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1 1 Creative Techniques for Finding Money to Save Plus a Bonus: Saving Resources.

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Presentation on theme: "1 1 Creative Techniques for Finding Money to Save Plus a Bonus: Saving Resources."— Presentation transcript:

1 1 1 Creative Techniques for Finding Money to Save Plus a Bonus: Saving Resources

2 2 How would you you define savings? 2

3 3 One Montanans Definition Amount left over after expenses… 3

4 4 Which is, most of the time, zero 4

5 5 Federal Reserve Board Definition 5 Savings is the process of setting aside a portion of current income for future use.

6 6 WIKIPEDIA Economics Definition 6 Saving is income not spent or deferred consumption.

7 7 7 Question: What year between 1962 & 2013 did Americans have the highest rate of saving? o 1962 o 1975 o 1983 o 1991 o 2000

8 8 Personal Savings Rate May %

9 As of January 3.9% 9

10 10 $ aving Technique $ used by $ uccesful $ avers 10

11 11 Make savings automatic Technique #1

12 12 Automatic deposits Arrange for monthly automatic deposits from paychecks or checking to savings accounts for an emergency fund

13 13 Dont have to think about it every payday – Can adjust/change as needed Benefit!!

14 14 Arrange for automatic contributions to retirement plan: tax deferred (401k) (403b) (457) Save for Retirement

15 15 Tax Deferred Plan Limits (401k, 403b, 457) $17,500 – 2014 Catch up if age 50 & older $5,500

16 16 Some plans offer loans for emergencies Borrow if really, really, really needed Benefit!!

17 17 Penalty if withdraw before age 59 ½ Less likely to make withdrawal Penalty!!

18 18 IRAs $5,500 yearly Catch-up amount if age 50 & older $1,000

19 19 Boost Saving by 1% More & have more at retirement Salary Age 25 Age 35 $25,000$102,827$41,639 $30,000$123,393$49,967 $35,000$143,958$58,295 $40,000$164,523$66,623 $45,000$185,089$74,951 $50,000$205,654$83,279 Assuming 8% rate of return; Pay Increases 3%

20 20 Boost Saving by 1% More & have more at retirement Salary Age 40 Age 50 $25,000$25,675$8,559 $30,000$30,810$10,271 $35,000$35,945$11,983 $40,000$41,080$13,695 $45,000$46,215$15,047 $50,000$51,351$17,118 Assuming 8% rate of return; Pay Increases 3%

21 21 Technique #2 Once a loan is paid Pretend you are still making payments Place former payment in savings

22 22 Benefit!! Already altered lifestyle so you can make loan payments A reallocation of payment to savings can be made without sacrifice

23 23 Technique #3 Put 2014 state/federal tax refund into savings

24 24 Tax Refund A tax refund is not a bonus its a refund of your money that can become savings

25 25 Benefit!! Its money you have already adapted to being without during the year

26 26 Technique #4 Open an MSA Montana Income tax savings $207 if taxable income above $16,700 $414 for married couple

27 27 Benefit!! Saving tax money on medical expenses you have anyway

28 28 Question: What percent of Montanans have MSAs? o 1.4% o 25.2% o 53.6% o 70.3% o 92.5% 28

29 29 Percent of Montanans with MSAs Only 1.4% 29

30 30 Technique #5 Utilize creativity for saving… Techniques used by Montanans

31 31 U. S. Treasury says Americans hold $15 billion in loose change Piggy Bank Your Extra Coins

32 32 Eastern Montana mother Filled-up old socks with loose change & hid in the closet Sock it away

33 33 Hidden Savings in Checking Account Central Montana woman wrote checks for next $1 or $5 up in checking account register Monthly she deposited the extra in savings

34 34 Recipe Box Western Montana Family who put money that they didnt use for eating out in recipe box Would go through weekly to show, This is what we saved by not eating out…..

35 35 Nothing Week Central Montana Family saves money that would have spent on activities that cost

36 36 Sugar Bowl Woman on the high-line who squirreled away cash in sugar bowl at the top of the kitchen cabinet

37 37 Under the mattress Grandpa in central Montana who hid money in envelope under his mattress

38 38 Save lunch money Parents in northwest Montana packed lunches & totaled their savings

39 39 Coupon Southeast Montana woman who saved money that would have spent without using coupon

40 40 Technique #6 Kick habits that cost $$$$$$

41 41 Item Yearly Savings Snack/Candy/Soda$360 Coffee, Latte, Etc$1,140 Fast Food Meal$1,320 Money Saved if not spent on Everyday Items

42 42 Accelerate debt repayment so have money to save Technique #7

43 43 Priority Pay off highest interest rate debt first to save on interest Which to accelerate?

44 44 https://powerpay.org PowerPay Web site (Utah State University- Extension)

45 45 Without Power Payments (Highest Interest First) Creditor Name# of paymentsTotal PaidInt. Paid Chase Auto31$ $ Mastercard119$ $ Security Bank49$ $ Lowes14$ $67.51 Payoff Time 9 years 11 months May 2010 Total Paid $35, Total Interest $12,578.17

46 46 With Power Payments (Highest Interest First) Creditor Name# of paymentsTotal PaidInt. Paid Chase Auto31$ $ Mastercard47$ $ Security Bank47$ $ Lowes14$ $67.51 Payoff Time 3 years 11 months May 2013 Total Paid $29, Total Interest $6,263.25

47 47 Bottom Line Benefits (Highest Interest First) Time to Pay off Reduced by: – 6 years Amount Saved in Interest: – $6,314.92

48 48 Bottom Line Benefits (Highest Interest First) Amount Saved in Interest: – $6, No Power Pmt $12, Power Payment - 6, $6,314.92

