Government_Leadership-8

=**Finance**=
 * Resolved: To Develop Financial Intelligence**

Financial literacy is as important, if not more valuable, than earning income. If a person is not good at managing money, it doesn't matter how much he/she makes. For example, people who make $25,000 a year think if they made $50,000 that their problems would be solved. People who make $50,000 a year think $100,000 would solve their financial issues. The truth is that a person can be wealthy or broke at any income level. It's less about what a person makes and more about what a person keeps. Spending less than you make for the long term is the way to generate wealth. This is just simple math. There are required principles to do this, such as delayed gratification, or learning to say no even when the money is available to say yes. Look at our Founding Fathers. They had the financial means to develop themselves, a community, a culture, and eventually a nation.

Listed below are 10 financial facts compiled from //Own the Dollar// and //Money 101//. (1) Students graduate with an average loan debt of over $25,000 and credit card debt over $4,000. (2) People spend 12% to 18% more when using credit cards than when using cash. McDonald's found that the average transaction rose from $4.50 to $7.00 when customers used plastic instead of cash. (3) A recent study by Harris Interactive found that 57% of households do not have a budget. (4) A Money magazine poll stated: "43% of readers who lent to family or friends weren't paid back in full; 27% hadn't received a dime." (5) The number of Americans living paycheck to paycheck is 61%, up from 49% in 2008 and 43% in 2007. (6) Personal saving as a percentage of disposable personal income is low and decreasing (at about 3% now). (7) There were 159 million credit card holders (separte individuals who owned at least one credit card) in the U.S. in 2000 vs. an estimated 181 million in 2010. (8) Average household credit card debt is over $8,000 - 75% of card holders maxed out their credit cards by 2010. (9) A financial literacy study was conducted and the results showed that those who understood and could calculate interest with credit had greater net worth. (10) Personal savings as a percentage of personal income has declined and continues to decline.

These points are evidence that most Americans have not been taught the importance of financial literacy.

__The 10 Principles for Financial Mastery__:
 * (1) Identify Net Income/Revenue. This is the income after taxes used for bills and spending. The goal is to figure out your net income to make life decisions. Without this step, a person is running blind and estimating instead of using financial facts. We shouldn't think in terms of "if-come." We must have data in order to confront reality.
 * (2) Document All Expenses. Write down all bills, taxes, and everything that flows from your money pile to someone else's money pile. Determine other payments as well. The goal is to get as close as possible to your average monthly expenses. Then, you can see your profits. It takes leadership and courage to fix spending more than you bring in. If spending frivolously is an issue, a person should start a cash allowance a.k.a. have a budget.
 * (3) Set a Financial Goal. Focus on reducing expenses and increase income. A good goal is not to spend more than 75% of what is taken in. This savings of 25% should be from net income, the income after taxes are deducted. Spending every penny is like a bobber on the water - the first financial bite pulls the entire household under water. Four months of saving 25% equals one month of freedom. This requires tough thinking on what is needed or wanted. It's important to stop attempting to look wealthy and start applying principles to become wealthy.
 * (4) Never Finance Anything That Depreciates. Being able to make payments doesn't necessarily equal affordability Paying interest on something that depreciates is a double whammy. For example, a loan for $30,000 for a car paying on for five years will have the buyer paying about $60,000 by the time it's paid off. At the same time, the retail value will go under $20,000 in resale value. No wonder many people are upside down financially. Absolutely never finance entertainment of toys or vacations under any circumstances. Finances are mathematics applied to life. Many houses appreciate in value, making real estate and worthwhile purchase. However, it's important to live within your means. Another deadly example is the lease car option. Whoever conceived this idea was a genius. A person is paying for something he/she won't own. This shows that one would rather look successful than be successful.
 * (5) Set a Price Limit on Spontaneous Purchases. Anything above the limit should be slept on before buying. Spontaneous buying from emotion destroys budgets. Is it worth purchasing or will it just take room in the garage, attic, or basement should be the question.
 * (6) Pay Off Credit Card Debt and Use Cash Whenever Possible. Credit cards have been found to increase a person's spending. The key is not to live today on next year's income, but rather live today on last year's income.
 * (7) Wipe Out All Consumer Debt Before Starting to Save.
 * (8) Know the Difference Between an Investment and an Expense. An investment has a return, while an expense just consumes money. Learning is an investment.
 * (9) Focus on Quality of Life and Peace of Mind. This is important once one becomes financially free.
 * (10) Be a Blessing to Others. Once financial freedom is reached and wealth is accumulated, charitable donations are blessings to others. Keep in mind, the purpose of wealth should be to improve society. Satisfaction is felt when one earns his keep and serves others. This mentality was the backbone of the founding era.

