.
I'd better work
a little bit harder at these extra jobs,
these extra assignments
and save the money.
And
then he realizes that, you know what, you could save
the money in 2 weeks.
And then he scheduled an appointment
to replace the tires.
For those of you who want to be a professional ball
player
or who want to start a business,
right?
You're going to have to spend more time,
writing a little plan for yourself to figure out,
ok
well,
at the age of
14, 15, 16
this is what I need to do to start thinking my business.
Or
how am I going to make myself a soccer player?
And then at the age of 18, 19
this is what it needs to happen.
And then at this age
and what kind of networking do you need
to do?
What kind of help do you need?
So both a long term goal
like yours, or short term goal
like this example here with Mike.
It's good to write it down and figure out what are the
steps you need to do to achieve your goal,
and how much is it going to cost.
Is it really attainable?
Right?
Maybe right now
you can't become the professional soccer player
or basketball player because you're not of age yet
and you haven't trained enough.
But that doesn't mean you may not be able to do it
2 years from now,
3 years from now.
And you need to be thinking of
how reasonable is it for you to achieve this goal.
So for example,
here,
Mike,
he saves his money because he's perfectly fine able
to work.
He pays for the new tires.
And he actually
went around and looked at several places,
three businesses near him and said,
yeah,
here's the one that I'm going to go and get it done.
So for you to be a soccer player, you're going to have to be thinking
Okay,
how much could I get in soccer training
just playing with my friends?
That's a kind of training.
How much soccer training can I get at school?
Maybe you already have a soccer team there.
So that's another...
It's free...well, it's technically not free.
It's your parents taxes that are paying to go to that
school.
But you're not having to pay extra.
And then you might have to think
well, hang on,
maybe the soccer at
my school isn't an offer.
Maybe there isn't soccer.
What else can I do here?
Where can I go
do some training of soccer something?
Do I think I'm good enough that I could get a scholarship
to go to school?
Or even if I don't get the scholarship that I can play
soccer at a particular university.
So it's important to think about these things and
write down the plan for yourself.
As to what are the different
things you need to do to achieve your goal?
And then to try to put some dollars behind each of these steps.
So try to figure out.
Because being a soccer player or professional basketball player
you got to need certain kinds of athletic clothes.
You got to need sneakers.
Maybe you need to go to the doctor a couple more
times a year
not just for an annual physical,
but to check
because obviously you're using your body a lot
to play these sports.
So all those kinds of things are things that are important
for you to think about.
And then to try to put a dollar value to that.
And then along the way,
it's good to think,
well
hang on
is this goal still relevant?
Maybe when you're 5 years old you wanted
something.
Is that still what you want to do now?
And then right now
you may want to be a soccer player or a professional
basketball player,
start a business,
it's good to check next year.
And in the coming years
is this still what you want.
If you do,
that's great.
And you keep reevaluating what kind of resources
you need to achieve this and how much it costs.
In the simple example
when Mike wanted
to replaces his tires.
They worn out.
And the good thing is that,
guess what,
when you have better tires
it's better for your car.
It's more fuel efficient.
And it reduces the risk of getting a flat tire in the
middle of a forest.
You know,
when you try to go up the mountain or anything like that.
What's the deadline for reaching the goal?
By when do you need to take action?
If you're thinking,
you know what,
I think I want to start a business after college,
after graduate school.
Well, guess what?
It's not something you have to do right now.
You can periodically think about it.
But if you wanted to start a business right now or tomorrow,
then you have to
move.
Because the deadline is right around the corner.
As opposed to something you think
you want to do 10 years, 20 years from now.
Being a soccer player,
being a professional basketball player,
because you're using your body to do this.
All right,
as opposed to starting a business,
sure
of course
I'm involved using my body.
But it's not
demanding
like physically demanding
that is like a soccer, professional basketball player.
If you want to be...
Those are things that you want to start pretty young.
You want to start now.
You want to make sure your training.
You're doing all the exercise.
You're getting all the advice. Well, start a business...
You can start a business at any age.
So long as you're
healthy
and you get the resources.
So it's important to think about the time
the goal
the time goal
for these things.
And so that's why I said
you have short,
medium and long term.
Short, as anything that 3 months or less.
Gee,
I really need tires
and I'd better get it done in a month.
Medium,
3 months to a year.
You know what?
I really need to finish that paper for school,
or I'm not going to graduate.
