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

Budgeting The UnexpectedHome repair, medical bills vehicle repair Annual, semi-annual, quarterly Licence renewal, Property taxes, Insurance MonthlyBank loans, credit card payment, rent, cable, telephone WeeklyGroceries, transportation, personal care (toiletries), Discretionary expensesBooks, 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 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?