- Slides: 21
State Employee Money Management
Important This is by no means a complete list of interventions and resources available, just a useful guide that may give you a starting point or lead you to other options. KEAP does not advertise as a financial consultant or legal specialist, and many of the suggestions above have been gathered from resources dealing with financial planning. KEAP does not guarantee that the above suggestions will solve your financial difficulties and many of the ideas presented come with some risk. Further, KEAP does not guarantee that the information concerning documentation will result in legally binding agreements, if you have any question concerning that topic contact a lawyer specializing in estate planning.
A Healthy Financial Picture Should include the following: l Monthly Spending Budget l Emergency Savings l Flexible Spending Account l Debt Elimination Plan l Disability Insurance l Retirement Savings Plan l Will and Power of Attorney
Something to Think About What percentage of American families spend more than they make? (Click for answer) 10% 25% 40% 55% On average, Americans spend $1. 22 for every dollar they earn.
Americans spend $2600 per year on what? (Click for answer) Medications Charities Eating Out Pets Eating out is #1 on the list of things people splurge on and #2 on the list of things people say they will cut back on during difficult times.
WHY? Do we spend more than we make. Do we say were are going to cut back but then continue to eat out. Answer: It is hard to manage your money if you don’t know how you are spending it. Many people are surprised when they record their spending habits to find that they are spending a lot more money than they thought on items that are not high on their list of necessities.
Can you do this in your head? Income Rent Utilities Car payment Groceries Total $1400 - $525 - $87 - $233 - $109 $446 Will you be able to afford that $450 car repair? NO and now you are paying fees for your bounced check?
Financial Emergencies are Common l l l While the previous example may be extreme, everyone knows what it is like to have an unexpected expense that you are not sure you have the funds to cover. In fact, almost 80% of people surveyed list medical, car and home as the top three unexpected expenses with medical as the #1. Why not take out the guess work by maintaining a budget?
Improved State of Mind Through organization that removes the guess work that can sometimes cost us money, individuals experience a decrease in stress levels.
Financial Stability It improves your credit score by guaranteeing that you will pay your bills on time and, as a result, better interest rates will become available.
Improved Relationships The #1 reason couples fight is money. Agreeing on a budget will eliminate that type of argument and guarantee that both people are working toward the same goals.
Budgeting Necessities 1. Track your expenses so you know what to expect ¡ ¡ Record it on a note pad Or get receipts for everything and then organize them into envelopes labeled with that expense (for example: groceries, eating out)
Categories for your envelopes • • Rent/Mortgage Groceries Savings Electric/gas Phone/cell phone School lunches Gasoline • • • Credit cards Car payment Dry cleaning Entertainment Daycare Charitable giving Work lunch Hair cuts/nails Prescriptions Clothing Fun money
Budgeting Necessities 1. Track your expenses so you know what to expect ¡ 2. The previous list is not all encompassing so make it specific to you depending on your spending Use a budgeting sheet to separate your fixed expenses from your variable
Fixed vs. Variable Fixed expenses are typically a set amount due at the same time each month l Examples include rent/mortgage, car insurance, car loan, utility, etc. Variable expenses can change from month to month depending on your needs l Examples include groceries, gas, entertainment, clothing, etc.
Budgeting Necessities 1. 2. 3. Track your expenses so you know what to expect. Use a budgeting sheet to separate your fixed expenses from your variable. Subtract your fixed expenses from your monthly income and whatever is left can be dispersed to your variable bills.
Fixed Expenses Amount Rent $640 Car payment $275 Utilities $120 Phone $62 Cable $60 Savings $100 Income Fixed Expenses Total Remainder to go to Variable Expenses $2200 - $1257 $943
Now the remainder ($943) can be disbursed depending on your situation that month. Example: You are hosting a holiday meal for the family. Variable Expenses Groceries $600 Gas $200 Entertainment $143 Groceries take priority.
Or, You’re Taking a Trip During Your Vacation Variable Expenses Groceries $400 Gas $300 Entertainment $243 Gas and entertainment get an increase.
Tailored to You Flexibility Accounting for your fixed expenses first allows you flexibility to deal with situations that change from paycheck to paycheck. Free A blank budgeting sheet is available for download on our website. It contains many of the categories already discussed as well as blank spaces that you can fill in depending on your specific needs.