Right?
So that's I know that it's September.
And I know that there's a big paper
that's due sometime in the spring.
That's a medium term goal.
Long term
is more than a year, like you want to become
a professional basketball player.
Probably when you're in your late teens or early twenties.
So that's something that is more than a year from now.
And
that helps you to say,
all right,
well then,
what are the resources I need for that short term,
medium term, long term?
And how much are these things going to cost?
And it's good if you can keep a diary or something,
where you can periodically
write about these things.
Keep track of them.
It's quite useful to see
what else you need to get done to achieve those
goals.
So having these goals
helps you in terms of finances.
You need to set priorities, on the scale of 1 to 5.
How important is it?
You know
more you think about it,
you know what
being a basketball player,
being a soccer player
isn't that important to me.
So it may be a want.
Maybe you just wanted to be a hobby.
Maybe you just want to be able to play with your friends.
Or the opposite.
You may say
no
absolutely not.
It really is very important for me. Then you score
a 5.
The more important it is for you.
That means that you really have to spend more time
thinking about all the things you need to get done.
All the training you gonna need.
All the sneakers you gonna need. All the time you gonna need.
Your parents drive you around
until you yourself can have a car
and you yourself drive.
All of these things
are things that you need to put a dollar to see how much
it's gonna...
it's gonna cost.
If it's something that you end up saying,
this is kind of average for me or less.
Then
maybe it's not really a goal that you need to work on
right now.
And it's really more likely to be a hobby
rather than a big objective.
Any comments, questions?
Okay.
I see that it's two forties
So what did you take a quick break to 45 just so you can
rehydrate and all that
and then we'll get into spending and cash flow and
get into some some balance sheet and income
State information
okay
so we'll restart
it will start to get a 246
I just
see that. It.
just to give you five minutes. Thank you.
and there.
So
we want to talk a little bit now about planning your
spending and cash flow.
And in anywhere here
where if I feel like we've already talked about it,
I'll skip those slides.
But so it's very important to plan.
And it's not always so easy.
But especially as you get older and you start working
more and you have your own money,
it's very important to be thinking of planning
in advance
to think of
as we said
setting those goals.
um
Because
a lot of these things
will cost money.
And you want to try to basically avoid traps
as we said earlier,
you don't want to end up in a situation where
you bought food, or you bought a phone, or a clock,
or a watch,
or something that you end up realizing,
wait a minute,
I didn't even really need this.
And you may not be able to return it.
And so
you want to be thinking of yourself saving money for
any kind of emergency.
Because that's something the older you get
the more important that is. So managing your cash flow.
When we mean by cash flow is how much money is coming
in and how much money is going out.
Right.
It's a balancing art.
Not so easy.
And so you want to think of,
even when you really
desperately think you want to gain,
or a particular trip,
or a particular outfit.
It is
again
back to this idea of
do you really need it or want it? So that you always,
as you get older,
you want to make sure you have some cash in the bank
for emergencies and not have to...
and to avoid borrowing.
So we've already talked a lot about goals. What are the goals?
How long will the plan be used?
This plan that you put together
is just a short term
3 months or is for a year?
And you're going to have to be thinking,
well,
how much income is available while I work.
And
this is how much I make, by babysitting,
or coaching kids,
or whatever it is that you do.
How much income is available and income maybe your
parents are giving you an allowance as well.
In the next part of your spending plan as well.
What are the anticipated expenses?
Some of you said
I need to spend 5 dollars every day for lunch.
I know that 2 weeks from now
I'm going to have to buy
you know
some kind of a book or computer,
etc.
And then
periodically,
depending on your time frame
is a 3 months, a year, etc. You may want to look a couple of times during that period
of whether you need to make changes.
Is there something you need to adjust in the plan?
Maybe the price of the book,
the price of the computer went up,
or maybe went down.
Or maybe you don't really need it.
This second
you could wait.
So
a plan of spending.
Any kind of plan that you ever creating in your life is
not set in stone.
It's something that you can periodically re-evaluate
and see if you need to make any changes.
Maybe you get a surprise
that your aunt or uncle decides to give you 100 dollars for birthday or for a special
holiday.
Or now you have more income
you hadn't anticipated.
That's a good surprise.
As opposed to the price went up of what I wanted to buy.
And now I'm going to wait longer to be able to get it.
But it's good
to have a plan answering these things.
