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Money Management 101. Budgeting & Planning The Financial Literacy Summitt III East Carolina University June 22, 2012. Money Management 101. About the Presenter: Christopher E. Jenkins, Certified Public Accountant and Master’s in Business Administration

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money management 101

Money Management 101

Budgeting & Planning

The Financial Literacy Summitt III

East Carolina University

June 22, 2012

money management 1011
Money Management 101
  • About the Presenter:

Christopher E. Jenkins, Certified Public Accountant and Master’s in Business Administration

Owner – Jenkins Management Consulting, P.C. (A CPA Firm) established in 1999

Registered Representative – Genworth Financial Securities Corp.

Investment Advisor Rep. - Genworth Financial Advisers Corp.

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Money Management 101
  • Objective: To inform attendees of best approach to develop a budget and track performance against it and to focus discussion on key budget areas – Saving/Investing and Taxes
  • Format: Presentation & Dialogue (feel free to ask questions along the way)
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Money Management 101
  • How would you define the term budget?
  • How many have household and/or business budgets currently in use?
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Money Management 101
  • Dictionary definition of Budget: An estimate of income and expenditure for a set period of time
  • To estimate implies planning or thinking about income and expenses BEFORE they occur
  • Fail to plan; Plan to fail!!
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Money Management 101
  • The Bible encourages planning in Luke 14:28:
    • “For which of you, intending to build a tower, sitteth not down first, and counteth the cost, whether he have sufficient (money) to finish it?”
    • The moral of the words of Jesus: think about the future you want and plan for it so you will not be ashamed.
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Money Management 101
  • Benefits of having a budget:
    • Peace (less worry)
    • Helps you visualize your goals
    • Provide a written point of reference for household
    • Help family communication
    • Provide a written reminder
    • Reflect your spending habits.
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Money Management 101
  • How to develop a budget? (Simple but not easy!)
    • Determine where you are now!
    • Determine where you should be?
    • Set your budget based on your determinations above.
    • Be mindful of budget challenges
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Money Management 101
  • Where are you now?
    • Review all of your expenses for most recent 3 month period
      • List all your debts and total them
      • Write down EVERY expense (cash, credit card, debit, check)
      • Organize each expense into meaningful categories (see handout)
      • Total each category at end of a month and calculate the average for the 3 months
      • Consider hidden or infrequent expenses such as auto insurance, family loans, doctor bills, auto repairs, home repair, etc. (these are challenge areas)
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Money Management 101
  • Where should we be?
    • Consider Guideline budget
      • See example in handout
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Money Management 101
  • Set your budget…
    • See handout
      • This is the Not so easy part!
        • Determine your new monthly budget amount for each category of expense
        • When actual spending is greater than guideline spending, tough decisions must be made on modifying your spending behavior
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Money Management 101
  • How to make the budget work/stick!
    • Buy and use software such as Quicken, Microsoft Money or similar product to track income and expense versus budget
    • Use manual paper system (e.g., Excel spreadsheet)
    • Use envelope system (cash only)
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Money Management 101
  • Specific Budget Area Considerations
    • Savings & Investing
      • How much to save (need emergency savings – 6-12 months)
      • Time value of money (start early) (see handout)
      • Dollar cost averaging (be consistent)
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Money Management 101
  • Specific Budget Area Considerations
    • Taxes
      • Second highest living expense for most people approaching 10 to 30% of household income
      • Expense this great deserves special attention!!
      • Consider tax saving strategies for yourself before year-end

(see handout)

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Money Management 101
  • Concluding Remarks:
    • Develop budget
    • Stick to it
    • Save regularly
    • Invest intelligently
    • Seek professional advice
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Money Management 101
  • Questions/Comments??
  • Thank you!!