Date post: | 12-May-2015 |
Category: |
Education |
Upload: | jim-johnston |
View: | 950 times |
Download: | 0 times |
FINANCIAL LITERACY
Personal Financial Discipline
PERSONAL FINANCIAL DISCIPLINE IS . . .
. . . the self imposed systematic modification of the way you think about money and your spending habits, with the goal of becoming a Faithful Financial Steward (and at the same time, live better for less , become debt free and save for the future).
It may require Doing some things you don’t want to do,
and Refraining from some things you want to
do.
REVIEW
The Enemy of Faithful Financial Stewardship is raising your standard of living by accumulating consumer debt.The principle access to consumer debt is the “Credit Card.”Personal Financial Discipline requires taking control of your Credit Card and Shopping habits.
CREDIT CARD HIGHLIGHTS
Consider a debit card or pre-paid card. Pay on time - all the time! Pay-In-Full Monthly - If you can’t pay in
full, always pay more than the minimum payment.
Don’t use credit cards for cash advances.
Don’t routinely carry your credit cards. Use a credit card register to track
spending. Keep a “rainy day” credit card.
SHOPPING
Stop Recreational Shopping. Plan to shop and Stick To The Plan. Avoid temptation.
FINANCIAL RECORDS . . .
Financial Discipline requires gathering and both regularly updating and reviewing personal financial information.
THE STARTING POINT IS BALANCING YOURCHECK BOOK
Most people are not good money managers and can’t even balance their check book.
LISTING DEBTS
Most people don’t know who and how much they owe, which is essential to taking control of your debt issues.
DEBT REPAYMENT SCHEDULE
Developing a plan to repay debt and tracking progress is an important to financial discipline.
ESTIMATED MONTHLY BUDGET
An “Estimated Monthly Budget” is a helpful, if not an essential, means to Financial Disciplined.
A FAMILY BUDGET . . .
. . . is a tool to help monitor a family’s income and expenses by planning for expenses, savings and debt repayment.
A BUDGET DOES NOT . . .
Get you out of debt Make your life better Solve your problems Constitute an end, in-and-of itself
A BUDGET CAN . . .
Offer a clearer picture of where money is going
Help “find money” by revealing waste, un-necessary expenditures and “leaks”
Provide information needed to set priorities and develop plans to reach goals
Reveal opportunities to increase income
WHAT YOU DO WITH THE INFORMATION . . .
. . . IS UP TO YOU!
YOU CAN IGNORE IT . . .
And Stick Your Head In The Sand
YOU CAN COMMIT TO . . .
. . . using the information to discipline your financial life – for the rest of your life!
Take a Stand!
WHO BENEFITS FROM A BUDGET Everyone! Some can get along without a
budget WEALTHY - They Can’t Spend It
All THRIFTY – They Will Not Spend
It All INTUITIVE BUDGETERS
Even these do better on a budget
Most people who don’t budget eventually have financial troubles.
A FAMILY BUDGET IS . . .
. . . A Family’s plan to manage the money that comes into their home.
Your Budget For Your Family ≠ Your Family Budget
A FAMILY BUDGET
It accounts for all spending (including weekly, monthly, quarterly, semi-annual and annual items) so that money is put aside monthly to pay them as they come due.
Frequently expressed as a “monthly budget,” which is a “yearly budget” divided by 12.
ESTIMATED MONTHLY BUDGET
An “Estimated Monthly Budget” is included in handouts.
There are many other good forms.
BUDGET GUIDELINES
BUDGET GUIDELINES
BUDGET GUIDELINES
BUDGET GUIDELINES
BUDGET GUIDELINES
ENTERING FINANCIAL INFORMATION
Looking For 1/12th Annual Totals
Weekly Sums X 4.33 = Monthly Equivalent
Annual Sums ÷ 12 = Monthly Equivalent
Quarterly Sums ÷ 4 = Monthly Equivalent
THREE MAIN PARTS OF BUDGET
Net Spendable Income
(Total Living Expenses)
Surplus or Deficit
AS YOU RECORD EXPENSES . . .
Find A Place To Record Everything Only Record Things Once Look for opportunities to
Eliminate Expense Items Entirely Reduce Those You Can’t Eliminate
Make a List of those areas where you can eliminate or reduce expenses
GROSS INCOME
Salary Interest Dividends Alimony/Child
Support Social Security &
Public Benefits
Pension Benefits
Other Income Giving Taxes (Income
Related)
LIVING EXPENSES (HOUSING 25% - 38%)
Mortgage or Rent Second Mortgage Home Insurance Property Taxes Electricity Gas Water & Sewer Garbage & Trash
Collection
Telephone Maintenance Cleaning &
Supplies Association or
Condo Fees & Assessments
Other
LIVING EXPENSES (FOOD) Food (10% - 15%)
Eating Out Transportation (10% -
15%) Loan or Lease
Payments Gas & Oil Insurance Maintenance, Repair &
Replacement Other
LIVING EXPENSES (ENTERTAINMENT)
Entertainment & Recreation (4% - 7%) Baby Sitters Vacations Pets Other
Clothing (4% - 6%) Savings & Investments (5% -
25%)
LIVING EXPENSES (INSURANCE)
Insurance (3% - 7%) Life Insurance Medical Insurance Disability Insurance Other
Debts Except Auto (0% - 10%)
LIVING EXPENSES (MEDICAL) Medical & Dental (4% - 8%)
Doctor Prescriptions Other
School & Child Care (5% - 10%) Tuition Day Care Student Loans Other
MISC. LIVING EXPENSES (4% - 8%)
Alimony & Child Support Toiletries & Cosmetics Laundry & Cleaning Children’s Allowances Subscriptions Birthdays &
Anniversaries Weddings & Showers Christmas Presents
Postage Accounting
/Legal Fees Education Other
RECONCILIATION
Net Spendable Income
Total Living Expenses
Deficit
IF YOU HAVE A DEFICIT
Identify Areas Where You Can Cut BackIf You Can’t Pay All - Prioritize Obligations
Secured Debt: Home Mortgage
Auto LoansUnsecured: Small Balance
High Interest“Rainy Day” Credit
CardGet creative
BECOME CREATIVE
“We just sat in the hot car for 6 hours and bickered. It was like taking a vacation, but we saved $1,000.
RECONCILIATION
Net Spendable Income
Total Living Expenses
Surplus
SUGGESTIONS FOR USE OF A SURPLUS:
Create A Cash ReservePrioritize & Pay Off DebtsLow Balance AccountsHigh Interest DebtSecured DebtsBankruptcy
Invest & Save
Why bother to budget?
So we can worrybefore we spend money rather thanafter we spend it!
BEING DEBT FREE & IN CONTROL IS SWEET
Confused?
Later Can Be Too Late!
RESOURCES
Faith Fellowship(239) 278-3638
Christian Financial Counselinghttp://www.cfcswf.org/
(239) 337-2122