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Chris Webner » Money Matters: Living & Building Wealth in Guthrie Co.

Money Matters: Living & Building Wealth in Guthrie Co.

 

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Why Worry About Your Salary If You Know How to Manage Your Money?

Due to fears that a career interest of ours may not pay well enough to live on, these activities give that concern real data to consider; A&B) how will I live?, C&D) can I really ever retire?

 

  1. A) Living with your pay using the Living Wage -

See what size of family your possible job scenario could care for without public assistance by matching the Living Wage (http://livingwage.mit.edu/states/19 with below chart) wanted to the salary of your future work at Bureau of Labor & Statistics (Iowa)

  • What is a "Living Wage"? _____________________________________________________
  • Family Size - choose (up to 4 or 5):  _______________
  • Living Wage for Chosen Family    ______________
  • Annual Wage 10th Percentile (beginner)   ______________
  • Annual Wage 50th Percentile (median)     _____________
  • Annual Wage 90th Percentile (expert)   ____________
  1. Summary Sentence: ______________________________________________

Example: Working as an Interior Designer (https://www.bls.gov/oes/current/oes271025.htm), to take care of family with 2 adults & 3 children with a  living wage is $26.45. - that is almost a realistic wage at the 50th Percentile [$24.76], easily realistic at 90th Percentile [$45.09], but not realistic with 10th Percentile beginner [$13.10]). As a beginning Interior Designer I would probably need the other adult to have a wage like mine or higher.

Fact: The average size of an Iowa Family is 3 people (https://www.iowadatacenter.org/quickfacts).

Chart Below is Iowa, Guthrie County, Living wage (http://livingwage.mit.edu/counties/19077)

  1. B) Use weblink to see chart webpage & select necessary costs of living in Guthrie Co.:

Compare your chosen costs and wages.

  • WIll you need a second wage earner in your family? Explain: ___________________
  • WIll your wages cover your costs? Explain: _________________
  • When would you project your wages will cover your costs (thinks of lower 10%ile as beginner, etc.)?
    • Explain: _____________________________

Hourly Wages

1 Adult

1 Adult 1 Child

1 Adult 2 Child

1 Adult 3 Child

2 Adults (1 Works)

2 Adults (1 Works) 1 Child

2 Adults (1 Works) 2 Child

2 Adults (1 Works) 3 Child

2 Adults (1 Works Part Time) 1 Child*

2 Adults

2 Adults 1 Child

2 Adults 2 Child

2 Adults 3 Child

Living Wage

$10.84

$23.46

$26.56

$33.26

$18.03

$21.20

$24.29

$26.96

$16.40

$9.02

$12.63

$14.90

$16.96

Poverty Wage

$5.00

$7.00

$9.00

$11.00

$7.00

$9.00

$11.00

$13.00

 

$3.00

$4.00

$5.00

$6.00

Minimum Wage

$7.25

$7.25

$7.25

$7.25

$7.25

$7.25

$7.25

$7.25

 

$7.25

$7.25

$7.25

$7.25

  1. C) Retiring with Wealth for Regardless of Our Pay

Regardless of our salary, we all can take advantage of the compounding interest that is part of our economy.

The classic example to help  us understand compounding interest is the “Choose a Penny Doubled Every Day for 1 Month (30 days) Or Choose a Million Dollars. What you would choose? Here is the math explaining the doubling penny scenario (http://mathforum.org/dr.math/faq/faq.doubling.pennies.html).

The U.S. stock market has increased people's money an average of 10 percent when they buy and leave money invested to grow over time (https://www.nerdwallet.com/blog/investing/average-stock-market-return/), or lower and closer to 7 percent if investors are not as patient. At the lower 7 percent annual interest it takes one decade (10.2 years) for money to double (Rule of 72, Investopedia), so an average American who works until age 65 can see their investment double 4x's (graduate from university and start investing by age 25 and retire at age 65).

Well known and controversial financial adviser (time.com/money, 2013 online article), Dave Ramsey (books, radio talk show, public shows, et.) encourages all of us to invest and take advantage of our economies' growth with up to 12% interest.

Play with the possible money you can accumulate using Dave Ramsey retirement calculator (which advises investing in more successful business sector, referred to S & P 500 at up to 12 percent return each year). Here are the fields you enter your data for a calculated total:

 

Current Age (or age you plan to begin building wealth) _____

Age You Plan to Retire  ____

How Much You Already Have Saved for Retirement  $_____

How Much You Will Contribute Monthly   $_____

How Much Do You Think Your Annual Return (Interest Rate) Will Be  ___%

Amount Contributed:   $____

Amount Grown (Growth):   $____

Total:   $___

Living During Retirement: Find your “Required annual income before taxes” from the MIT Living Wage Expenses (Introduced in Part A @ http://livingwage.mit.edu/counties/19077). Multiply that amount by 0.7, to match typical retirement spending (70 percent of pre-retirement spending, of course you can choose a lower or higher percent (considerations reference @ ).  Apply this “salary” to your projected wealth amount, and determine how many years until it is all spent (in order to estimate if it will last you long enough or not).

