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Basic Money Management & Calendar-Based

Budgeting For more information:

Anita McKinney, Duval County Extension Educator 1010 N McDuff Ave

Jacksonville, FL 32254 904-255-7450 mckinney@coj.net

http://duval.ifas.ufl.edu

and

Needs & Wants

Know Resources

Economic Environment

Good Financial

Health

Manage Risk

Save Manage Cash & Credit

What you will learn today: •  Importance of managing

money •  Steps to build a budget •  Techniques and tools to

encourage implementation of a budget

•  Using a calendar to track expenses

•  Spending gaps, leaks, habits •  Resources to help clients

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Why plan your spending and

saving? •  Reduce the stress – can I pay my bills on time? •  Live within my income – avoid debt •  Recordkeeping •  Measure progress toward goals •  Set a good example

and

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The Spending Plan Process

6. Track actual and adjust as needed

5. Write down spending and saving amounts by category

1. Determine values, needs, wants, and habitudes to set priorities

3. Set SMART financial goals

4. Determine income

2. Track spending with UF Money Management calendar

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Values, Needs, Wants •  Values – what is important to you? •  Need – can’t do without it •  Wants – everything else

Needs:

Shelter

Food

Clothing

Transportation

Health Care

Decisions Influenced By:

Individual Situation

Geography

Culture

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Spending Decision Card from Dollar Decisions, Idaho Extension

Will this purchase meet one of my goals?

Do I really want and need it?

Can I afford it?

What must I give up to have it?

Am I buying this only because it’s on sale?

Would I buy this if I had to pay cash?

Am I buying because I am depressed or

bored?

Would I come back tomorrow to buy this?

How much do I owe on my credit card this

month?

If I charge this, can I pay off this month’s

bill? Could I feel better now without spending

money?

Discovering Your Money Personality

•  Many “quizzes” available •  Examples include:

– SmartAboutMoney.org – Money Attitude Scales – Money Habitudes

and

SmartAboutMoney.org

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Money  Habitudes.com    

Money Habitudes™ Solitaire •  Find the cards that say

–  That’s me –  That’s not me –  That’s partially true or sometimes me –  Use them as the Ace in solitaire

•  Read each card’s statement quickly and place on the appropriate pile

•  Then, make sure you have 12 – 15 cards in “That’s me” pile

•  Sort “That’s me” cards by the designs on the back of the cards

•  Your dominant style is the one with the most cards

   Spontaneous

Money encourages me to enjoy the moment •  Other see you:

–  Spontaneous and Fun-loving –  Impulsive and Unconcerned with Consequences

•  Advantages: –  Enjoy an exciting and fun life, taking risks –  Able to quickly respond to opportunities –  Get things right away without waiting

•  Disadvantages: –  Spend money even when you don’t have it –  Go into debt to buy things you don’t need –  Do not have any reserves for the unexpected

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    Free Spirit Money isn’t a priority. Just let life happen.

•  Others  see  you:  –  Easy  going  and  Carefree,  or  –  Immature  and  Irresponsible  

•  Advantages:  –  Have  faith  that  others  will  provide  –  No  pressured  by  other’s  expectaBons  –  Not  distracted  by  money  consideraBons  or  details  

•  Disadvantages:  –  Lack  the  skills  and  informaBon  to  make  wise  choices  –  Feel  trapped  or  obligated  by  being  supported  –  Do  not  have  necessary  items  because  of  sharing  so  freely  with  others  

    Status Money helps me present a positive image

•  Others  see  you:  –  Generous  and  Impressive,  or  –  Superficial  and  InsensiBve  

•  Advantages:  –  Present  a  strong  first  impression  – Make  generous  donaBons  –  Give  expensive  or  unexpected  giKs  

•  Disadvantages:  –  Create  a  false  impression  of  having  wealth  –  Feel  constant  stress  to  keep  up  with  others  –  Do  not  have  reserves  for  the  unexpected  

    Selfless Money  helps  me  feel  good  by  giving  to  others  

•  Others  see  you:  –  Sacrificing  and  Charitable,  or  –  Judgmental  and  a  Martyr  

•  Advantages:  –  Have  strong  values  and  convicBons  –  Generously  support  other  people  or  causes  –  Depended  on  by  others  

