54991 WSU HBEC HouseHold Fin.indd 1 2/1/16 2:07 PM

54991 WSU HBEC_HouseHold Fin.indd 1 2/1/16 2:07 PM

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TableOfContents

Goals……………………………………………………………………………………3

ValuesAboutMoney……………………………………………………………4

NetWorth……………………………………………………………………………6

SettingFinancialGoals………………………………………………………..10

GoalSettingWorksheet………………………………………………………11

SavingsGoalWorksheet……………………………………………………..12

CreatingaMonthlySpendingPlan………………………………………13

MoneyLeaksExercise…………………………………………………………14

CostofLivingPlan………………………………………………………………15

ReverseBudgetingExercise………………………………………………..17

RetirementSpendingPlans………………………………………………..20

Resources…………………………………………………………………………..21

Wayne State University, Institute of Gerontology • 313-664-2600

Healthier Black Elders Center


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GOALS

Bytheendofthissessionyouwill:

• Understandyourmoneyvalues

• Understandnetworthandhowtocalculateyours

• Bebetterpreparedtosetfinancialgoalsandsticktothem

• Betterunderstandyourspendinghabits

• BeabletocreateyourownpersonalCostofLivingPlan


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VALUESABOUTMONEYValuesarepeople’sopinionsaboutwhatisrightandgood.Valuescomefromfamily,friends,church,schoolcommunityorganizationsandsociety.People’svaluesarereflectedinwhattheythinkisimportantinlife,andhelpthemdecidewhattodowiththeirmoney.Forexample:Carlagrewupinacommunitywhereeveryonehasdebt.Shecontinuedtoliveinthesamecommunitythroughoutheradultlife.CarlaneversavedforretirementandcurrentlyonlyhasSocialSecurityincometocoverherlivingexpenses.Whataresomeofthethingsyouhavelearnedaboutmoneythroughoutyourlife?_______________________________________________________________________

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Howdoyouthinkthismayhaveaffectedyourvaluesaboutmoney?

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MyMoneyValues

Readthelistofitemsbelow.Ifyouspendmoneyonactivitiesoritemsnotonthelist,addthemtothespacesmarked“other.”Crossoutthewaysofspendingonthelistthatarenotimportanttoyou.

Next,noticetherearetwocolumnsnexttothelist.Inthefirstcolumnprioritizeyourcurrentspendinghabits.Forexample,writea“1”nexttothemostimportantspendingitem,a“2”nexttothesecondmostimportantandsoonuntiltheentirelistisnumbered.

Finally,lookoverthewayyouprioritizedthelistanddetermineifyouwouldliketomakeanychangesinyourspendinghabits.Ifso,usethesecondcolumntoprioritizethewayyouwouldliketospendyourmoney.Rememberthereisnowrongorrightwayforthelisttobearranged

Automobileorothertransportation _____ _____Billspaidontime _____ _____Groceries _____ _____Housing _____ _____Churchcontributions _____ _____Savingforemergencies _____ _____Televisionorradio _____ _____Clothingandshoes _____ _____Familyorreligiouscelebrations _____ _____Payingoffdebt _____ _____Comfortablefurniture _____ _____Medications _____ _____ Vacation _____ _____Giftsforfamily _____ _____Lifeinsurance _____ _____Eatingatrestaurants _____ _____Householdappliances _____ _____Entertainment _____ _____Other___________________________ _____ _____Other___________________________ _____ _____


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NETWORTHWhereyoustandfinanciallyiscalledyournetworth.Networthisthevalueofyourassets(whatyouown),minusthetotalofallofyourliabilities(whatyouowe).

TotalAssets-TotalLiabilities=NetWorth

AssetsAssetsareanythingyouownthatcanbesoldor“cashedin.”Examplesrangefromretirementaccountstopersonalbelongings.Itisagoodideato:• Keeparecordofyourassets.• Keepreceiptsofwhatyoubuy.• Keepappraisalsofvaluableassets.• Takepicturesofvaluableassets.• Knowwhicharedepreciating(goingdowninvalue)andwhichareappreciating

(goingupinvalue).Debts/LiabilitiesDebtsorliabilitiesareanymoneythatyouowe.Examplesrangefrommortgagepaymentstounpaidutilities.• Ifyouneedrecordsofthedebt,contactthecompany.• Wheneveryouspeaktoacustomerservicerepresentative,writedowntheir

nameandIDnumber.• Alwayskeepfinancialinformation,evenifyoucannotpaythebillsnow.