Predicting my income.
If you have a regular job
and so long as you have that job and the economy is good,
then you know you've got a paycheck.
Usually twice a week,
or once a week.
Maybe you have allowance.
And maybe you're in a place where you can go do some help.
Some gardening.
Help with some carrying round of packages.
Help coach a lot.
I have seen a lot in some of these places where high school
kids...
parents are hiring high school kids to say,
oh please,
come and play with my smaller kid for a little bit.
So those
are what we call odd jobs.
Odd meaning
they're not on a regular every week.
They're just kind of sporadic.
Maybe they're just in a couple of weeks
in the summer.
Things like that.
Maybe you have friends
or family
that giving
you cash or gift card.
As you get older
heaven forbid you have a disability.
You've been paying insurance.
You get the money. Or as you get older and you retire,
all the money that a variety of taxes you've
been paying.
Then you can get such security benefits.
Or when you're out of a job.
A lot of people right now,
are getting unemployment benefits because there's
millions and millions of Americans that are without work.
Maybe there's some things that you could sell.
There's an old bike you don't need any more.
A helmet.
A baseball bat.
And if you already have a savings accounts.
So all these things here.
Things that are income.
And so you could periodically look at it every month
and see how
this changing, so that you can try to figure out
how much money are you really going to have.
How much income are you going to have.
There are different kinds of income.
You have active income.
And that's
hey
I'm working right now.
And I'm getting that money right now.
And that's what we call active income.
You have passive income that doesn't require any work.
So for example.
Or little work.
So let's say that I owned an apartment in New York or
somewhere else.
And then so long as those people are themselves have
money.
They're just sending in the rental income.
But I myself am not having to work there.
It just... I own the property and I'm getting paid that
rent.
And then we have what's called investment income.
So this is
I've invested in stocks,
which is what a company issues.
And I now have some ownership in that company.
Or the company wants to borrow money from investors
and so it issues bonds.
And so if the market is performing well,
then I'm also earning money from... earning income from
the stocks and bonds.
Most people disproportionally
have income streams here from income that's
from work.
And so
what your parents do?
Probably without you even knowing
is that they have to estimate the different expenses
that they have.
There are some that are fixed
that you've been told us what they are.
And every month it's going to be the same thing.
So let's say that your family
or you go to the gym.
There's an annual membership.
But there's a monthly membership
and that's what you're going to pay.
It's not that it's changing every other day.
Car loan. You borrowed the money.
And
you know
you have to pay 100 dollars, 200 dollars
every month.
That's what you pay. Student loans...
you'll also be told.
here's a minimum that you have to pay back when you
have to start paying back.
Or if you have a mobile phone where it's unlimited,
you know
you pay 100 dollars every month.
A lot of those are
what we call fixed expenses.
We know exactly what those regular payments are going to be.
Maybe internet.
I got to pay this particular service.
Then there's things that are variable.
I buy food once a week, minimum.
But I don't pay
the exact same amount every week.
Sometimes I feel like I'm going to give
my kids a treat,
a little extra ice cream.
Or maybe I decided this kind of meat,
this fish, things like that.
So these are what we call variable expenses.
It's not the same amount every time.
Entertainment.
We are right now under Covid
what entertainment.
But when it wasn't covered.
Yeah, sometimes we go to the movies. Sometimes we go to a restaurant.
Sometimes we take travel.
We travel.
So then,
of course, those costs money.
But it's not a set fee every time.
Some people have a cell phone bill
pay as you go.
And so those
might be variable
if I use this many minutes.
There's also what we called periodic or occasional expenses.
Auto repairs.
Surely you've seen your parents
sometimes they've got to go fix a tire.
They have to fix the air conditioner.
They have to fix the radio.
So fortunately
I hope those are not things that are happening
every day in a week.
But you do have those occasional expenses。
Car insurance.
You have insurance for the car. If you're going to go
to the prom,
those are...
you're going to take a big trip once a year,
twice a year.
Those are what we call occasional or periodic expenses.
So let's look at it again.
If you remember back to be in the class with Michael and
Selena.
Right.
Two different people.
Michael's already a senior in high school.
Selena is
a freshmen.
So he has a part-time job (net).
Look at that little "net".
It means possibly that maybe he has to spend money
on the car that he uses to get to work,
and he has to buy gasoline and all that.
And he gets paid.
So net
meaning he gets the income
and it covers those
specific expenses related to work.
