MONEY MANGEMENT

Presented by

L Everette Martin

November 2010

Overview Definitions Why is Money Management Important? Goal Setting Identify Needs versus Wants Budgeting Building Your Savings Managing Your Debt

Definitions Money – any common medium of exchange

Wealth – the total of everything you own that has value

Debt – an obligation to pay or do something

Net Worth – the difference between what you own and what you owe

Why is Money Management Important?

Achieve your financial goals College Education

House Land Car Retirement

Live comfortably within your means

Increase your wealth

Goal Setting Establish Clear Specific Goals

Example - Save $30,000 within 5 years towards college education

State Goals in writing Segregate goals into short/medium/long term

Short Term – six months to one year Over one year to five years Over five years This may vary according to individual

Target Date Cost of Your Goal

Goal Setting How much do you need to put aside to achieve

your goal per Weekly/Monthly/Yearly

Establish Milestones If your goal is to save $30,000 in 5 years, establish

annual milestones ($6,000 per year) Be Practical Be Flexible Review and evaluate your goals periodically

Identify Your Needs and Wants Wants

Motorcycle 50 inch television 3 cell phones

Needs Food Clothing Shelter College Education Medical care

Budgeting Money Management Tool that assists you in

achieving your goals Track your income and spending Why do personal budgeting fail?

Failure to prioritise spending Failure to be practical Failure to plan for the unexpected Failure to include quarterly or annual expense Spending more than your income

Budgeting List and prioritise expenses Expenses – weekly, monthly, quarterly, semi-

annual, annual, unexpected Discretionary versus Non-discretionary

spending Discretionary spending is the money you spend

on the things that you could live without but that you won’t (entertainment?)

Failure to budget for discretionary spending can cause your budgeting to fail

BudgetingThe Unexpected Home repair, medical bills

vehicle repair

Annual, semi-annual, quarterly

Licence renewal, Property taxes, Insurance

Monthly Bank loans, credit card payment, rent, cable, telephone

Weekly Groceries, transportation, personal care (toiletries),

Discretionary expenses Books, magazine, dining entertainment, snacks,

Budgeting

Prioritise Expenses Top priorities are food, clothing and shelter Electricity, water Car loans Home insurance, medical and vehicle insurance Credit card payments Discretionary expenses

Budgeting Income

Salary - $5,000 Expenses

Rent or mortgage payment $800 Groceries $200 Electricity $120 Water $20 Insurance $200 Credit card $100 Entertainment $100 Savings $2,000

Building Your Savings Shop with a list and buy only what you need Plan your shopping trips

Compare prices Buy groceries at the supermarket that offers

most savings Shop around for banks with the best interest rate

on loans Consider rates on deposits Use debit card or cash instead of credit card Turn off lights

Building Your Savings Turn off your computer after use Cut long distance telephone calls by using

available mechanisms such as skype, magic jack etc

Use email or social network instead of calling

Check you cable bill to ascertain if you need all the channels

Balance your check book Track your spending monthly

Managing Your Debt Track your money

Know how much money you have Know what your monthly expenses are and what

you have left to pay creditors Save before you borrow Investigate before you borrow – conduct

comparisons of bank loans, credit cards Have a personal debt management plan Prioritise your debts Check with the experts

Conclusion

Establish Goals Identify Needs versus Wants Budget Building Your Savings by prioritising your

spending Manage your Debt

THE END

THANK YOU

QUESTIONS?