CashCourse

     

Budgeting for the Young
Fabulous and NOT BROKE! 

Michael Meyer
October 2009
Who are the Millenials? 

CashCourse

     

1. Do not respect the corporate pecking order. 

2. Want to know work is mean...
Who are the Millenials continued? 

  

CashCourse

  
   

1. Want to be treated with respect. 
2. Mantra ’’I want it all...
College Student Financial

Literac

CashCourse

     

Scored 62% on the Jumpstart financial surveyl

° First year student...
College Student Financial

   

Literac

>50% of college students accumulated $5000

debt while in school and 33% accumula...
What influences financial behavior

CashCourse

   

° Parents,  modeling and expectations
- Work
- Formal financial educa...
Who am I and what do you know ? 

    

CashCouise
Boomer to Gen Xer

' B.  S.  ChE '87

- 21 years experience

— Dupont, ...
What is BROKE? 

° BROKE IS relying on a cash advance on your credit card
to pay the rent,  mortgage and praying that you ...
What is BROKE? 

° BROKE IS counting every coin in your change jar as well
as scrounging under the sofa cushions in a desp...
CashCouise

     
 

Budgeting/ Spending PLAN: 
Keeping Track of Your Money
Budgeting/ Spending Plan

     

CashCouise

  

“Spend less than you make.  Avoid the use of debt.  Build
an emergency/ l...
Cashllourse

10 Reasons to have a Spending Plan

To find out where you
are spending money

To extract money for
saving and...
Reasons & Excuses Not To Have a Plan

    

CashCourse
You are rich enough to buy anything you want and

still have plenty...
The Secret Every

Millionaire Knows

Cashcouise

    

Live within your income. 

 

“They became millionaires by budgetin...
What about the Millionaire Next Door ? 

CashCouise

  

° 54% of millionaires have a budget

° >23% create a scarcity men...
Why Care? 

It's Just Your Mone
CashCouise

    

° Managing your money is possible! 
' Reaching goals is possible! 

° Av...
Creating a Spending Plan

  

CashCourse

  
    

1. Define goals
2. Identify Income
3. Track Expenses
4. Define cash flo...
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'4'. «l"’ , l.VV’i. ...
How Students Spend Money

Cashllourse

    
   

Hobbies 4% Transportation Home 6%
I Books 9% I Food 16%

Health 3% Entert...
Fixed Expenses

CashCourse

    

° Housing
° Tuition

° Utilities
° Car Insurance
° Cell Phone

 

|20
Variable Expenses

CashCourse

    

° Books
- Food
- Entertainment

° Gifts and celebrations

° Gas or transportation

l ...
Choices,  Choices,  Choices

CashCourse

   

° Electronics ° Cable TV

    

- Bus pass - Internet
° DVDS ° Manicure
° Sh...
Nssos vs.  Wmrs Woaxsneer

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Not.  raw yuu...
I| w. II III

gf B You Must Be Kidding! 

    

, .
J‘. ..

1 Starbucks” drink @ $3.50
$3.50 x 7 days =  $24.50
$3.50 x 36...
Cashflouise

   

cut backon cut back on cut not cut back on Postponed Retired useo high - Used one Tool lean
urtertaimnori...
Your Next Best Alternative

CashCourse

    

° Bus/ walk/ carpool
0 Free concerts on campus

° Movies on campus

° Volunt...
Now What? 

"’ Identify where your money comes from. 

    

 Track where your money goes — keep a
spending diary for a mo...
Open a
Roth

Contribute
to 401 -K
Give to others

Pay yourself first
Save,  Save,  Save

Establish credit & build
FICO

Pa...
The FICO Ranges

CashCourse
Ranges

720-850 BEST
700-719

675-699

620-674

560-619

500-559 WORST
Cashllourse

 

Your FICO Score

Factors included in your FICO credit score: 

Amounts owed Payment history
How much do yo...
I What defines a FICO Score? 

Description

CashCouise

(%l
Paying bills on time.  35

Total balance on credit cards and o...
Get Educated & Know Your

Fnends

  

CashCouise

  

Subscribe to or read a magazine @ the library
— Money,  Kiplinger,  ...
National Endowment for Financial

Education
CashCouise

     

These materials are for non-commercial educational use
only...
Exraosia Woaxsntn 4' 9115 Exrzuzs Wowxsozn :2 an
n.  .. i . . *. ... ii_, .4 VVI 1. m,  1n M,  1.. .,
~‘I| IV“' A. .. Mi’ ...
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Budgeting Workshop Power Point Michael Meyer Ms&T Rev. 1

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This presentation was made at the Missouri University of Science and Technology to help students understand the importance of budgeting.