GroupExercise:Paul’sNetWorthPaul,61,livesinahousehepurchasedyearsagofor$200,000.Thehouseiscurrentlyworth$190,000with$150,000remainingonthemortgage.Althoughhismonthlypaymentsareuptodate,Paulisworriedaboutwhatwillhappenifheloseshisjob.Hismonthlyincomejustbreaksevenwithhismonthlyexpenses.


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Recently,theoldgasfurnaceinPaul’shomebrokedownforthelasttime.Paullivesinacitywithbrutallycoldwinters,andhedecidestoreplacethefurnacewithaheatpumpusinga$10,000lineofcreditofferedbytheheatingandcoolingcompany.Heisstillpayingoff$16,000inmedicaldebtincurredduringhislatewife’sillness.Paulalsooweshissister$600forapersonalloanshegavehimwhilehewasonunpaidleavetotendtohiswife.

Paulhas$1,000inacheckingaccountand$4,000inasavingsaccount.Hehas$100incashinhiswallet.Heregularlyusestwocreditcards.Heowes$3,000ononeand$2,000ontheother.Pauldrivesa1998HondaAccord,fullypaidfor,worthabout$2,500.Heownsfurniturevaluedat$2,000andacollectionofsnowglobesvaluedat$1,000.

Paulistryingtofigureouthowtheexpenseofpurchasingtheheatpumpwillimpacthisnetworth.

NetWorthWorksheet

Assets Value Liabilities Value

Home Mortgage

Car FurnaceLineofCredit

Collectibles PersonalLoan Furnishings/HouseholdItems CreditCard

CheckingAccount MedicalDebt

SavingsAccount

Cash

TotalAssets TotalLiabilities Paul’sNetWorthaftertakingoutheatingpumplineofcredit??TotalAssets-TotalLiabilities=


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AssetTrackerWorksheet

Asset Value Ownership

(Example)House $95,000 JointIndividual

JointIndividual

JointIndividual

JointIndividual

JointIndividual

JointIndividual

JointIndividual

JointIndividual

JointIndividual

TotalAssetsValue


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DebtTrackerWorksheet

Filloutthechartbelow,listingthebalanceswiththehighestinterestratesfirstandthelowestinterestrateslast.Ifyoudon’tknowallofyourbills,youcanfilltheminasyougettheinformation.

Company InterestRate

TotalAmount

MinimumMonthlyPayment

AmountYouCanPay

Ownership

o Jointo Individualo AuthorizedUser







Whydowelistthedebtswiththehighestinterestratesfirst?Dependingontheinterestrate,adebtwithalowprincipleamountandhigherinterestratecouldendupcostingyoumorethanadebtwithahigherprincipleamountandlowerinterestrate.


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SETTINGFINANCIALGOALSInalllifestages,individualsaremorethanlikelytohavesomeshort-andlong-termfinancialgoals.Settingtangibleandrealisticgoals,followingthemandtrackingyourprogressisthekeytobeingsuccessfulinachievingyourgoals.Short-TermGoals-Ashort-termgoalisoneyouplantoachieveinoneortwoyears.Mid-TermGoals-Mid-termgoalsareprioritiesthatcanbeaccomplishedintwotofiveyears.Long-TermGoals–Long-termfinancialgoalsareprioritiesthatmaytakemorethanfiveyearstoaccomplish.

SMARTGoalsSpecificMeasurableAttainableRealisticTimely

ExamplesofSMARTGoals?Statement:Iwanttopayoffmycreditcards.SmartGoal:Overthenext12months,Iwillpayoffthebalancesonmycreditcards.Statement:Iwanttotakeavacation.SmartGoal:Iwillsave$100amonthoverthenext12monthsandusethemoneyforatriptoMexico.Statement:Ineedanewcar.SmartGoal:Overthenext6monthsIplantoassessmycreditsituation,saveadownpaymentandshopforanewcar.


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GoalSettingWorksheet

Short-TermGoals AmountNeeded

WhenNeeded

#ofMonthstoSave

$PerMonthNeededtoMeetGoal

Mid-TermGoals AmountNeeded

WhenNeeded

#ofMonthstoSave


Long-TermGoal AmountNeeded

WhenNeeded

#ofMonthstoSave



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SavingsGoalWorksheet

CurrentDate

Goal

Cost

TargetDate

Months

MonthlySavings

WeeklySavings

DailySavings

6/1/15 FloridaVacation $1500 6/1/17 24 $62.50 $15.63 $2.23

TotalMonthlySavings


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CreatingaMonthlySpendingPlanMoneyPlanningDefinitions

Itisimpossibletoreachanygoalwithouttheproperplanning.Thisistrueoffinancialgoalsaswell.Belowaresometermsanddefinitionsassociatedwithmoneyplanning:

MonthlySpendingPlan(Budget)Adetailedplanofhowyouspendmoneythroughoutthemonth.Canbeadaptedtobeweekly,yearlyormonthly.