The following is a humorous story about a young man who learned the lesson of what it means to earn his keep. His father had built a large multimillion-dollar business from the ground up. As this father approached retirement, he brought his son into his office and told him that he wanted him to take over his company. The son was excited, but the father said he had to earn it. The son asked how and the father told him he first had to earn $10,000 before he'd tell him the next step. As the son left the house to begin his quest, his mother grabbed him and put $10,000 in his hand and told him to give the money to his father. His dad was sitting by the fireplace reading a book. The son approached with the money and asked about the business. Without even looking up, the father grabbed the $10,000 and tossed it into the fire and watched it burn. The son stood, frozen in amazement. As the money burned, the father said to come back when he's earned the money. As the son left, his mother once again gave him $10,000 and instructed him that he needed to be more convincing that he actually worked for the money. So, the boy scuffed himself up a little, jogged around the block a few times, and then went to see his father again. He gave his father the $10,000 and expressed how he really wants to run the business. Once again the father took the money and threw it in the fire. The son asked how the father knew he didn't earn it and the father said how easy it is to lose or spend money that wasn't earned. At this point, the son realized he wasn't going to get the business unless he actually earned $10,000. He wanted the business so much that when his mother offered again, he refused. He picked up some odd jobs getting up early and working late and worked and worked until he earned $10,000. Proudly, he walked to his father with the money. Like before, the father threw the money into the fire. However, this time the son jumped into the fire risking burns to save the money. His father said "I see you really did earn the money this time."

This story shows that when one earns something, it'll be treated with respect. Conversely, a fool and his money are soon parted.

Franklin was one of our most respected Founding Fathers. He saw success in business, science, politics, and diplomacy. He developed in three stages: apprenticeship, journeyman status, and mastership. One of his greatest discoveries was his franchising model for his printing business. It would provide him with the financial means to retire early to devote his leisure time to other discoveries. Had he not done this, he would only have gone down in history as not much more than a top-rate colonial printer.
 * Benjamin Franklin: Financial Management - Money and Time**

As a teen, he worked in his brother's print shop. At age 16, tired of his brother's abuse, he ran away and went to Philadelphia. In a short time, he became a prominent printer. His father refused to loan him money for his own equipment to run his own business saying he was too young to handle the added responsibilities. He became even more determined to start his own business. He realized that saving his money was the key. As a result, he eventually was able to begin his own business. He modeled one of the most popular sayings "Early to bed and early to rise makes a man healthy, wealthy, and wise.

His reputation expanded and was offered position of South Carolina's official printer for its public records at age 26. He liked the opportunity, but didn't want to leave Philadelphia. Therefore, he developed an alternate plan. He suggested to the South Carolina officials that they hire one of his journeymen, Thomas Whitmarsh. Franklin would own the business and Whitmarsh would run the day-to-day operations in Charleston. Everyone profited - South Carolina got a top notch journeyman, Whitemarsh earned money, and Franklin began his print business/franchise. Franklin got 1/3 of the profit for 6 years then Whitemarsh could buy the business but the arrangement continued.

Franklin looked for other hardworking journeymen and his franchising program expanded. These journeymen ran many sister newspapers with each following the leadership of his Pennsylvania Gazette masthead. His expensive printing empire reached from Hartford to Antigua. In 1755, 8 of the 15 newspapers printed in Colonial America were part of Franklin's conglomerate. Not all of his partnerships were profitable, but most prospered, which provided him with an income stream for over 50 years leaving him free to pursue his purpose.

Thanks to his franchises, at age 42, Franklin freed himself from the day-to-day oversight of his printing empire and he could focus on other areas of interest such as science, politics, and his community. He didn't use his new liberty to be lazy, but rather build a legacy. His accomplishments included the following:
 * He set up the world's first franchise model freeing himself from a day-to-day routine.
 * He invented the Franklin stove, improving the heat efficiency of wood fires.
 * He created the first volunteer fire department.
 * He founded an academy of learning - today it's the University of Pennsylvania.
 * He began America's first public library.
 * He discovered electricity and studied its nature through countless experiments.
 * He invented bifocals.
 * He was the first to chart and study temperatures of the Gulf Stream.
 * He published Poor Richard's Almanac yearly.
 * He wrote one of the best selling autobiographies of all time.
 * He revolutionized the mail service delivery of the colonies as the postmaster general by implementing home delivery and one-day service.
 * He was the only Founding Father to sign the Declaration of Independence, Constitution, war alliance with France, and the treaty with Britain.

He could only have done all of these things if he was financially free. He said "an investment in knowledge always pays the best interest." Franklin was more interested in moral improvements than monetary gains. He cited the Bible in a letter to his parents on his wish to serve God through virtuous deeds. He cited Matthew 25 when he wrote to his parents "Scripture assures me, that at the last day, we shall not be examined by what we thought, but what we did." He viewed one of life's duties to teach people the art of virtuous conduct and show how to practice it daily. He was an American original, a creative genius, and through his efforts, he unleashed himself upon the world stage. This is a priceless lesson we can learn from Franklin's life.

__Thinking Questions__: 1. Finances have a big impact on what we accomplish in life and Ben Franklin is an excellent example. He was able to accomplish much by living below his means. Today, we have been mis-trained about money. What are some examples of mis-training that we see in our every day lives? 2. Acknowledging that poor financial information is plentiful, one also has to acknowledge that we are presently living in one of the richest countries in the world, in the richest time in history. How is it then that so many people are living paycheck to paycheck? 3. One of the 10 financial principles is to set a financial goal. One way is living on 75% of your paycheck and saving 25%. Why is this a good goal? How can people do this if they're not currently doing this? 4. The eighth financial principle is to learn the difference between and investment and an expense. "Without investing in personal development, a person is as good as he will get." What is the difference between an investment and an expense? Give an example from your own life to give evidence to how personal development has been an investment to you. 5. Principle 10 is about reaching a point, through financial discipline, that one can begin to be a blessing. Being a blessing is to have the extra money to fund charities, causes or organizations that are close to your heart. What is an area that you would like to bless? Explain why. 6. What will you take from this lesson and begin applying in your own life?

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