So he gets 136 dollars a week, where Selena doesn't
have a part time job.
Michael does not do things that are occasional odd
jobs like baby-sitting,
pet-sitting,
walking the dog,
that kind of thing.
So that zero for him.
But she gets 100 dollars a month.
But again
it may be only certain months of the year.
Things like that.
Money gifts.
Michael gets 100 dollars a year,
whereas Selena gets 250 dollars a year.
Michael doesn't get an allowance.
He's a senior already
and younger adults.
So maybe he doesn't get an allowance, whereas she gets
10 to 20 dollars a week.
But when you add it all up.
He could estimate that his income is 544 dollars.
Add all of those different things.
Whereas hers is 160.
And that's kind of an odd
like
how do we get that number when she gets 250 a year.
Maybe it's not every year.
So the point of illustrating this is that,
you have to be estimating your income.
And it's not like you estimate your income
January 1st
and then that's it.
Every month
there could be things that are changing because of
your different ways to get
money.
I mean,
gifts,
allowance,
things like that.
Now each of them,
of course,
because of their different age
and all that,
they also have different expense.
They are different people,
so they have different expenses.
So,
for example,
he has a lot more expenses.
If you look here
just eyeballing 100 dollars on entertainment and
personal care, and car insurance, and food
and all that much higher than she does.
However,
because the estimated income is so different.
He would actually still be ok.
He would end up having a difference of 134 dollars.
She would actually be in the negative,
meaning she would have to borrow that money to cover it.
So this is a very simple table.
But it's something for you to be thinking about,
as to what all...
what do you think your monthly...
think of draw something like this
for yourself.
What are all the different sources of income you have,
including allowance,
any part time job,
gifts from family,
et cetera.
And then think of all your expenses.
And this will start to tell you,
wait a minute,
you're spending more than you really have.
And over time,
here look,
you know what,
she's only short
18 dollars.
Meaning she doesn't have 18 dollars.
Doesn't seem look really big deal.
But over time again,
if you were to multiply that times 10 months,
now we're talking 180 dollars.
So the more and more that number is negative.
It gets harder and harder to be able to cover it.
And you're going to have to do some drastic
drastic changes.
So things to think about is you have to pay yourself
first.
P Y F
what does it mean?
You should think about setting aside money for the
big ticket items. You want to buy a TV for your room.
You want to buy big
expensive video game.
Avoid borrowing money if at all possible.
Now
the older you get,
it may not always be possible because some of these
universities are costing 70,000 dollars a year,
80,000 dollars a year.
If you have that money and your parents can pay that
flat-out.
Good for you.
Congratulations!
Most people don't.
So either you or your parents would borrow
a little bit of money or a lot.
But
you do
want to be thinking about if you can avoid borrowing.
It's for the most party.
It could be a good discipline to have.
V for very wise to save a little
now for later.
Be thinking about even putting 10 cents,
25 cents,
or a dollar here.
Just to
develop that habit
of being able to save money.
And then E.
Every time you pay,
you pay yourself first.
You have more money to spend later on.
Things that are really important
for you.
Make adjustments. Sooner or later
you realize you have to make adjustments. If your income
is larger than your expenses.
That's fantastic.
But there may be
time when your expenses go up more than
you thought.
All of a sudden,
you have to go to the
doctor more often.
Or your rent goes up unexpectedly.
Things like that.
And so that's why it's good to look at these expenses.
Remember the variable when some of them can go up unexpectedly.
You can also have nice surprises of your income being
higher.
But once you get into a job, it is very typical.
Once you've agreed on what you're going to get paid,
that's typically the set amount.
So the idea is you're trying to be thinking of how you
maximize the money that keeps coming in.
So that you have good cash flow.
and you're trying to reduce all these expenses,
especially
unnecessary expenses.
And obviously,
it's always better to be in a situation where you have more money than you spending,
so that you're all not having to borrow,
not having to get into difficulties.
In America, one of the things that's important for you to understand
is
once you're 18 years old,
all of a sudden you're going to start getting all kinds
of credit card offers from companies.
I remember going to college and I was barely
there
and I was already getting notices under my college door
and in the mailbox for all kinds of credit cards.
So it's very seductive to say,
oh
great,
I'm independent.
Apply for the credit card
just because I'm going to college.
There were kinds of deals
even though I'd never...
even I hadn't worked
or whatever.