IncomeAnymoneyyouhavecomingintoyourhome.Salary(formalorinformal),disability,SocialSecurity,etc.

ExpenseAnythingthatcostsyoumoney.

DesignatedIncomeMoniesdesignatedtopayforaspecificexpense.FoodStamps,Section8Voucher,etc.

PlannedExpenseAnyexpenseyouplanfor.Includedinyourcostoflivingplan.

FixedMonthlyExpenseAnyexpensethatisthesameeverymonth.Rent,CarNote,etc.

ChangingMonthlyExpenseAnyexpenseyoupaymonthly,buttheamountchanges.Food,utilities,etc.

OccasionalExpenseExpensesthatdonotoccureverymonth(sometimesdifficulttoplanfor).Carrepairs,birthdays,holidays,etc.

MoneyLeaksAreoccurringexpensethatisnotincludedinyourCostofLivingPlan.Anexpenseyoudonotplan.Fastfoodhabits,cigarettes,coffee,etc.


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MoneyLeaksExercise

Sometimesmoneyseemstoevaporateintothinairrightfromourpockets.Ileftthehousewith$20thismorning.Ididnotdoanyshoppingorsignificantspending.WhenIreturnedhomeIonlyhad$7.56.Thinkingback,Iboughtcoffee,abagelandapackofcigarettesthismorning.Then,Ipurchasedasaladatlunch.ThesetypesofexpensesareexamplesofMoneyLeaks.IdentifyingMoneyLeakshelpswithyourCostofLivingPlanbecauseyoucanidentifywhereyourspendingistakingplaceandaddittotheplanorcutexpensesthatmaybehinderingyouinreachingyourfinancialgoals.TheactivitybelowwillhelpyouidentifyyourMoneyLeaksandturnthemintoplannedexpenses.MoneyLeak Cost/Time WeeklyCost MonthlyCostStarbucksCoffee $4.00 $4.00X5=$20.00 $20.00x4=

$80.00Starbucksonceaweek $4.00 $4.00x1=$4.00 $4.00x4=$16.00

PlannedExpense MonthlySavings $16.00 $80-$16=$64.00

MoneyLeak Cost/Time WeeklyCost MonthlyCost

PlannedExpense MonthlySavings

MoneyLeak Cost/Time WeeklyCost MonthlyCost

PlannedExpense MonthlySavings


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CostofLivingPlanNowthatwehavedeterminedyournetworth,thoughtaboutyourfinancialgoalsandidentifiedyourunplannedspending,itistimetocompletetheCostofLivingPlan.Thiswillbeoneofthemostimportantdocumentsinhelpingyoutakechargeofyourhouseholdfinances.Thefirstthingyouwillhavetodoiscalculateyourtotalmonthlyincome.Pleaseremembertoincludeallsourcesofincome,formalandinformal,designated,etc.MonthlyIncome(AfterTaxesandDeductions)MonthlyWages/Salary GovernmentBenefits(SocialSecurity,SSI,TANF,etc) GovernmentFoodBenefits(SNAP) ChildSupport/Alimony SupportfromFamilyorFriends Other: Other: Other:

MonthlyIncomeTotal


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ExpensesHousingandUtilities PrescriptionMedicines

Rent/Mortgage OtherMedicalBills Electric Gym/HealthClub Gas Grooming(hair,nails,etc) HomeMaintenance PersonalHygieneProducts Phone(celland/orlandline) Food,ClothingandEntertainmentCable Groceries Internet MealsOut Water Tobacco/Alcohol RentersorHomeInsurance Clothing PropertyTaxes Shoes Other: SportingEvents

Transportation GoingOut CarPayment Movies AutoInsurance Books/Music Gas Hobbies Maintenance Clubs PublicTransportation LaundryandDryCleaning Other: Other:

LoansandCreditCards Other: CreditCard1 MiscellaneousCreditCard2 Charities CreditCard3 Gifts PersonalLoanPayments Vacation StudentLoanPayments Travel Other: LifeInsurance

SavingsandInvesting DisabilityInsurance EmergencySavings EducationalExpenses RetirementAccounts Other: OtherInvestmentAccounts Other: Other: Other: Other: Other:

HealthandGrooming Other: HealthInsurance(monthly) MedicalVisits(copays) TotalMonthlyExpenses


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NetIncomeNowthatyouhaveanestimatedCostofLivingPlan,youcangetamorerealisticideaofyourmonthlyhouseholdfinancialsituation.Thenextstepistofigureyournetincome,theamountofincomeyouhaveleftoverafteryoumeetyourmonthlyexpenses.

