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Business of Budgeting for the Family

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  • What money management lessons will your children or even youth family members learn from you? What did your parents tell you about money when you were younger and what do you tell your children (or younger family members) now?

Transcript

  • 1. Financial Empowerment The Business of Budgeting for the Family
  • 2. What is Money Management ?
    • Maintaining a budget
    • Tracking your spending
    • Controlling your spending
    • Having positive cash flow
    • Maximizing savings
    • Utilizing your money efficiently
  • 3. What they say about budgets …
    • “ A budget is restraining and limits my freedom . ”
    • “ I cannot solve my money problems unless I make more money . ” “ Budgets are complicated and take too much time . ”
  • 4. Think about this…
    • We must understand all the aspects that affect our money
      • Inflation
      • Money Management
  • 5. What Kind of Message are You Giving?
    • What do your spending habits say about how you manage your money?
    • What do your spending habits teach your children?
    • How often do you include the well-being of your family when making financial decisions?
  • 6. Youth
    • Students perceive financial independence as a means to achieve adult status. Although some young adults in college learn to manage their money well, many others overspend their budgets, accrue credit card debt, and fail to pay off debts on time.
  • 7. 7 Reasons to Budget
    • Less stress
    • Less reasons to argue over money
    • Assure our financial stability
    • Teach our children and family
    • Protect ourselves from our temptation to spend
    • Protect ourselves from unexpected expenses, emergencies & unemployment
    • Assure that our money grows
  • 8. Let’s Rid Ourselves from the “ Budget ”
    • Invent your own name
      • Spending Plan
      • Money Plan
      • Etc.
  • 9. First Step towards Money Management ?
    • Attitude of Money
      • Before making your plan you must change your perception of money and your approach to money management.
  • 10. Emotion
    • Money can affect us emotionally . When we have money to spend are feelings towards money are positive. When we don’t have it to spend, our sentiments towards money can be negative. This can lead a person to make emotional decisions rather then logical ones.
  • 11.
    • Some times we try to keep up with Jones’ when in reality not even the Jones’ can keep up with the lifestyle they lead. They live an artificial life and we go through leaps and bounds to mimic them.
  • 12.
    • We have to acknowledge our weaknesses and identify our temptations so we can take them in account when we make a budget or every time we’re in a situation where that temptation exists.
  • 13. Why become a business owner ?
    • Achieve financial freedom
    • Pursue personal and career interests
  • 14. What is a business supposed to do?
    • Earn money
      • Be a successful business
    • Grow and Expand
      • Increase revenue, increase production
    • Fulfill an Objective
      • Satisfy a need or want
      • Provide a service
  • 15. You Are A Business
    • Treat yourself as if you were a business
      • A business as though every person with any income has a cash flow
      • Cash flow is constant movement – the in comes and out comes of your money
  • 16. Cash Flow
    • The difference between the inflows and outflows of your money determine if you have negative or positive cash flow
    • It’s important because it measures your capacity to save and arrive at your financial objectives
  • 17. Example
    • A person that earns $3,000 a month and spends $4,500 every two months has a negative or positive cash flow?
    • Is this person in line with their spending plan?
  • 18. Money Management
    • How do you differentiate money management for the home and for a business?
  • 19. … As a Family
    • Must find out how much it costs to “run” your household
      • How can you really know if you are using good money management if you don’t track your expenses?
  • 20. Putting it in Perspective
    • Expense Ratio
      • Compares your total income with how much you’ve spent for a specific expense.
      • What you paid = Expense Ratio
      • Your total income
  • 21. Example
    • If you earn $45,000 per year and you spend $120 per week for food what is your expense ratio?
    • $6,240 ($120 X 52) per year.
    • Your Expense Ratio is…
    • $6,240 /$45,000 = 0.138  14%
  • 22. Discover Your Net Worth
  • 23.  
  • 24. How to Money Proof Your Family
    • Assure that the whole family participates
    • Take an honest look at your finances
    • Identify your weaknesses
    • Get organized
    • Assign a family member
    • Designate a place
    • Know your credit score and history
    • Distinguish between needs and wants
    • Form realistic goals
  • 25. My Temptations List
    • Clothing
      • Jeans
      • Coats, Jackets
    • Books
    • Food
      • Brazilian & Haitian food
      • Chips & Soda
      • French Fries
  • 26. An honest look at your finances
    • Do I have savings, and if so, how much?
    • Has the percentage of my income to pay bills increased?
    • Do I max out my credit cards?
    • Do you frequently miss payments?
    • Do you use reserved funds to get caught up on bills?
  • 27.
    • What types of purchases do you make with your credit card? Could you use cash?
    • Do you have a backup in case you lose your job?
    • Do you know how much you owe?
    • Do you know the interest on the debt you owe?
    • Do you receive calls from creditors attempting to get payment on a debt?
  • 28. Organize Your Documents
    • Keep receipts for large purchases
    • Use your bills to help create your budget
    • Always keep documents that deal with home repairs
    • Cross check your W-2 income with your check stubs
    • Keep your tax returns for at least 6 years .
  • 29.
    • Medical receipts ( insurance payments, prescriptions, etc. ) should be kept for at least 6 years .
  • 30. Designate a Person
    • Elect a member in your household to be the “money manager”.
  • 31. Designate a Place
    • Find a secure and safe place in your home to store financial documents.
  • 32. Credit
    • Make sure you know your credit score or are at least up to date with your report.
    • AnnualCreditReport.com
  • 33. My Needs and Wants Needs Wants Student Loans New Car Money for Retirement Digital Camera Cell phone Eating out Clothing Europe trip Cable TV Plasma TV Healthcare $100 in savings
  • 34. Activity
    • Priorities
  • 35. What was the Objective of the activity?
    • Reduce debt
    • Money management is required to reach any financial goal
    • Identify opportunities to spend
  • 36.
    • Determine monthly income
    • Calculate monthly expenses
    • Subtract monthly expenses from monthly income
    Money Plan
  • 37. Fix the Leaks in Your Money Plan
    • Net Income vs. Gross Income
    • ATM fees
    • Not Comparison Shopping
    • Not comparison shopping… for better rates
    • Are you utilizing community resources?
    • How are you using credit ?