And next thing you know
I'm going to charge that
pair of trousers,
that pair of jeans.
Next thing you know
that credit card comes to you.
You got to pay. And if you don't pay,
that stays on your record for 7 years.
There's something that's not part of this class.
I know it's part of another class.
It's called the FICO score.
And so if you don't pay,
that stays on your record for 7 years and it will really
affect your ability to take out another loan or another credit card.
So you do have to be careful of that.
So
Let's look at... I'm sorry.
What happened here?
I'm going the wrong. Somehow
I got out of order in my own
slides. give me one second.
Okay,
it's important to keep track of our finances.
That's something we had
said before.
So how do we start?
What are some basic ways to start?
Well,
we have to think of these different individuals.
So here,
for example,
earlier
we had said for you to have goals.
There's no different for adults.
So here we have
Jack is 29 years old.
He works
as a sales executive at a company.
He's been going out with someone. He wants to get married.
So he wants to see if he can buy her an engagement ring.
So
he wants to figure out
what are the different things.
So he found
an interesting article about how to make
a personal income statement.
So he just wants to have a template so that he can be
thinking of
what kind of...
how much money does he make?
What are the expenses?
And hopefully you want net profits.
Meaning you're receiving more than you're spending.
So in an income statement,
there's different ways to refer to an income statement.
When you're talking about a business
you talk about an income statement.
That's all the money that's coming in.
And how's the money being spent.
So the basic formula is also what we call a profit and
loss statement, where you have revenues
different money coming in and the expenses.
Hopefully you get more money coming in
than what you're spending.
Then you have a profit.
And there's different ways to refer to
this income statement.
Earnings report, statement of revenues and expanses,
operating statement, and even for use as an individual.
You're not a company,
obviously.
But it's good to have an idea of what is your own income.
Just like we were talking earlier.
What is money that you're making from little jobs
and allowance and gifts and things like that.
So typically
for a company,
this is what an income statement really look like.
The operating revenue is the money that the company
made.
Let's say,
a Walmart
for example.
They have different products that their selling.
Maybe they sell services like...
you know,
going to help with some repairs.
That's a service.
And then you have the cost.
Wait a minute.
You have to spend money to buy those goods that you're
selling.
And that's what we called cost of goods (COG).
And you have to subtract that.
Now you're down to eight thousand. And then you have all
kinds of what we call overhead.
So you got to pay a rent,
insurance,
the utility,
the water. These days
internet is almost a utility.
And so you end up with operating income of 6,000 dollars.
And let's say that you had also borrowed money.
Walmart borrows lots and lots of money.
Especially right now that interest rates are slow.
And it's got to pay interest on those loans.
And so, finally,
would you end up with
after all that is, you have your earnings before
income tax.
And then you have your income tax. So you would subtract that.
You'd end up with 5,000.
So now you're not a company.
So you wouldn't do something like that.
But the idea is roughly...
is obviously the same.
That you're calculating all your different revenues,
all your different expenses.
The very bottom you'd have
what's called net earnings.
Net income.
And
for an individual like Jack here.
It depends on how he earns his money.
Some people
earned the same by weekly amount of money.
And so that's a fixed salary.
Others are paid by what's called commission.
So depending on how much ...
like Jack here is a salesperson,
so depending on how much he sells.
He's going to get a commission.
And so here you see that he makes 2,667 dollars a month.
And he has these commissions,
which obviously means Jack works really hard.
Because otherwise that's what we call a variable
salary.
He's not getting that $1500 every time.
He also gets an allowance for travel.
He gets a bonus depending on how well he does.
And then maybe he also gets dividends,
meaning he maybe own some shares
and he's getting paid back.
So his total monthly income of 5,000 doesn't
mean that his bank account increased by that amount.
Whatever income he gets doesn't mean that he automatically
puts it all in the bank, because he's also going to have
different kinds of
expenses.
And so you always have to be thinking not just
about the income,
but also the expenses.
Look at all these expenses,
I won't read you each one.
But it's got a lot going on.
He pays his rent.
And there's insurance and his transportation,
incidentals or things like...
things that may come up like fixing a car,
things like that.
So his total monthly expenses are actually over 6,000
dollars.
And so when you look at everything.
When you then put it together
to do an income statement,
as if you are a company,
the net result is that he's in the negatives,
he's in the red.
As you see here.
He has a deficit.