- = MonthlyIncome MonthlyExpenses NetIncome

Ifyourmonthlyexpensesexceedyourincome,youmayneedtolookforwaystocutyourexpensesorsupplementyourincome.Onewaytosupplementyouincomemaybegettingapart-timejob.Seetheactivitybelowonreversebudgetingtohelpunderstandhowtocalculatetheamountyoumustearnatapart-timejobtocoverallyourmonthlyexpenses.ReverseBudgetingExerciseMaryisawidowlivingonafixedincome.ShereceivesamonthlypensioncheckforherdeceasedhusbandJohnintheamountof$636andherownSocialSecuritycheckmonthlyintheamountof$250.Mary’ssonJoshuaalsoprovidesMarywith$150eachmonthtocoverherexpenses.However,Maryisnoticingthatthereneverseemstobeenoughmoneyeachmonthtocoverallofherexpenses,andshealwaysfeelsbehind.Maryhasestimatedhermonthlyexpensesat$1700,whilehermonthlyincomeisonly$1036currently.Althoughsheidentifiedplacesshecouldcutback,Marycouldonlygetherexpensesdownto$1500evenwithmakingnecessarycutstoherCostofLivingPlan.Maryhasdecidedtogetapart-timejobtoearntheremaining$464sheneedstocoverherexpenseseverymonth.Shewouldliketogetabetterideaofhowmanyhourssheneedstoworkandhowmuchsheneedstoearnperhourtocoverherexpenses.Maryhasfoundareversebudgetingtechniquethatwillhelphertodeterminejustthat.


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Step1: Determinemonthlyexpenses

$1500Step2: Subtractanyconsistentincome

$1500-$1036=$434Step3: Multiplytoestimatetaxesandotherdeductions.Thiswouldinclude

benefitspaymentsdeducteddirectlybytheemployer.Thispercentagemaybesmallerifyouhaveotherbenefitsandwillnotbeparticipatinginhealthcare,retirementorotherprogramsofferedbytheemployer.InMary’scase,wewillestimatethisat20%.

$434X.20=$86.80 $434+$86.80=$520.80Step4: Determinetheannualincome.Multiplymonthlyincomeby12. 520.80X12=$6249.60Step5: Determineweeklyincome.Divideannualincometotalby52. $6249.60÷52=$120.18Step6: Determinehowmanyhoursyoucouldworkeachweek. 15Step7: Determinethehourlywageneeded.Dividetheweeklyincomebythe

numberofhoursavailabletoworkeachweek. $120.18÷15=8.01Usingthisformula,Maryhasdeterminedsheshouldbelookingforapositionpayingatleast$8.00perhourandofferingaminimumof15hoursperweektomaketheadditionalfundssheneedstocoverhermonthlyexpenses.AlsopleaserememberifyoureceiveSocialSecurityorothergovernmentbenefits,theremaybesomerestrictionsonhowmuchyoucanworkbeforeyourbenefitsareaffected.Checkwiththeagencyadministeringthebenefitstolearnabouttheserestrictions.


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Toincreaseincome:• Findapart-timejob,ifpossible.• Besuretomaximizeyouruseofpublicbenefits.• Startasmallbusinessoutofyourhobby.• Sellexcessitemsorthoseyouarenotusinganymore.• Rentoutanextraroominyourhome.

Toreduceexpenses:• Thinkaboutmovingtoamoreaffordablehome.• Checkifthereareanyfamilyandfriendsyoucouldlivewithtoshareliving

expenses.• Seeifrefinancinghigherinterestdebtispossible.• Lookatyourfoodcostsandseeifthereareareasyoucancutback.• Lookforwaystocutbackonenergycosts.

Additionalideasforincreasingincomeanddecreasingexpenses:

1. _____________________________________________________________

2. ______________________________________________________________

3. ______________________________________________________________

4. ______________________________________________________________

5. ______________________________________________________________

6. ______________________________________________________________

7. ______________________________________________________________

8. ______________________________________________________________


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RETIREMENTSPENDINGPLANSReadytoretire??Youhaveplanned,savedthemoneyandmadegoodinvestments,nowit’stimetospendit.Oneofthebestwaystoensureyouspendwiselyandhaveenoughmoneytolastyouthroughoutyourretirementistocomposearetirementspendingplan.StepOne:CompleteyourCostofLivingPlan.Itisimportanttocompletethissteptoknowwhatyourprojectedexpenseswillbeduringretirement.Theremaybeareaswhereyouwillbeabletoadjustexpensesonceyouretire.Forexample,downsizingyourhome,transportationcosts,workrelatedclothing,contributionstoretirementaccounts,etc.Andtheremaybeareasyouwouldliketoaddmorefunds,suchashobbies,travel,etc.StepTwo:CalculateallofyourFixedMonthlyIncomestreams.Forexample,SocialSecurity,employerpensionpayments,annuitymonthlypayouts,etc.Thiswillhelpyoudetermineifyouneedtouseyourretirementportfolioincomesources,andifso,howmuchyouwouldneedtodrawfromtheseaccountsannuallytomeetyourretirementlivingexpenses.StepThree:Createaninventoryofyourportfolioincomesources,investments,401Kaccounts,IRAs,etc.DuringthisstepitisbesttositdownwithaFinancialAdvisor.Anadvisorcanhelpyouunderstandwhattheaverageratesofreturnare,howmuchyoucanaffordtodrawfromthefundeachyear,andhowlongyourretirementportfoliowilllastifyousticktotheplan.


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RESOURCESEducationalResourcesWayneCountyCommunityCollegeDistrict(WCCCD)CitizenswhoareresidentsoftheWCCCcollegedistrictand60yearsofageoroldermayreceiveaWCCCDtuition-freewaiver.MainCampus801WestFortStreetDetroit,MI48226313-496-2600EmploymentResourcesDetroitAreaAgencyonAgingMatureWorkersEmployment&TrainingPrograms1333BreweryParkBlvd,Suite200DetroitMI48207313-446-4444ext.5296FosterGrandParentProgram517-373-8230Thisprogramofferslow-incomemenandwomenage55andoldertheopportunitytoprovidecompanionshipandguidancetochildrenwithspecialandexceptionalneeds.Volunteersserveonaverage20hoursperweekandinreturn,receiveamodesttax-freestipend.OperationABLEWhethercurrentlyunemployedorlookingtodevelopskillsnecessaryformaintainingfutureemployability,OperationABLE'sservicesareaimedathelpingmaturejobseekers.4850Woodward,Suite201DetroitMI48201313-832-0922


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SeniorsHelpingSeniorshttp://seniorshelpingseniors.com/Want-to-Help.htmlSeniorsHelpingSeniorsisalwayslookingforloving,giving,caring,compassionatepeopletoworkwithseniors.Eachhelperworksasmanyhoursaweekasheorshewants.Mostofthepeoplewhoworktherewerelookingforvolunteerjobs,seekingactivitiesthatwouldaddmeaningtotheirlives.Workingasaseniorhelpingotherseniorsmeansyouwillbemakinganimportantcontribution.Italsoprovidesyouwithanhourlywagethatcanhelpcovertheextras.ClintonTownship37040GarfieldRd.,SuiteC-3ClintonTwp,MI48036586-286-5820OaklandandNorthwestWayneCounty25128ToddyLaneFarmingtonHills,MI48335248-224-2477Volunteer–SeniorCompanionProgram(SCP)Thisprogramoffersyouvolunteeropportunitiestoprovidecommunityserviceactivitiesservingseniorswithphysical,mental,oremotionalimpairments.Servicesmayincludeshort-termcareassistance,non-medicalpersonalcare,andsocialorrecreationalactivities.Ifyouvolunteer,youmayreceiveastipendandotherbenefits.Mustbeover55.SCPofWayneCounty9851HamiltonDetroit,MI48202Phone:(313)883-2362OaklandCountySCP18310W12thMileRoadSouthfield,MI48076Phone:(248)559-1147ext.3424


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FoodResourcesMealsonWheels

DearbornHeights313-791-3550

Detroit313-446-4444

GrossePointe313-882-9600

MacombCounty586-469-5228

OaklandCounty800-317-0532

GovernmentBenefitsEconomicCheckUpNationalCouncilonAgingwww.benefitscheckup.org/Answerssomequestionstofindbenefitprogramsthatcanhelpyoupayformedications,healthcare,food,utilitiesandmore.MichiganDHSFoodAssistanceProgramTemporaryfoodassistanceforeligiblelow-incomefamiliesandindividualsisavailablefromtheU.S.DepartmentofAgriculture.UseMIBridgestoapplyforassistance,checkyoureligibilitystatusandmanageyouraccountonline.https://www.mibridges.michigan.gov/access/1-855-275-6424


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Documents

54991 WSU HBEC HouseHold Fin.indd 1 2/1/16 2:07 PM