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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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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.
The purposes of the financial education workshop are to assist participants to: • Appreciate the importance of financial planning • Manage money more productively • Recognize life cycle financial needs and manage future risks • Analyze trade-offs between various financial options • Recognize how Bank and other financial products can help you to improve your financial situation • Make a financial plan for your household
Objectives By the end of the learning session members will have: • Distinguished between good and poor daily money management practices • Analyzed their own daily money management practices and identified ways to improve them
In this session, participants will review their day-to-day money management in order to find ways of improving their practices.
Distinguish between good and bad financial managers in a large group – 20 minutes
STORY TIME. The stories help participants to see simple examples of one person who plans and another who does not.
John’s story • John is a salary earner who earns K 400 a fortnight. He plans his household purchases and searches for the least expensive groceries. He saves daily with Bank. The savings allow him to borrow from bank rather than the moneylender if he needs a loan. By examining what money came in and out of his household regularly, he was able to save enough each month to put his current savings into a fixed deposit to earn more interest. When his child got sick he had savings to withdraw to buy medicine. He is also saving for his daughter’s wedding in three years. It is to be a collective wedding with some other families in her village so it will be less expensive than other types of weddings.
Sarah’s story • Sarah is a salaried worker who earns K 750 a fortnight. She likes to buy lots of tea and is always buying ice-cream for the kids. Sarah does not save. When his son joined university she had to borrow K 200.00 from the moneylender at 1.00 per month for each K 10. Then she borrowed from her brother to keep her household going. She buys household necessities at the last minute and has to pay higher prices. Her father suddenly got ill. She could not pay for the hospital and borrowed money from her neighbor. She has a lot of debt that is eating away her earnings.
(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.)
(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 Exercise
Please call out the regular expenditures you have on a day-to-day basis. These are things that you spend money on regularly. Expenditure items Food shopping Rent for the house Transport to the work place Utility payments Payments on debt Sweets for children Entertainment activities Hygiene supplies
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.
Weekly Expense Tracking • If you don’t know where your money is going, it’s time to start tracking your spending. Different methods of tracking work for different people – some like to save receipts while others prefer to jot down all purchases in a small notebook they carry with them. Remember, tracking is only effective if you count every expense, including the morning newspaper and the change you put in the office vending machine. Use the sheets on the next two pages to record weekly and monthly spending totals. (Make copies of the charts so that you can track for longer than one week.)
key learning points – Daily Money Management Practices • Think before you spend • Reduce unnecessary costs • Put aside extra money for the future and unexpected events
The cash flow • Understanding cash flow • It is clear that money helps us to manage our lives. We can store it, carry it around with us and use it to buy things we need. It becomes a problem when we don't have any. To avoid this we need to plan, to understand where we get money from and when and to be able to decide what we spend it on and when. We need to understand our cash flow.
Cash flow means the pattern of money coming in and going out of your life. • Money coming in (income) usually results from employment, salaries, wages, gifts, rent, remittances from other family members, the sale of goods (crops, livestock, processed food, etc.) or services ( bicycle repair, sewing, etc.) etc. • Money going out (expenses) will include family expenses, e.g. for food, clothes, furniture, medicine, fuel, school fees, ceremonies, travel, and business expenses, e.g. for equipment, livestock, vaccines, tools, goods for resale, wages, etc.
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? Compare your cash flow trees.
CASH FLOW PLANNING Aim • To learn how to prepare cash flow forecasts which show when money is likely to be received or spent. • To see how we can predict if we will be able to save and when we would be able to buy something we want.
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.
Time for a discussion: • What is the best way to cope with deficit months? • Do you know how much you need to save in order to cope with months when you have many things to pay for? • What kind of unplanned cash requirements might arise? (Medical expenses and funerals are common examples.) How should people prepare for these? • What are some ways that you could increase the income coming to the household?
MAKING A CASH FLOW PLAN Aim: • • To ensure that each person is able to prepare his or her own cash flow plan.
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. Instruction for making a cash flow statement.
Objectives By the end of the learning session participants will have: • Reviewed key points from the last learning session • Defined planning and stated the importance of long-term planning • Stated dreams and prioritized future life cycle events • Identified various financial options and their characteristics • Practiced analyzing trade-offs between different financial options
Time 75 minutes
Preparation/Materials • Practice telling the story • Life cycle cards
Methods • Short presentation, story-telling, large-group discussions, brainstorming.
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?
15 minutes Story-telling about the ant and the grasshopper to discuss the importance of long-term planning
Ant and grasshopper • This is the story of a farsighted ant and a lazy grasshopper. The grasshopper and the ant were good friends living in the jungle together. In the season of spring, the ant was working hard, stock-piling food for the rainy season. The grasshopper was wasting time by wandering on trees and was also advising the ant not to do any hard work in the spring season, saying that this is the time to enjoy yourself. The ant replied that she was doing hard work to prepare for the rainy season. 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.