•  Disadvantages:  –  Feel  guilty  or  angry  if  money  is  spent  on  personal  pleasure  and  not  to  help  others  

–  Resent  when  giving  is  expected  and  assumed  –  Use  giving  as  a  way  to  control  or  impose  personal  values  on  others  

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   Security

Money helps me feel safe, secure, in control •  Others see you:

–  Thrifty and Organized, or –  Miserly and Cheap

•  Advantages: –  Have a budget, financial goals and savings –  Shop wisely for value items on sale –  Have accessible money in case of emergencies

•  Disadvantages: –  Save so much there is no money for today’s wants and needs –  Your investments choices are safe, but don’t allow for growth –  Unable to take advantage of unexpected sales and opportunities

   Targeted Goal

Money helps me achieve my goals •  Others see you:

–  Responsible and Accomplished, or –  Driven and Too Conservative

•  Advantages: –  Make intentional financial decisions based on values

and desired long-term outcomes –  Have money reserved to pay for the unexpected –  Have a sense of well-being and control

•  Disadvantages: –  Feel pressured by others to spend money on things that

do not fit your budget or values –  Expected to help others who did not plan –  Have difficulty responding to new opportunities because

they are not part of your plan

   Chat  QuesBons  

•  Did  you  have  an  eye-­‐opening  moment  about  your  style?  

•  How  can  knowing  your  money  habitudes  help  you  with  budgeBng,  saving,  invesBng,  managing  debt?  

•  How  can  your  habitudes  conflict  with  other  family  members?  

•  Can  you  make  changes  to  counter  disadvantages  of  your  dominant  style?  

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   Spontaneous

Money encourages me to enjoy the moment •  Disadvantages:

–  Spend money even when you don’t have it –  Go into debt to buy things you don’t need –  Do not have any reserves for the unexpected

•  Create More Balance: –  Make a list of alternative activities to shopping. Plan to do

them with other people. –  Get rid of store credit cards and keep one major card for

emergencies. Leave it home. Pay with cash. –  Use direct deposit and online bill pay. Save a set amount

weekly.

   Free Spirit

Money isn’t a priority. Just let life happen. •  Disadvantages:

–  Lack the skills and information to make wise choices

–  Feel trapped or obligated by being supported –  Do not have necessary items because of sharing

so freely with others •  Create More Balance:

–  If you avoid managing money because of a lack of skills, take a class.

–  Know the realistic expenses to support yourself even if you do not pay them.

–  Determine if you are being fairly compensated for your work.

    Status Money helps me present a positive image

•  Disadvantages: –  Create a false impression of having wealth –  Feel constant stress to keep up with others –  Do not have reserves for the unexpected

•  Create More Balance: –  Shop for quality, not name brands. Limit trendy items

to 10% of your purchases. –  Shop online or from a catalog to avoid impulsive

spending caused by store displays, sales and persuasive salespeople.

–  Set up a budget. Use direct deposits to insure there is enough money to pay bills and savings for the future.

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    Selfless Money  helps  me  feel  good  by  giving  to  others  

•  Disadvantages: –  Feel guilty or angry if money is spent on personal

pleasure and not to help others –  Resent when giving is expected and assumed –  Use giving as a way to control or impose personal

values on others •  Create More Balance:

–  Know how much you can give and identify how you like to give. Stick to a plan.

–  Plan activities for personal enjoyment that are unrelated to your favorite charities.

–  Before giving monetary help to others, consider if you may be hindering their development or responsible behavior.

    Security Money helps me feel safe, secure, in control

•  Disadvantages: –  Save so much there is no money for today’s wants and

needs –  Your investments choices are safe, but don’t allow for

growth –  Unable to take advantage of unexpected sales and

opportunities •  Create More Balance :

–  Reassess your budget to include fun, gifts, and spontaneous opportunities

–  Interview financial professionals to find someone you trust to help you have a broader perspective on saving and investing

–  Plan to spend money on a special gift or activity for yourself every month

    Targeted Goal Money helps me achieve my goals

•  Disadvantages: –  Feel pressured by others to spend money on

things that do not fit your budget or values –  Expected to help others who did not plan –  Have difficulty responding to new opportunities

because they are not part of your plan •  Create More Balance:

–  Learn effective communication skills that you can use when pressured

–  Challenge yourself to experience new activities that are out of your comfort zone. Take some risks.