It's a startling thing.
How is it that you may be wondering...
hang on,
how can he live like this,
where he's spending more than he's earning.
And any thoughts on that?
How is it possible that he has this income here?
And he's got all these expensive
and his actual month amount this here.
This example is in January.
He had a negative amount.
Somebody says
maybe he has to draw on to his savings.
That's right, to cover that.
That's right.
Very good observation.
Because this is an income statement.
It's not a balance sheet.
We don't know what he has in savings and investments.
Very good.
But he has a deficit.
He's got to cover that.
Anybody else think of
how is it that he can
spend more than he earns.
Any thoughts?
maybe, as a trust.
he has a word
go ahead on her aren't you
Are you got cut out so that a person
he has a lot.
so, Sir.
Kenya, mute yourself.
I'll give him a second to see if I can get him.
so sad
I'm putting it on the chat box
I put a trust fund
Thank you for that
Yeah
I was hitting unmute
but for some reason you are not in meeting
That's right
Maybe he's lucky enough to have a trust fund。
His parents were wealthy enough, or some
relative
was wealthy enough and set up a trust fund for him.
And so he can dip into that.
Any other thoughts? There's an important one here.
Okey.
credit card.
Somebody put "loans". That's right. He can go borrow some money
from relatives,
friends, and we would not see this here.
Very important.
We don't see that he has a loan now.
If he had a loan with a bank,
we would see this in the expense area.
Because we would see that he's paying interest on
that loan.
Very good.
But credit card.
That's how Americans are some of the most indebted
people in the world.
Because it's very easy to get a credit card.
So long as you pay even just the minimum.
So long as you don't default miss payments.
You get away with it for a long time.
But that's how Americans become very
very indebted.
It's really quite a dangerous thing.
Because at some point,
you got to pay this back.
The more you have things on a credit card
you're paying the interest on it.
That's in a separate class,
and some of you may have come to the class I gave last week.
But there's a thing called compounded interest.
Where you're paying interest on the interest.
And so those expenses start to be big.
What's the difference between an income statement
and a spending plan?
So let's go back to that slide where we saw that
here is the income. All the different ways in
which Jack makes money.
But now you have a spending plan.
What you have to do is compare your actual income
with what you think you may become bringing in, and
compare your actual spending.
Right now how much is he spending? He's spending money on
going out and rent and insurance, and a spending plan
is actually making adjustments.
Wait a minute,
I'm just
not making enough money.
I better either try to maybe take an extra job at night
or the weekend.
So you can adjust how much money can you get.
Or you figure out,
you know what,
I'm spending too much on those daily lattes,
and the monthly shows or the movies,
and buying all these games.
And I'm buying all this.
And so you got to think about those things.
So it's increasing your income,
decreasing your expenses,
or a combination of both.
Somebody on the chatbox is asking,
what's a trust fund?
very important question.
If you're lucky enough,
and it's a minority of people around the world.
But if you're lucky enough,
parents or relatives
that could be a grandparent, will set up
basically...
think about it...
think of it like an account,
a bank account.
They will set up an account.
You get a lawyer to help you set up the documentation
and you will save money for an individual.
So I'm just going to pretend you have a grandmother,
grandfather,
and they've decided that they would like to set up
some money so that you have money
for to go to college,
for example.
Or maybe they just want to set aside some money so that you
at the age of 16,17 can buy a car,
whatever.
So they will set up an account.
And there will be very specific documentation on
how that money can be spent.
Some people will set up an account and say,
Ok,
this person can start using that money at the age of
21, 35,
et cetera.
So if you're lucky enough that somebody sets up a trust
fund for you,
that's great.
And so there are people who are very...
whose family was very wealthy.
And then when the child
when the individual turns a certain age,
can use
that money.
So that's what basically what a trust fund is.
What's the balance sheet?
We talked about the income statement.
That's where the money's coming in
and where is it going out. Here,
We've got Jack.
And we also have to look at what's called the balance sheet.
A balance sheet
just like a picture.
If I took a picture of you right now,
that's what you look like
this second.
You may not look like that
a month from now,
certainly 5 years from now.
So it's a snapshot of what your financial position
is at any given time.
It only shows that one single moment.
And so basically what a balance sheet is
your assets and your liabilities.
What's an asset? One of you mentioned already.
Savings.
That's right.
If I have cash at the bank,
that's an asset.
