state employee money management. important this is by no means a complete list of interventions and...

State Employee Money Management

ImportantThis is by no means a complete list of interventions and resources available, just a useful guide that may give you a starting point or lead you to other options. KEAP does not advertise as a financial consultant or legal specialist, and many of the suggestions above have been gathered from resources dealing with financial planning. KEAP does not guarantee that the above suggestions will solve your financial difficulties and many of the ideas presented come with some risk. Further, KEAP does not guarantee that the information concerning documentation will result in legally binding agreements, if you have any question concerning that topic contact a lawyer specializing in estate planning.

A Healthy Financial Picture

Should include the following:Monthly Spending BudgetEmergency SavingsFlexible Spending AccountDebt Elimination PlanDisability InsuranceRetirement Savings PlanWill and Power of Attorney

Something to Think AboutWhat percentage of American families

spend more than they make? (Click for answer)

10%25%40%55%

On average, Americans spend $1.22 for every dollar they earn.

Americans spend $2600 per year on what? (Click for answer)

Medications Charities Eating OutPets

Eating out is #1 on the list of things people splurge on and #2 on the list of things people say they will cut back on during difficult times.

WHY?Do we spend more than we make. Do we say were are going to cut back but

then continue to eat out.

Answer: It is hard to manage your money if you don’t know how you are spending it. Many people are surprised when they record their spending habits to find that they are spending a lot more money than they thought on items that are not high on their list of necessities.

Can you do this in your head?Income $1400 Rent - $525 Utilities - $87Car payment - $233Groceries - $109

Total $446

Will you be able to afford that $450 car repair?

NO and now you are paying fees for your bounced check?

Financial Emergencies are Common

While the previous example may be extreme, everyone knows what it is like to have an unexpected expense that you are not sure you have the funds to cover.

In fact, almost 80% of people surveyed list medical, car and home as the top three unexpected expenses with medical as the #1.

Why not take out the guess work by maintaining a budget?

Why Budget?

Improved State of Mind

Through organization that removes the guess work that can sometimes cost us money, individuals experience a decrease in stress levels.

Financial Stability

It improves your credit score by guaranteeing that you will pay your bills on time and, as a result, better interest rates will become available.

Improved Relationships

The #1 reason couples fight is money. Agreeing on a budget will eliminate that type of argument and guarantee that both people are working toward the same goals.

Budgeting Necessities1. Track your

expenses so you know what to expect

Record it on a note pad

Or get receipts for everything and then organize them into envelopes labeled with that expense (for example: groceries, eating out)

Categories for your envelopes

• Rent/Mortgage• Groceries• Savings • Electric/gas• Phone/cell

phone• School lunches• Gasoline

• Credit cards• Car payment• Dry cleaning• Entertainment• Daycare• Charitable giving• Work lunch• Hair cuts/nails• Prescriptions• Clothing• Fun money

Budgeting Necessities1. Track your expenses so you

know what to expect The previous list is not all

encompassing so make it specific to you depending on your spending

2. Use a budgeting sheet to separate your fixed expenses from your variable

Fixed vs. VariableFixed expenses are typically a set amount due at the same time each month Examples include rent/mortgage, car

insurance, car loan, utility, etc.

Variable expenses can change from month to month depending on your needsExamples include groceries, gas,

entertainment, clothing, etc.

Budgeting Necessities1. Track your expenses so you

know what to expect.2. Use a budgeting sheet to

separate your fixed expenses from your variable.

3. Subtract your fixed expenses from your monthly income and whatever is left can be dispersed to your variable bills.

Fixed Expenses Amount

Rent $640

Car payment$275

Utilities$120

Phone $62

Cable $60

Savings $100

Income $2200

Fixed Expenses Total - $1257Remainder to go to Variable Expenses $943

Now the remainder ($943) can be disbursed depending on your situation that

month.Example: You are hosting a holiday meal

for the family.Variable Expenses

Groceries$600

Gas$200

Entertainment$143

Groceries take priority.

Or, You’re Taking a Trip During Your Vacation

Variable ExpensesGroceries

$400Gas

$300 Entertainment

$243Gas and entertainment get an increase.

Tailored to YouFlexibility

Accounting for your fixed expenses first allows you flexibility to deal with situations that change from paycheck to paycheck.

FreeA blank budgeting sheet is available for download on our website. It contains many of the categories already discussed as well as blank spaces that you can fill in depending on your specific needs.