–  Be tolerant and patient with people who have lifestyles and values different from yours.

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Set SMART Goals It’s a big world out there

and it’s hard to get to where you are going without a roadmap.

The shortest distance between two points… depends on where that second point is…

and

SMART Goals Goal $ Amount Start

Saving Buy Date No. Months $ per Month

50” LCD TV

$600 6/1/12 11/1/12 6 $100

Rainy day fund

Write your goals in the chart on page 3 of UF Money Management Calendar

It’s YOUR choice! •  Spend and enjoy today

•  Save and enjoy tomorrow

•  Don’t forget to have enough set aside for an emergency! – 1 to 6 months of major expenses – Set up automatic withdrawal from paycheck to

an account of your choice

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Identify Your Income •  Show me the money!

– Salary or wages, benefits, tips, commissions

•  What if you don’t know how much it will be? – Plan with what you know! –  If it varies, use the average or lowest amount

Write monthly income on page 4

Track Your Current Behavior •  List monthly bills and amounts •  Keep track of your expenses for one

month to see where your money goes

Track Your Current Behavior •  Spending Diary

–  Keep a folded sheet of paper with you

•  Keep all receipts •  Decide the category of each expense •  Write amounts in the Flexible and Occasional

Expense Chart each day

Sun. Mon. Tues. Wed.

Thurs. Fri. Sat. Shopping list

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Get Organized With Your Expenses

•  Fixed •  Flexible •  Occasional

Write it down – better than just thinking it. Get in the habit!

Write the Plan – Pages 5 & 6

•  Fixed expenses –  Rent or mortgage –  Utilities –  Debt payments

•  Flexible expenses –  Food –  Personal care –  Clothes

•  Add the amount you intend to save for your goals and rainy day fund

•  Identify yearly totals of occasional expenses –  Divide by 12 to get the monthly amount to save each

month in your “put and pull” account

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•  When planning,

Income - Expenses = 0 •  If positive, decide how you will spend or save

the extra so it doesn’t “disappear” •  If negative, make the hard choices now to

avoid debt

Are you Positive or Negative?

and

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Increase Income/Resources

•  Second job •  Prove your worth – get a raise •  Find a better job •  Family member gets a job •  Volunteer to work overtime •  Roommate

and

Increase Income •  Get new licenses/degrees/certifications

–  This may require spending money to make money

•  Personal exemption withholding from paychecks •  Tax deductions

–  Child Tax Credit –  Earned Income Credit –  Dependent Care Credit

•  Get taxes prepared free, amend previous tax returns

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Other Assistance & Resources •  Housing Assistance •  Medicaid, CHIP •  Food Stamps, food

pantry, commodity foods

Call 211 for social service help

Does your state have a benefits website?

•  WIC, school lunch program •  Emergency Assistance •  Energy Assistance

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Decrease Expenses •  Reduce or eliminate spending on “wants” •  Learn to “do it yourself” •  Barter or trade services •  Modify or reduce flexible expenses

– Grocery shopping (Extension publications) – Electric and water (Utility handouts) – Carpool – Limit eating out

•  Can you change fixed expenses?

Simplify Share Substitute

Conserve Energy

Check for Spending Leaks •  Do you compare prices?

•  Do you use coupons wisely? Use advertising to your advantage, or give in to it?

•  Do you think ahead about your needs?

•  Do you take care of what you own and get full life from purchases?

and

How much should we spend?

Food 13-15%

Housing 32-42%

Child Care 15-25%

Clothing 3.8-4.2%

Personal 2-5%

Transportation 17-18%

Medical 6-7%

Education/ Recreation

0-10%

Gifts/ Contributions

0-10%

Misc./ Emergency

2-10%

Savings 0-10%

Insurance 0-11%

On average, Americans spend the following percentages of their income in each category:

and

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Percentages •  Divide amount you spend by the

amount you take home – $450 (rent) divided by $1200 (income)

equals .375 •  Multiply answer by 100 to find per cent

–  .375 multiplied by 100 = 37.5%

Is this per cent in the range for Housing?

