Money Management Workshop Objectives By the end of the learning session participants will, have: Discussed the purpose of the personal finance workshop. Time 15 minutes Methods Short presentation, brainstorming.
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Money Management Workshop
By the end of the learning session participants will, have:
Discussed the purpose of the personal finance workshop.
Short presentation, brainstorming.
By the end of the learning session members will have:
Distinguish between good and bad financial managers in a large group – 20 minutes
The stories help participants to see simple examples of one person who plans and another who does not.
How do John and Sarah think differently about money?
(John plans, saves short and long term, saves money by buying in bulk, reduces costs by having a collective marriage, has money for unexpected sickness. Sarah buys things for herself, borrows a lot at high cost, and does not save regularly.)
Which persons approach do you prefer and why?
(John, because he saves on costs to have more money, has money for unexpected events, invests in productive uses to earn more, and stays out of debt.)
Summary of the key points of the discussion.
3. Large and small groups analyze their own money management practices – 35 minutes
The way to improve money management practices is to, like John, lower your costs and look for ways to increase your income
Please call out the regular expenditures you have on a day-to-day basis. These are things that you spend money on regularly.
Rent for the house
Transport to the work place
Payments on debt
Sweets for children
Are there ways of reducing the amount of money that we are spending on these items? (Cutting down on things that we don’t need such as tobacco, ice-cream,buying in bulk; making fewer trips to the market; thinking before you spend; planning your purchases; trying not to spend more than you have; reducing borrowing.)
The following tables can be useful in helping participants to track their expenditure.
Tracking your expenditure means not only looking at your daily expenses, but at your weekly, monthly, seasonal, and annual expenses to find items and services big and small that can be eliminated, or reduced for big spending.
Time for a discussion: Group work
Discuss the different types of expenditure and how each of you decides what to spend money on.
What are some ways that you could increase the income coming to the household?
Are there differences between the cash flow trees of men and women? How does this affect the household?
Which sources of income are most important and reliable?
Are there some types of expenditure you can do without?
Does anyone plan savings or does it just happen that you find you have accumulated some surpluses?
How do you know if you can save up enough to invest in a new enterprise?
Can you tell in which months there is more coming in than going out and vice versa? When there is more coming in we have a cash surplus and when there is more going out we have a cash deficit.
If you estimate the difference each month to see if it is a surplus or a deficit, you could draw a chart like this showing if the differences are large or small.
In this example there are cash deficits in February, August, October and November. In June the amount coming in equals the amount going out.
It may be a good idea to work in small groups and do one cash flow at a time, discussing it together as you go. It is important to try and show each person's own personal situation as accurately as possible. However there is likely to be a lot of guesswork needed and this is quite OK – all budgeting is guesswork.
1) Write in the names of the months on the form you are going to fill and put your name and which year we are in at the top.
2) Next you must think of all the sources of cash income that you anticipate in the plan period. If you made a cash flow tree, this should help you remember. Think of any sources of income that come your way and include them. Think of everything you are going to sell, any cash wages you may earn, money someone in the family may send back from the town, rent you may receive, and list them in the "money coming in" section.
3)add up all you expenses involving any details of expenditure per month.
PLANNING FOR FUTURE EVENTS
By the end of the learning session participants will have:
Volunteers report on the results of improving money management practices – 5 minutes
Will a few volunteers please tell us what you would decide to do in your family to improve money management practices?
What are some other ways to improve these practices?
Story-telling about the ant and the grasshopper to discuss the importance of long-term planning
At the time of the rains, the ant does not have to worry because she has planned for the rainy days. But the poor grasshopper had to get wet because he had not planned for the rainy days. Today, the ant’s savings will help to overcome the times of crisis.
What do you learn from the story?
(It is important to plan for the long term.)
What is financial planning?
The ant is a good animal to think about as a long-term planner. She regularly stores more food than she consumes. She does this regularly and often, not at the last minute, so that she can build up wealth over time.
Planning involves making choices. When you plan for tomorrow, you will most likely have to give up something today. When your resources are limited, you must choose between different things. Sometimes these choices are hard. In the long run, good choices will make for a happier, more secure life.