If I have a savings account,
if I have investments,
those are assets.
But I also have liabilities.
That credit card bill,
now that's a liability.
A student loan.
A car loan.
Something that I owe is a liability. And assets minus
liabilities are my actual net worth, or a company
net worth.
And so here
different kinds of examples of assets.
I could have cash.
Cash in a checking account.
Money market bonds.
Bonds.
These are all things that have a value.
Different kinds of investments.
Jewelry, cars.
Some of you may collect antiques or coins.
Anything like that.
Those are all called assets.
Some of these assets are more liquid than others.
That's also something else is very important.
If I have cash,
if I have a savings account,
those are things that if I really needed for that emergency,
medical care or something like that,
I have it right then and there.
If I have stocks,
or I have a house,
or I have a bicycle,
a car,
jewelry,
anything like,
those are not called liquid assets.
They're important.
It's good to have them.
But if I really had an emergency,
I may not be able to sell the car
this second.
Liabilities are... we have a mortgage.
If you take a personal loan.
If you took a loan to start off your business and
subtracting those liabilities from the assets.
Assets minus liabilities are telling me what is the
net worth. The difference between assets and liabilities.
Obviously,
you want more assets than you want liabilities.
For a company or for an individual,
you have to calculate your net worth.
And that's something when you want to borrow money
for a car, a house,
or anything like that, or student loan,
you would be asked to calculate your net worth
to figure out.
So for example,
here,
Jack
you remember him.
He was still trying to buy the ring to try to get married.
He has cash.
He has a current account.
That's a kind of a checking account where he could
just withdraw money any time. He has a savings account.
He has a retirement account.
He's sort of been planning to save some money for when
he retires.
So he has 68,000 dollars already. That are his
assets.
That a little over 68,000,
so as to calculate it.
But look at the liabilities.
Remember
I told you about the fact that he's been
spending all this money and
how's this spending more than what he's earning over
on the income statement.
It's because he has credit card No.1,
No.2 or No. 3.
He's still paying for student loans. So he has more liabilities
than he has assets.
That's tough.
He has to work it around so that eventually has more assets
than liabilities.
And that's a very typical American
have all these credit cards.
It's good and it's bad.
Meaning you can
end up in a situation where
you want to be able to have more assets here.
So for example,
I'm sorry,
my mistake,
he has 68000 asset
and 65,000 liability.
He's actually in good shape in comparison.
And because his net worth is 2,700,
almost 3,000.
But it's still kind of a narrow, meaning
it would be great if his liabilities were 60,000,
as opposed to 65,000.
But at least he's in the black,
as we say.
In other words,
he does have more assets than he as liabilities.
But the credit card right here.
That's the dangerous thing.
Because that costs. That interest is really
really high.
Something you want to think about.
It's very tempting when you get that first offer
to get a credit card.
And sometimes they waive the annual fee for the credit card.
Does all kinds of ways to entice you to get a credit card.
Is it important to have credit?
Which is something I discussed in the class last week.
For those of you who might have been with me.
To have a credit card so that you can show that
yes,
you periodically charge something and you pay it
off immediately,
or you pay it
so long as you pay it on time. All that is good.
Because you want to build that
credit records.
So eventually
when you get older and you want to buy a car
or a home or something,
you want to be very
very careful about using that
credit card.
That's how Americans get very
very in debt and can get into a lot of trouble.
But here our friend Jack,
our imaginary friend Jack,
actually
has more now.
If you look at Bill Gates,
he's in much better shape than Jack.
We're talking about billions of dollars.
What is his net worth is?
So he's obviously done pretty well.
So he doesn't have to worry as much as Jack does about
whether he wants to buy one or multiple diamond rings.
Should he choose to do so.
Having a positive net worth is good.
It shows you're on the right track.
Can you get better. Great.
Negative net worth
is not an automatic financial death sentence,
as it says here.
It's not like a horrible thing. If it's a really narrow
gap.
But you got to be careful.
Because that really does mean you have to do some serious
thinking about
how are you going to pay down your debt.
So that you are not stuck with that debt.
And heaven forbid, you get an emergency.
Most Americans end up declaring bankruptcy.
Those that declare bankruptcy,
that is that they have to go to court and say,
sorry,
I don't have any money and
I can't pay any of my debts.
It's not because people are irresponsible.
