setting financial goals
Post on 06-May-2015
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Building: Knowledge, Security, Confidence
Setting Financial Goals
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Does this sound familiar……?
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Today, we will…
• Learn how to manage money by preparing a personal spending plan (budget)
• Identify ways to decrease spending and increase income
• Avoid debt!
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After today…
• Track your daily spending habits
• Prepare a personal spending plan to estimate monthly income and expenses
• Explore ways to decrease spending and increase income
• Use budgeting tools to help you manage your money
You will be able to:
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What is a Spending Plan?
Having a Spending Plan is:
• The best way to take control of your financial situation
• About choices – choosing how to make and spend money
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Why have a Plan?
Usually for 1 month
Usually for 1 month
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Preparing a Spending Plan
Having a Spending Plan is about:• Choosing how to
use your money – now and for the future
• Knowing what your income and expenses are every month
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Set Your GoalsWant to save for a new car or a fantastic vacation? Consider your goals when planning a budget:
• Be realistic
• Be specific
• Have a time frame
• State the action to be taken
• Set milestones
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Four Steps to Preparing a Spending Plan
1. Keep track of your daily spending
2. Determine what your monthly income and expenses are the month before they are due
3. Decrease spending
4. Increase income
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Step 1: Keep Track of Daily SpendingMany people spend all their money…
and have no clue where it went!
• Where did your $50 go?• Do you know exactly what
you bought? Where it all went?
• Let’s go to the mall…
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Daily Spending Diary
Control Your Money!Watch your spending closely by using a
spending diary or log:
• You’ll see where your money goes
• You’ll be able to cut expenses to save for goals
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Activity 1: Daily Spending Diary
– Write down what you spend in a typical day
– Keep track of everything you spend – no matter how small the amount!
– Do this for 1 month– Expect to be surprised…
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Step 2: Your Income & Expenses
Income comes in the form of:
• Allowances• Wages from a job• Miscellaneous work (like cutting
grass)• Interest and dividends from
investments
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What You REALLY Earn: Income
• Your employer must subtract certain taxes from your paycheck
• The time it takes to meet goals for saving may increase
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Gross Income: Total income without deductions
Net Income: Gross income after deductions or subtractions, such as Social Security and other taxes
What You REALLY Earn: Income (cont’d)
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Expenses
Expenses: Everything you pay for in a time period
There are two types of expenses:
– Fixed
– Flexible
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Fixed Expenses do not change• Car payment• Rent
Flexible Expenses might change• Electricity• Food• Clothing or entertainment
Expenses (cont’d)
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Expenses: items you pay for each month
• Housing & car payments
• Insurance/Utilities• Food & clothing• Cell phone bills• Personal, child or
pet care
Step 2: Your Income & Expenses
• Eating out • Entertainment• Education costs
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ATM Fees Computerware Parties Cosmetics
Online Services Nail Services Sneakers
Cell Phones Dating Ice Cream Parking FeesCDs
Gifts Bottled Water Bounced Checks Clubs
Cigarettes Greeting Cards Tanning Haircuts Videos
Cable TV Late Payment Fees Dinners OutGasoline
Books Fast Food Attacks Dry Cleaning Car Wash
Lottery Tickets Magazines Movie Rentals Sports
Lunches Out iTunes Gambling Prescriptions
Household Items Pet Costs Licenses Speeding Tickets
Cash Advance Fees Munchies Vending MachinesSouvenirs
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Activity 2: Monthly Income & Expense Worksheet
– You will list all of your income & expenses on this worksheet
– You may need to check your bills or invoices at home for exact amounts
– Estimate expenses that do not occur on a monthly basis
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Step 3: Find Ways to Decrease Spending
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What are some ways we can decrease our spending?
Step 3: Find Ways to Decrease Spending
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• Carrying limited cash and controlling your debit/credit card use
• Not shopping “for fun”
• Remembering your spending plan & savings goals
• Buying only what you need
• Paying your bills on time to avoid extra fees and charges
You can decrease spending by:
Step 3: Find Ways to Decrease Spending
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What are some ways we can increase our income?
Step 4: Find Ways to Increase Income
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Step 4: Find Ways to Increase Income
• Get a job (if you don’t have one)
• Ask for a raise, if you have a job
• Get a better paying job• Get a second job • Do freelance work• Sell some of your stuff!
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Your Spending Plan Tools
These tools will help you manage your spending plan:
• Monthly payment schedule
• Monthly payment calendar
• A computer spreadsheet
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A monthly paymentschedule and a monthlypayment calendar will helpyou:
• Record income in advance
• Plan ahead to pay your bills
Spending Plan Tools (cont’d)
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Activity 3: Monthly Payment Schedule
– Use the Income and Expenses Worksheet to transfer info
– Complete due dates and amount due in columns
– Enter the date when expense has been paid
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Activity 4: Monthly Payment Calendar
Use the Monthly Payment Schedule to fill in your calendar:•Transfer income sources & amounts to the dates income is paid•Transfer your expenses to the dates they are due•Use one color ink for income and a different color for expenses•Check off each bill as it is paid
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Monthly Payment CalendarMonth: June 2010
Sunday Monday Tuesday Wednesday
Thursday Friday Saturday
1 2$300 paycheck$25 savings$20 expenses
3$100 car insurance
4 5$25 interest
6$50 cell phone
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8 9$300 paycheck$25 savings$20 expenses
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$25 gas11 12 $20 haircut 13 14
15 16$300 paycheck$25 savings$20 expenses
17 18$150 carpayment
19 20$20 gift card
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22 23$300 paycheck$25 savings$20 expenses
24 $25 gas 25 26 27$20 Sun Pass
28$40 entertain-
ment
29 30 $300 paycheck
$25 savings$20 expenses
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Help! I Can’t Pay My Bills!
Scenario: You add up your bills and the total is $900, but your income is
only $600….
What do you do?
Think about the bills that would
be the most important!
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Help! I Can’t Pay My Bills! (cont’d)
If you have to choose, think of major obligations first:
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Activity 5: A Hole in Todd’s Pocket
Can we come up with 6 ideas to help Todd?
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Spending Plans rock!
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Setting Financial Goals
• How to track what you spend each day• How to prepare a personal spending
plan (budget) to estimate monthly income and expenses• Ways to decrease spending and
increase income• About tools for better money
management
Congratulations! You have learned:
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Knowledge Check
1. The main reason why it is helpful to track daily spending habits is to:a. Spend moreb. Know exactly how your money is spentc. Increase your incomed. Decrease your spending
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Knowledge Check
2. Before you prepare a spending plan, the two most important things you must know are:a. Total income and expensesb. Your car payment and gasc. How to budget for entertainmentd. What your cell phone costs
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Knowledge Check
3. A personal spending diary will help you to:a. Spend more moneyb. Borrow moneyc. Keep track of where you spent your moneyd. Keep your spending a secret
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Knowledge Check
4. If you’re having trouble meeting your expenses, you should first:a. Stop paying your billsb. Take a payday loanc. Pay your rent or mortgaged. Buy something to make yourself feel better
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Thank you!
American Debt Counseling, Inc.American Debt Counseling, Inc.1 888 DEBT USA1 888 DEBT USA
www.americandebtcounseling.orgwww.americandebtcounseling.org
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