Money Management

- 101
Practical Money Skills for Life
What a Spending Plan will do
for You
$ Allow you to learn how finances work in your
life
$ Enable you to make good decisions about
how you use money
$ Make you aware of where your money is
going
$ Give you a way to save for specific items
$ Help you to live within your income- or
decide if you need to increase it
A Spending Plan will
Show you where to cut spending
Provide methods for keeping good
records of spending
Allow you to spend money without feeling
guilty
Create a way to measure your progress
Improve communication with other
people

Make a realistic list of needs and wants
Needs Wants
Food Lots of Money
Clothing Cell Phone
Housing VCR or Big TV
Transportation New Car
Child Care Designer Jeans
Insurance Vacations
Medicines Boat
Titan Tickets


Make sure your goals are SMART
Specific- Clearly state what you want to do
Measurable- Measure by time and/or money
needed
Attainable- Make sure your goal is realistic and
possible
Relevant- Make sure goals fit your needs
Time related- Set a definite target day
(day/month/ year)
Put things in Priority Order- Imagine the
actions you need to take to get from
where you are now to where you want to
be.

Goals are dreams with deadlines! Post
your goals where you will see them
frequently. Find a picture to represent
your goals. Make them happen.
SMART GOAL

GOAL: Use cash to purchase a refrigerator in 6 months. New
refrigerator will cost $600.00.

MUST SAVE FROM EACH PAYCHECK:
$100/Paycheck - if paid monthly
$50/Paycheck - if paid bi-weekly or semi-monthly
$25/Paycheck - if paid weekly

I will save $25.00 from each weekly paycheck for refrigerator.
Steps to Get There:
Pack lunches.
Borrow movies and CDs from the library.
Shop with a list for everything.
Stay out of Walmart!
Your Plan with Actions
TARGET DATE: 6 MONTHS
PRIORITIZING GOALS
1. Build an emergency savings of $_____________.
A. Put $50.00 from each paycheck for 5 months.
B. Use OVERTIME or BONUS $$ to build more
quickly.
2. Build a retirement account.
Put $50.00 (automatic deduction)
401(k)
Roth IRA
The money that
comes in - INCOME
Regular take home
income
The money that goes
out SPENDING
Must know what you
are spending to
develop a plan for
managing your
money.
Three type of
expenses
How much money comes in each month?
Income has two parts:
1) Gross income- total you actually earn
2) Net income (take home pay) - what is
left over after your employer takes out
deductions for taxes, Social Security,
Medicare, and other needs.

Three Types of Expenses
Fixed expenses

Flexible (variable or controllable)
expenses

Periodic or occasional expenses
FI XED / MONTHLY EXPENSES
Car Payments
Rent or Mortgage
Child Care
Cable TV
Car Insurance
FLEXIBLE / VARIABLE EXPENSES
Clothing
Food
at home
away from home
Telephone
Utilities
Gasoline
FLEXIBLE / VARIABLE EXPENSES (cont)..
Public Transportation
Medical / Dental
Recreation
Supplies
household
personal
OCCASIONAL / SEASONAL EXPENSES
Car Maintenance / Repairs
License Tags
Insurance Payments
Gifts / Holidays
School
Taxes
Magazine Subscriptions
Vacations
$500
$100
$600
$800
$0
$200
$0
$200
$2400 / 12 = $200/month
Keep and organize the following items to help
you keep up with expenses

$ Check registers
$ Check stubs and canceled checks
$ Receipts
$ Bills and invoices
$ Credit card statements
$ Calendars, diaries, pocket notebooks
$ Pack lunch for work or school
$ Shop for store or generic brands
$ Use the public library
$ Choose free recreational activities
$ Check resale shops or garage sales for
bargains
$ Eat out less often
$ Handle home maintenance and repairs
yourself
$ Use public transportation when possible
$ Take advantage of free activities
SAVINGS
Its never impossible to
save money, no matter
how small the amount.
Two types of savings accounts
1)Emergency fund provides means for
paying for emergencies instead of
using credit
2) Nest egg account- helps you reach
specific goals such as buying a house
or taking a vacation
$ If you save $20 per week, every week for
a year, after one year you will have
saved $1,040!

$ Keep this up and after five years you will
save $5,200, not to mention the interest
you will earn!
WAYS TO SAVE
Work average 22 days/month
Lunch $8.00/day $176/month
Coffee $1.00/day $22/month
Soft Drinks $1.00/day $22/month
Childs Lunch $2.00/day $44/month
Total $264/month
$ Dont shop on payday
$ Dont shop when youre tired
$ Dont shop for food when youre hungry
$ Take your time. Try not to shop when you have
to hurry
$ You dont have to buy it today
$ Remember, nothing is a bargain unless you
need it
$ Have a spending plan and stick to it
$ No one can make you buy anything
Rule of thumb for consumer debt
Under 15%=comfortable 15-20%=Caution
Over 20%=Danger!!!

To figure your debt-to-income ratio:

Total average monthly debt payments
(excluding mortgage/rent and utilities) $400
Monthly take-home pay $2,000

$400 $2,000 = .20 = 20%
Developing a Personal Spending Plan will
show you
$ What money is coming in
$ How much you spend on the basic needs,
fixed and variable
$ How much you need to set aside for periodic
or unexpected expenses
$ How to plan for savings and investing
$ What is left over for your wants
Money Management
- 101

Get the most from
your Money
Set Goals
Develop a Plan
Balance Spending and Saving