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Budgeting & Planning The Financial Literacy Summitt III East Carolina University June 22, 2012 1.

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Presentation on theme: "Budgeting & Planning The Financial Literacy Summitt III East Carolina University June 22, 2012 1."— Presentation transcript:

1 Budgeting & Planning The Financial Literacy Summitt III East Carolina University June 22, 2012 1

2 Money Management 101 About the Presenter: Christopher E. Jenkins, Certified Public Accountant and Masters in Business Administration Owner – Jenkins Management Consulting, P.C. (A CPA Firm) established in 1999 Registered Representative – Genworth Financial Securities Corp. Investment Advisor Rep. - Genworth Financial Advisers Corp. 2

3 Money Management 101 Objective: To inform attendees of best approach to develop a budget and track performance against it and to focus discussion on key budget areas – Saving/Investing and Taxes Format: Presentation & Dialogue (feel free to ask questions along the way) 3

4 Money Management 101 How would you define the term budget? How many have household and/or business budgets currently in use? 4

5 Money Management 101 Dictionary definition of Budget: An estimate of income and expenditure for a set period of time To estimate implies planning or thinking about income and expenses BEFORE they occur Fail to plan; Plan to fail!! 5

6 Money Management 101 The Bible encourages planning in Luke 14:28: For which of you, intending to build a tower, sitteth not down first, and counteth the cost, whether he have sufficient (money) to finish it? The moral of the words of Jesus: think about the future you want and plan for it so you will not be ashamed. 6

7 Money Management 101 Benefits of having a budget: Peace (less worry) Helps you visualize your goals Provide a written point of reference for household Help family communication Provide a written reminder Reflect your spending habits. 7

8 Money Management 101 How to develop a budget? (Simple but not easy!) Determine where you are now! Determine where you should be? Set your budget based on your determinations above. Be mindful of budget challenges 8

9 Money Management 101 Where are you now? Review all of your expenses for most recent 3 month period List all your debts and total them Write down EVERY expense (cash, credit card, debit, check) Organize each expense into meaningful categories (see handout) Total each category at end of a month and calculate the average for the 3 months Consider hidden or infrequent expenses such as auto insurance, family loans, doctor bills, auto repairs, home repair, etc. (these are challenge areas) 9

10 Money Management 101 Where should we be? Consider Guideline budget See example in handout 10

11 Money Management 101 Set your budget… See handout This is the Not so easy part! Determine your new monthly budget amount for each category of expense When actual spending is greater than guideline spending, tough decisions must be made on modifying your spending behavior 11

12 Money Management 101 How to make the budget work/stick! Buy and use software such as Quicken, Microsoft Money or similar product to track income and expense versus budget Use manual paper system (e.g., Excel spreadsheet) Use envelope system (cash only) 12

13 Money Management 101 Specific Budget Area Considerations Savings & Investing How much to save (need emergency savings – 6-12 months) Time value of money (start early) (see handout) Dollar cost averaging (be consistent) 13

14 Money Management 101 Specific Budget Area Considerations Taxes Second highest living expense for most people approaching 10 to 30% of household income Expense this great deserves special attention!! Consider tax saving strategies for yourself before year-end (see handout) 14

15 Money Management 101 Concluding Remarks: Develop budget Stick to it Save regularly Invest intelligently Seek professional advice 15

16 Money Management 101 Questions/Comments?? Thank you!! 16


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