Introduction to Personal Finance

Brian WalshLauren Anastasio


Week 1: Approaching Your Finances with Purpose

Week 2: Understanding Your Net Worth and Credit Score

Week 3: Assessing Your Cash Flow and Taxes

Week 4: Planning and Budgeting for Your Future

Week 1

The Benefits of Financial Planning

Financial decisions are getting more complicated and stakes are getting higher. Low education, not taught in school.

  • Be better prepared for emergencies
  • Plan better for retirement
  • Improve investment returns
  • Manage debt better
  • Reduce your financial stress
  • Understand your money
  • Save for future goals
  • Manage and repay debt
  • Invest for the future
  • Prepare for unexpected events

Common Misconceptions

1. Financial planning is investing
- Financial planning is making a plan, one step at a time.

2. I already made a plan years ago
- Financial planning is ongoing

3. Financial planning is just for the well off
- Financial planning is for everyone, for all incomes

4. Financial planning is expensive
- There are many approaches

5. I'll wait for major life events to do it
- Small healthy habits established early are more effective

Life Cycle of Financial Planning

  • Spending less than you bring home
  • Investing wisely
  • Insurance plan
  • Healthy habits
  • Balance between the present and the future

Planning in your

20s: establish healthy financial habits, find a balance between .paying down debt and saving for emergencies
30s: have a backup plan for unexpected events, prioritize between competing goals
40-50s: prioritize your own financial future
60s: planning for the unexpected and healthcare costs in retirement

Healthy habits for any age

1. Small healthy habits for long-term success
2. Consistent approach to understanding your finances to accomplish your goals
3. Establish safeguards

The Financial Planning Process

Financial Planning in 6 Steps

  1. Understand what you own, owe, and spend
  2. Identify your goals, concerns, and preferences
  3. Plot your course
  4. Identify your next best action
  5. Focus on that action for 30/60/90 days
  6. Rinse and repeat

Your Relationship with Money

Understand the Human Side of Personal Finances

Klontz Money Script Inventory (KMSI) Assessment

Based on assumptions: 
  • Money beliefs are developed in childhood and often passed down through generations
  • They are typically unconscious but connected to specific context or situations
  • Money beliefs are a primary driver of how we interact with money
  1. Money avoidance: Rich are bad/greedy, money should be avoided.
  2. Money worship: Happiness and solution is money, one can never have enough.
  3. Money status: self worth and net worth are closely linked
  4. Money vigilant: secretive and frugal, detrimental to relationships and inhibits your ability to enjoy your resources

Deep Dive into Personality 1 - Money Worship

Money is the key to happiness, but the pursuit never satisfies you. Have credit card debt, have lower net worth, prone to buying things. Redefine what happiness is, incorporate giving, increase timing between wanting to buy and actually buying.

Deep Dive into Personality 2 - Money Avoidance

Talking about money makes you feel uncomfortable, and rich people take advantage of others to achieve. There is virtue in not having much money. Often associated with people whose parents are wealthy, but not always. Acknowledge why you avoid it. Check in often. Create a ritual about being financially informed. Check in on your money habits. Come up with a list of ways where money is good. Create and hit smart and small goals.

Deep Dive into Personality 3 - Money Vigilance

Do you constantly thing about money optimization and making better choices, do you think it is important to always save. Appreciate that you need to work for your money, may believe that financial handouts are bad. Have better financial health. Higher likelihood to feel anxious about your financial future. May cause you to save, but also have financial secrets from your partner. Frugalness can lead to excessive anxiety about money, which impacts personal health and happiness which prevent you from enjoying your money. Find balance by incorporating fun into your budget. Have a trusted advisor or financial planner. Set an intention to spend less time worrying about money. 

Deep Dive into Personality 4 - Money Status

Linking self-worth to net worth, enjoy buying luxury brands or buying prioritize newest tech. Prone to excessive gambling, financially dependent on others, may hide spending from partners. You are not your net worth, focus on defining yourself. Try exercises to curb spending, pause reflect on impulses. Be healthy in emotion, physicality, and financially.

Couples and Money

Managing Finances with a Partner - Where to Start

Money consistently ranks at the top of the list for couples conflict.
  1. Know yourself, identify your money personality
  2. Share your money history, tell your partner how money was handled in your household growing up and how that has shaped you, listen to your partner's money history, identify your shared goals and values.
  3. Identify the roles you want to play in managing money together
  4. Review your finances together, go over all accounts and balances, discuss status of credit scores, talk about income amounts, share your goals. Cover credit scores and credit history, income amounts, debts, account balances, as well as goals.

Managing Finances with a Partner - Joint Accounts or Some of Both

Completely Separate Finances
Best if you are early in relationship, divorced, or prefer full control or value independence, autonomy, and privacy. Use a Transfer on Death designation for assets.

Hybrid Approach "Yours, Mine & Ours"
Contribute a percentage of income. Best for living together, carried debt or large assets into the relationship or have shared goals.

Completely Combine Finances
Combine all spending and these expenses are paid out of joint accounts, joint credit card, joint checking account. Best for married or committed life partners, you value transparency and simplicity.

Working with Your Partner on Finances

Establish Jobs to be Done, Identify the Roles You'll Each Play, Schedule a Monthly Money Date, Enjoy the Date

How Emotions Impact Your Finances

Understand and Overcoming Loss Aversion