Think for a few minutes what must happen – what you will need – to achieve your goals and dreams
Then find another person with whom to share these. Tell her two things:
What are the two or three goals and dreams that require money? five minutes
How will you secure the money to achieve these dreams? 10 minutes
After completing the dream card participants go into groups with similar categories
We are going to look at our events in terms of when they are going to occur. These are called long term goals. Some will happen very soon. These are called short-term goals. Medium-term goals are somewhere between these two.10 minutes
the participants to group their life cycle event cards in terms of the short term, medium term and long term.
the participants go back to a large groups for discussion.
volunteers to report on their groupings.
It is important for us to be able to know the time frame of our goal in order to plan accordingly and to choose the best financial option.
How will you secure money to finance your dreams?
There are many financial options for realizing your dreams. In some cases, the right approach may be a mix of a few different options. The option that is best for you and your household depends on your particular situation.
Savings – you give little lumps and you will get a big lump at the end. The longer you leave it the bigger the lump at the end.
Loans – big lump at the beginning, pay little lumps as you go.
Insurance – you give little lumps regularly and you will get a lump when you need it. ONLY if the event happens.
Scenario: Mary has some extra earnings. She would like to have money for her children’s education but one of her children has a history of illness. She would also like to buy more stock for her grocery business.
By the end of the learning session participants will have:
Picture scenario cards
Story-telling, report, brainstorming.
Testimonies to demonstrate the importance of saving and the difference between long- and short-term savings and investing – 20 minutes
How many of you are using long-term savings for a secure future?
What is the difference between saving and investing?
Saving is important for big expenses in the future
You earn more interest if you save early and often (zebra, ant)
The longer you save the higher will be your returns
You need to be able to get your money when you need it (giraffe)
There are trade-offs to using different savings services
It seems simple. In order to save money, you need to have "extra" cash. This is a common misconception.
Having a spending plan ("budget"), will help you create money for savings. Start , by setting spending goals, then you can manage to save regularly.
First, set a few short-term and long-term financial goals to work towards, like a down payment on a car or home.
Include the amount and a time frame for achieving the goal. It's much more motivating to save when you know what you're saving for. And remember, a goal that isn't written down is only a dream.
Short-term goals are where you'd like to see yourself in a few years. For instance, perhaps you want to buy a home.
Intermediate goals might include sending children who are young now to college in the future.
Long-range goals are your plans for retirement and your estate.
Set up a separate savings account. If you mingle your savings with your regular checking account, you'll almost certainly dip into your savings and may never pay them back. Having your savings in a separate account is a constant reminder that these funds are earmarked for your future, and watching the balance grow is not only rewarding and motivating - it's downright exciting
BORROWINGAND LOAN MANAGEMENT
By the end of the learning session participants will have:
Borrowing can be very expensive. If the reason for borrowing is not productive (does not earn income) it may be difficult to repay and can result in a cycle of debt. Borrowing is the opposite of saving or investing. The longer time that you borrow for and the less frequently that you make payments, the more that you will spend in interest.
Where do you currently obtain loans?
What are the advantages and disadvantages of these sources of loans?
Sources such as moneylenders are much more expensive than other sources. The goal is to ensure that you have as much money from cheaper sources as you can and as little money from more expensive sources as you can. Also, moneylenders do not require collateral or security for the loan whereas banks and credit unions do.
The squirrel is an interesting animal to help us think about good loan management. The squirrel hides nuts in different places in the woods. He may risk losing more nuts in some places compared to others.
How can you improve the way you use loans that will be less costly and easier to repay?
What are you using loans for – so that savings or investment can be better addressed?
RISK MANAGEMENT AND INSURANCE
By the end of the learning sessions the participants will have:
Risk management encourages a safety culture.
Has risk no beneficial side? What are the benefits?
Starts from the very basic issues and look broadly at more bigger issues.
We should always prepare plans for preventing and coping with actual or potential losses
By the end of the learning session the participants will have:
2. House purchase
3. House repair
5. Education of children
6. Business equipment
7. Riots/home burning
8. Business inputs/operations
10. Old age
11. Puberty ceremony
Discuss the events on the cards and decide which financial service would be best to use for these events and why
How is a financial plan different than a budget? (A budget only calculates income and expenses at a given time, whereas a financial plan tries to increase income and lower costs over a long term through different financial options such as savings, investment, loan management and insurance. A financial plan is broader.)
What are your goals for the future to build and protect your resources?
Find one other participant with whom to share your financial goals. Tell her how you plan to reach these goals.
What changes will you make in how you manage your money to reach these goals? Why?
Choose a change you plan to make and explain it to your partner
What financial services will help you reach your goals? Describe a goal and the financial service you will use. Explain why