49 49 Kick the minimum payment habit on credit cards!!!!! Technique #8

50 50 Credit Card Smarts Calculator

51 51 Orange Side--Side 1 Paying Just 3% on Your Credit Card Debt Check the REAL cost

52 52 Blue Side: Side 2 Pay MORE than 3% and Save a LOT

53 53 Matt & JulieSide 1 Credit Card Debt $10,000

54 54 Minimum Payment DANGER On $10,000 Loan $300 $9,421 in interest 20 years to pay off

55 55 Increase payment amount--Side 2 PMT$400$600 Years13 years8 years Interest $5,738 $3,226 Savings $3,226 $6,195

56 56 Another Example Debt: $25,000 10% APR YearsInterest $ $14,645 $ $6,871 $ $5,467 $ $4,548

57 57 Once loans paid off the money not paid in interest is available for saving! Benefit of Power Payments

58 58 Individually As a couple As a family Technique #9: Establish Savings Goals & Track Progress Towards Them

59 59 Things? Experiences? Regardless MSU Extension has a tool for you Goals: What are you saving for?

60 60 Front Cover

61 61 Trackn Your Savings Goals Register Funded by Montana Credit Unions for Community Development First Interstate BancSystem Foundation

62 62 What are you saving for? Savings Goals

63 63 Decide on Amount Needed: Figure 2

64 64 My Savings Goals: Figure 2

65 65 Recording a Savings Deposit Figure 4

66 66 Technique #10 Moonlight for additional income for savings

67 67 Until Ron got me this job, I didnt realize I was an important factor in his savings plan.

68 68 Moonlight Savings Yearly Amount Age Age $1,000$120,800$33,066 $2,000$241,600$66,132 $3,000$362,400$99,198 $4,000$483,199$132,264 Assuming 5% rate of return

69 69 Technique #11 Trade down to a smaller home

70 70 Retire? Sure, Cheryl you can retire….if we live in a tent! Ha, Ha, Ha,

71 71 Savings from Smaller Home Lower or no mortgage payment Reduced maintenance costs Lower utility bills Lower property taxes Lower insurance premiums

72 72 Technique #12 Move to a less expensive location

73 73 Move within Montana

74 74 Montana Average Home Price CityMedian Cost Bozeman$227,300 Missoula$144,300 Billings$138,400 Anaconda$102,800 Chinook$96,800 Ekalaka$74,100

75 75 Move to another State

76 76 Question: Which state in the U.S. is the most affordable to live in? 1. Montana 2. Texas 3. Oklahoma 4. Florida 5. Minnesota 76

77 77 Most Affordable States 1. Oklahoma 2. Tennessee 3. Idaho & Kentucky to-live-in 77

78 78 o Friends/relatives o Media (TV, newspaper, magazines) o Internet-Web o Parents o Financial Planner What are sources of advice about saving?

79 79 Make a commitment to save by utilizing savings techniques that work for you, then take action!!!!!!! Commitment

80 80 Savings Resources Organizations Government Sources

81 81 USDAExtension ll/publications/66_ways.pdf 66 ways to Save Money

82 82 Investing for Your Future for-your-future eXtension: 11 lesson web/study at home course eXtension-Sponsored by Rutgers University

83 83 NEFE ResourceCenter/WealthCareKit-Insurance.pdf Wealth Care Kit: A guide for financial wellness

84 84 The Money Mammals Teaching kids to share, save, and spend smart

85 85 Question According to the (March 2013 Retirement Confidence Survey), what % of workers said they are very confident theyll have enough for retirement? 85

86 86 What % of workers say they are very confident of having enough for retirement? 1.30% 2.20% 3.15% 4.13% 5. 5% 86

87 87 Confidence Survey % lowest level since survey started in

88 88 Easy-to-use, two-page worksheet – Helps you quickly identify approximately how much you need to save to fund a comfortable retirement Ballpark E $ timate

89 89 Department of Labor Savings Fitness: A Guide to Your Money and Your Financial Future

90 90 U. S. Securities & Exchange Commission Get the Facts: The SECs Roadmap to Saving & Investing

91 91 Calculators on: Auto Bond Budget College Credit Card Employee Benefits American Savings Education Council Home Insurance- Disability Insurance- Health Insurance-Life

92 92 Calculators on (contd): Mutual Fund Paycheck Planning Retiree-Health Retirement Roth IRA Taxes American Savings Education Council Stock Savings

93 93 America Saves Designated week February 24 – March 1, 2014

94 94 Montana Saves

95 95 America Saves: Savings Messages Receive savings tips and reminders straight to your phone

96 96 American Institute of Public Accountants: Offers information to help consumers make sound financial decisions at every stage of lives.

97 97 Life Stages Couples Parents and Children Home Owners In Crisis Retirees 97

98 98 Life Stages Small Business Owners Military and Reserves Employed College Students Tweens and Teens 98

99 99 Get Savings Tips Phone Join a discussion Beat your brain Feed The Pig American Institute of CPAs 99

100 100 4, 5, 6th graders The Great Piglet Challenge Interactive Adventure in Saving & Spending 100

101 101 Conclusion Almost overwhelming amount of savings information organizational & governmental resources Find the source that works for you

102 102 Understand yourself What motivates you to save?

103 103 Question: What is your primary goal for saving at this point in time? o Retirement o Emergency fund o College education o Family vacation o New Car o New Home chat

104 104 Savings bottom line…… Are you willing to delay gratification so youll have money to save?

105 105 In other words…… Are you willing to make a change in your behavior to make saving a priority?

106 106 In Conclusion Best wishes as you select the savings technique that works best for you & explore savings resources


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