Organize Your Calendar •  When you get the bill, write due date and amount

on the calendar •  Add paydays •  Add other flexible expenses, if dated •  Amounts and “pay dates”

Sun Mon Tue Wed Thu Fri Sat 1 2

Rent $500 3 4 5

Pay Utilities 6 Paid! $750

7 Groceries

8 9 Utilities Due

10 11 Cable Due

12 Pay Phone

13 14 Groceries

15 16 Phone Due

17 18 Pay Car

19 Car Due

20 Paid! $750

21 Groceries

22 Ballgame

23 24 25 26 27 haircut

28 Groceries

Use the Monthly Calendars •  Bills

–  Place bills in the calendar booklet for safekeeping –  Depending on method of payment, plan to pay bill at least 2-3

days in advance –  More time may be needed if bill is due on a weekend or Monday

•  Match up –  Timing of income –  Timing of expenses

•  Do you have a cash flow problem? –  Ask to change due dates –  Save money from previous income

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Stick With Your Plan •  Spending Diary

–  Keep a folded sheet of paper with you

•  Keep all receipts

•  Write amounts in the UF Money Management Calendar Charts each day

Sun. Mon. Tues. Wed.

Thurs. Fri. Sat. Shopping list

Review and Revise •  Set a monthly money date •  Add up amounts in flexible expense

columns •  Add up fixed expenses •  Add fixed and flexible amounts together •  Subtract total expenses from income •  Did you stay within your plan? •  Did you go over? Spend less? Why?

and

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Review and Revise •  Did you save the amount you need for

occasional expenses, emergency fund, goals?

•  Did your situation change? •  Is everyone still committed? •  Was the plan realistic? •  Are we building wealth? •  Are we decreasing debt? It takes time to make behavior changes

Stick with it!

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How Little Expenses Add Up Coke 1/day

Vending Machine Bought at Store

$1.00/day $.42/day

$260/yr $105/yr

Save $155/yr.

Cut it out! Change the frequency! Find cheaper way!

Set goal for the savings & save automatically

Long-term Cost of My Habit? Invested Investment Yield Years

$155.00 7% 5 years

Total Invested = $775 Total Value = $954

Total Earned in 5 years = $179

In 30 years, you will have $7,262

Long-term Cost of Snacks

•  $2 per day or $60 month –  Invest $60 month at 7% for 30 years

– How much are those daily snacks costing you?

$157,489

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End of the Year

•  Enter total monthly amounts for fixed and flexible categories on pages 34 & 35

•  Were you over or under your budgeted amounts?

•  Calculate your average monthly amounts for the year and use for next year’s plan

•  Enter tax deductible expenses on the back cover

•  Contact UF Extension for a new calendar, purchase financial calendar software, try www.mint.com

More Resources Spending Plan Forms -- • UF Master Money Mentor Factfinder • Effective Strategies Excel spreadsheets at http://www.fdic.gov/consumers/consumer/moneysmart/ • Quicken • Phone aps (from Elaine Courtney, UF Extension)

• Wallet • Money • Expense Lite • Cash Flow • Account Tracker • Page Once

http://www.cals.uidaho.edu/edComm/detail.asp?IDnum=1682

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http://www.fdic.gov/consumers/consumer/moneysmart/ Money Matters module

What you learned today: •  Importance of managing

money •  Steps to build a budget •  Techniques and tools to

encourage implementation of a budget

•  Using a calendar to track expenses

•  Spending gaps, leaks, habits •  Resources to help clients

Basic Money Management & Calendar-Based

Budgeting For more information:

Anita McKinney, Duval County Extension Educator 1010 N McDuff Ave

Jacksonville, FL 32254 904-255-7450 mckinney@coj.net

http://duval.ifas.ufl.edu and

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Connect With MFLN –Personal Finance Online

•  facebook.com/personalfinance4PFMs

•  Twitter: @MoneyTalk1, @DollarDecisions, @MollyCHerndon, @mikegutter, @dfougie

•  Military Families Learning Network Blog: blogs.extension.org/militaryfamilies/

•  http://www.extension.org/militaryfamilies