Share your summary analysis thoughts with a sentence:

___________________________________________________________________________

 

D) Look & Then Talk about your strategy to "let your money work for you instead of you working for your money" through long term investing in the U.S. Stock Market (Share a goal and it takes on more meaning in your life!).

  1. $100 monthly for 40 years at 7 % = $422,747 ($56,400 invested, $366,346 grew/compounding interest)
  2. $100 weekly (Like Mr. Nordquist challenged upperclassmen in Spring of 2018, or $400 monthly) for 40 years (maybe Age 22 to 62) at 7% interest is $1,025,340 (your a millionaire!)\
  3. Could you invest monthly if you lived at home for an extra year or two? Making minimum wage, $7.25/hr, 6 days per week (7.25 x 48 hr/wk. = $348/wk, then by 50 of 52 weeks in year = $17,400/year). Consider that taxes usually take one third of wages ($116/week, or $5,800/year), now could you live on one third? Could you invest and build your wealth with one third? If you continued to build wealth beyond the minimum wage days, but still contributed $5,800 per year for 10 years, age 19-29 (making 7% interest) builds $97,000. Then from ages 30 to 65 never add to that $97,000, just let it grow at 7% each year...by age 65 you could have over $1 million dollars.

Proof the Dave Ramsey Retirement Calculator using this governmental tool: (investor.gov) https://www.investor.gov/additional-resources/free-financial-planning-tools/compound-interest-calculator

 

Typical Expenses 2018

These figures show the individual expenses that went into the living wage estimate. Their values vary by family size, composition, and the current location.

Annual Expenses

1 Adult

1 Adult 1 Child

1 Adult 2 Children

1 Adult 3 Children

2 Adults (1 Working)

2 Adults (1 Working) 1 Child

2 Adults (1 Working) 2 Children

2 Adults (1 Working) 3 Children

2 Adults (1 Working Part Time) 1 Child*

2 Adults

2 Adults 1 Child

2 Adults 2 Children

2 Adults 3 Children

Food

$3,050

$4,489

$6,755

$8,966

$5,592

$6,953

$8,975

$10,932

 

$5,592

$6,953

$8,975

$10,932

Child Care

$0

$6,985

$9,426

$11,868

$0

$0

$0

$0

 

$0

$6,985

$9,426

$11,868

Medical

$2,266

$6,291

$6,011

$6,068

$4,698

$6,011

$6,068

$5,738

 

$4,698

$6,011

$6,068

$5,738

Housing

$6,792

$9,888

$9,888

$13,404

$8,028

$9,888

$9,888

$13,404

 

$8,028

$9,888

$9,888

$13,404

Transportation

$4,173

$8,624

$9,053

$10,868

$8,624

$9,053

$10,868

$10,827

 

$8,624

$9,053

$10,868

$10,827

Other

$2,877

$4,652

$5,131

$6,563

$4,652

$5,131

$6,563

$6,088

 

$4,652

$5,131

$6,563

$6,088

Required annual income after taxes

$19,159

$40,929

$46,264

$57,737

$31,593

$37,036

$42,363

$46,988

 

$31,593

$44,021

$51,789

$58,856

Annual taxes

$3,397

$7,867

$8,978

$11,453

$5,913

$7,051

$8,160

$9,089

 

$5,913

$8,509

$10,183

$11,696

Required annual income before taxes

$22,555

$48,796

$55,242

$69,190

$37,506

$44,087

$50,523

$56,077

$51,161

$37,506

$52,530

$61,972

$70,553

Typical Annual Salaries

These are the typical annual salaries for various professions in this location.

Occupational Area

Typical Annual Salary

Management

$82,349

Business & Financial Operations

$59,686

Computer & Mathematical

$73,113

Architecture & Engineering

$67,681

Life, Physical, & Social Science

$56,775

Community & Social Service

$39,514

Legal

$59,296

Education, Training, & Library

$44,454

Arts, Design, Entertainment, Sports, & Media

$34,430

Healthcare Practitioners & Technical

$56,478

Healthcare Support

$28,915

Protective Service

$40,826

Food Preparation & Serving Related

$19,670

Building & Grounds Cleaning & Maintenance

$25,031

Personal Care & Service

$23,134

Sales & Related

$25,123

Office & Administrative Support

$33,702

Farming, Fishing, & Forestry

$32,677

Construction & Extraction

$42,363

Installation, Maintenance, & Repair

$43,224

Production

$33,979

Transportation & Material Moving

$33,425