money mangement presented by l everette martin november 2010
TRANSCRIPT
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MONEY MANGEMENT
Presented by
L Everette Martin
November 2010
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Overview Definitions Why is Money Management Important? Goal Setting Identify Needs versus Wants Budgeting Building Your Savings Managing Your Debt
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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
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Why is Money Management Important?
Achieve your financial goals College Education
House Land Car Retirement
Live comfortably within your means
Increase your wealth
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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
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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
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Identify Your Needs and Wants Wants
Motorcycle 50 inch television 3 cell phones
Needs Food Clothing Shelter College Education Medical care
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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
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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
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BudgetingThe Unexpected Home repair, medical bills
vehicle repair
Annual, semi-annual, quarterly
Licence renewal, Property taxes, Insurance
Monthly Bank loans, credit card payment, rent, cable, telephone
Weekly Groceries, transportation, personal care (toiletries),
Discretionary expenses Books, magazine, dining entertainment, snacks,
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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
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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
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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
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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 email 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
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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
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Conclusion
Establish Goals Identify Needs versus Wants Budget Building Your Savings by prioritising your
spending Manage your Debt
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THE END
THANK YOU
QUESTIONS?