Those that do declare bankruptcy,
it's not because
they had five credit cards
buying all kinds of video games and phones
and cars
and going on wild trips.
It's actually because health care is so expensive
in this country.
And so its medical emergencies that end up sometimes
leading people to declare bankruptcy.
So that's an interesting thing to understand.
That's why it's important to be thinking of how you
want to have more assets than you do
liabilities for those possible emergencies.
Wow, we actually finished 11 minutes early.
Or almost finished.
So remember
what's the difference between a balance sheet and
an income statement.
The balance sheet
tells you what assets you have.
Do you have cash? Do you have a checking account?
A savings account?
Do you have any investments in stocks and bonds?
Do you own a bicycle,
a motorcycle,
jewelry,
art,
yachts?
Anything that you own
has a worth, has a value.
Those things that are cash,
that are US treasuries,
bonds of the US Government.
Things like that.
Those are things you can sell pretty quickly.
And then you can use for your immediate needs.
Those are called liquid assets.
You can convert them quickly to cash.
If you had to pay your obligations,
and your balance sheet also has your liabilities.
I owe my sister money.
I owe bank money.
You know.
I have credit card debt.
Car loans, all that.
Those are your liabilities.
And assets
minus liabilities
are your net worth.
Your income statement is how much money is coming in.
Hence the word income.
How much money is coming in from your work.
From any kind of work you do,
from friends,
from investments that you have
and you're making money of them.
And then how much are you spending.
I'm spending money on rent and trips and food and phones.
So that's the difference.
Your balance sheet and your income statement.
And both of those are things that are important for
you to be thinking about
as you get older.
But even now you can start to think of what are assets
that I have.
What are liabilities that you might have.
And then for the income statement,
how much money do you have coming in and how much money
do you have that
you know that you need to pay out.
That all the different kinds of expenses and things
like that.
Those are things that are important to be thinking
about already.
Because they'll help you develop good habits.
Right
That's what we want with a good habits for you in terms
of savings and in terms of earnings.
Anybody have any comments? Questions?
Okay
in the chat box.
Could a couple of you
write down some assets?
Assets that you think you have.
What do you think you own right now.
That if you really have to sell for an emergency,
you could sell.
What are some assets that you think you have?
Anybody of the chat box and any assets that you think
you have?
Gaming system.
I knew somebody would eventually say that.
That's right.
You have a gaming system.
It doesn't mean you want to sell it.
I am sure you love it.
You have an iPad.
That's right.
Those are assets. And those kinds of assets...
Your gaming system, your iPad would be what we would...
if we were talking about somebody has an old iPad...
If you were thinking of things that you,
in terms of assets,
on that balance sheet.
Those things would classify as long term assets.
There are things that are fixed assets.
There are long term assets.
It's not something that
right this very second you make an announcement on Ebay,
or you go outside of your house and say,
hey,
I have an iPad.
I want to sell it. And right that second
you convert it into cash. Whereas,
other examples of cash that you may have are money.
Actual dollar bills that you may have in a piggy bank.
Or some kind of a savings box.
Or maybe in the bank you have a checking account.
You have a savings account.
Those are what we called liquid assets.
Liabilities, I hope you don't have any.
But it's possible if you owe your sister money,
your brother money.
You took out a loan from your dad or mom.
So those would be examples of liabilities.
And any comments?
Any questions?
Anything else I can answer for you?
Okay,
all hang out here a couple of minutes.
If anybody else has any comments or questions otherwise.
Enjoy the rest of your afternoon.
I don't know if you have another class
at 3.30
or if you're done for the day.
But either way,
thank you very much for participating in the
chat box I appreciated.
And I might be seeing some of you next week.
We have a couple of interesting classes that we're
going to be discussing. For any of you who are interested
on balance sheet and income statements and all that.
I think again
for some of you,
I recommend
that you go to
www.federalreserve.gov
And there are a couple of good comic books that talk
about some of these concepts that
could be useful for you.
And even though it's a comic book,
they used a lot in different kinds of middle and high
schools to teach concepts about credit
cards and balance sheet and income statements.
Thank you very much and enjoy the rest of your afternoon.
My rozario homework for the students that I don't
think so
unless you need me to do is to put some in
And I wasn't asked to give homework
but if you need me to give them something to read
just to reinforce concepts
I'm happy to do that
No
it's okay
we'll let the students work on their projects
great kite, everyone.
thanks a lot everybody Thank you all