Presentation Transcript

1. Module 1.1

   Core PFRP for Transition

2. Disclaimer: The information provided herein does not constitute a formal endorsement of any company, its products, or services by the Department of Defense. Specifically, the appearance of external hyperlinks does not constitute endorsement by the U.S. Department of Defense of the linked web sites, or the information, products or services contained therein. The U.S. Department of Defense does not exercise any editorial control over the information you may find at these locations. This information is being provided as informational resource material to assist military personnel and their families and should be used to assist in identifying or exploring resources and options. Competencies: Completion of a working/realistic spending plan for transition that will contain current spending, transitional spending, and future requirements.
3. Learning Objectives Define long-term/short term transition goals Determine cost of each goal Determine current financial situation using Person Financial Spending Worksheet for Transition Compare current financial spending plan to goals Analyze current/desired financial state Anticipate future requirements Complete the following sections in their financial spending plan Net worth statement Living expense statement Credit obligations Action planning Spend plan Develop a post-service, 12-month transition spending plan
4. Why? A spending plan is a tool that helps you build the financial part of your plan to meet your transitional goals.
5. Spending Plan Characteristics Guide & servant No need to account for each penny Easy to understand Reflects wants & needs Based on current income/expenses Practical & realistic Flexible Provides for necessities and fun
6. Why a Spending Plan is Important Live within your income Realize personal goals Maintain good credit history Get more for your money Reduce financial stress Enjoy financial freedom
7. The Financial Planning Worksheet Six components of the worksheet Net Worth Statement Monthly Income Monthly Saving/Expenses Indebtedness Action Plan Expense Tracking Form
8. The Financial Planning Worksheet Organizing the worksheet Top half for personal information Bottom half for net worth Left for listing the total value of everything you own Right for listing the total balance due foreverything you owe To calculate net worth, subtract balance from value
9. 4.12
10. Estimating Net Worth www.savingsbond.gov www.homegain.com www.nada.com
11. Income to Savings Total pay + allowances = Gross Income Gross income – taxes = Net Income Net income – deductions such as allotments = Take-Home Pay 4.13
12. Complete the Income and Savings portion of the worksheet 4.13
13. Gross Income – Deductions = Net Income
14. Example 1
15. Example 1
16. Living Expenses
17. Tracking Expenses Track spending for 2-4 weeks Record all expenses daily Group expenditures by category
18. Calculate the living expenses on the Financial Planning Worksheet 4.13
19. Expenses
20. Debt Management
21. Income Summary Total pay equals all military compensation Total military compensation minus deductions equals take home pay Take home pay divided by 2 (i.e. military pay periods) is what you live on for the month
22. Income Summary Percentages will vary based on lifestyle, but guidelines prove effective in helping to develop a sound financial plan and keeping debt at a reasonable level. 4.18
23. Calculate the indebtedness & summary section of the Financial Planning Worksheet 4.13
24. Debt-to-Income Ratio Total Monthly Debt Payments / Net Income x 100
25. Income Summary Overextended 21-30% Seek assistance >30% OK to add credit <15% Fully extended 15-20% 4.18
26. The Action Plan
27. Improving a Spending Plan Decrease Indebtedness Increase Income Decrease Living Expenses
28. Sources of Help
29. Spending Plan 4.17