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  • Fast Forward Sinbad video to 2:50 for “broke” sketch
  • before flashing this, might be good to ask them for their ideas. what expenses do they have? Mention some they might not have thought of or had yet (e.g. still in dorms…) They will be pleased to see how CC worksheet matches up… Make sure they all have these as handouts.
  • >50% is spent on housing and food
  • before flashing this, might be good to ask them for their ideas. what expenses do they have? Mention some they might not have thought of or had yet (e.g. still in dorms…) They will be pleased to see how CC worksheet matches up… Make sure they all have these as handouts.
  • The FICO score is a three digit number that determines the interest rate that you will pay on your credit cards, car loan, home mortgage, rental apartment Fair Isaac Corporation The score really is a measure of risk and how likely you are to pay back money that is loaned to you.
  • before flashing this, might be good to ask them for their ideas. what expenses do they have? Mention some they might not have thought of or had yet (e.g. still in dorms…) They will be pleased to see how CC worksheet matches up… Make sure they all have these as handouts.
  • Budgeting Workshop Power Point Michael Meyer Ms&T Rev. 1

    1. 1. CashCourse Budgeting for the Young Fabulous and NOT BROKE! Michael Meyer October 2009
    2. 2. Who are the Millenials? CashCourse 1. Do not respect the corporate pecking order. 2. Want to know work is meaningful & have input to big decisions. 3. Need constructive feedback about suggestions and want more time. 4. Need encouragement even though they may not be promoted.
    3. 3. Who are the Millenials continued? CashCourse 1. Want to be treated with respect. 2. Mantra ’’I want it all and I want it now” 3. Want coaching in four life areas: ' Financial stability and success ° Relationships ° Health & fitness ° Career Workforce HBR Case Study, Tamara J Erikson, HBR, . l . i i l | 3 I. 87. No. 2 p.43-49
    4. 4. College Student Financial Literac CashCourse Scored 62% on the Jumpstart financial surveyl ° First year students scored 35% on the Jumpstartz financial survey ° Students in the class of 2007 had average loan debt of $20,0983 - First year students carry a credit card balance of $1,031 and by senior year increased to $2,063 1. Jumpstart coalition for Personal Finance, “Financial Literacy Still Declining, April 9, 2008 - 1030 students 2. What College Freshman Admit to Not Knowing about Personal Finance, Manton Edgar, Joumal of College Teaching and Leaming Vol. 3. No.1 January 2006 p. 43 — 400 students at Texas A&M 3. President's Advisory Council on Financial Literacy 2008 Annual Report . : ~ ~ l ll | 4 to the President, January 6, 2009
    5. 5. College Student Financial Literac >50% of college students accumulated $5000 debt while in school and 33% accumulated $10,000 in debt - 62% of 18-24 year old say they are not saving enough or not all Cashllourse - 20% of college students say they are ”very-well prepared” for managing money in college - 32% of college students consider themselves ”not at all’’ or ”not very well prepared" for managing money in college
    6. 6. What influences financial behavior CashCourse ° Parents, modeling and expectations - Work - Formal financial education in high school — Consumer economics - Junior achievement
    7. 7. Who am I and what do you know ? CashCouise Boomer to Gen Xer ' B. S. ChE '87 - 21 years experience — Dupont, WSRC, Merck, Dupont Protein Technologies International, Solae, HTRI | nc. , Covidien — Currently employed as Project manager - Single-10 years, Married-13 years - Work with coop students — 10 Years — Started coop education programs in two different companies ° Lived on a budget for 13 years - Provide one-on-one financial counsel to people through a national non-profit and local church
    8. 8. What is BROKE? ° BROKE IS relying on a cash advance on your credit card to pay the rent, mortgage and praying that you have enough left on the credit line to do so - BROKE IS having a ton of student loans that make you nauseated when you think about how long it is going to take to pay them all off - BROKE IS not opening the credit card bills because you are terrified to see what you owe and have no way of paying. You get hit with the late fee and finance charges - BROKE IS eating Raman noodles and not having money for the noodles Cashllourse | E1
    9. 9. What is BROKE? ° BROKE IS counting every coin in your change jar as well as scrounging under the sofa cushions in a desperate attempt to find the dough to cover your bounced check and the $25 check fee ° BROKE IS not having one penny saved even though you have a good job. If your car breaks down so will you. You don't have the money for repairs, but you need the wheels to get to work. CashCouise The Money Book for the Young Fabulous 8. Broke, 1 _ y , y I Q Suze Orman. 2005, p. 12-13 ' ‘ "
    10. 10. CashCouise Budgeting/ Spending PLAN: Keeping Track of Your Money
    11. 11. Budgeting/ Spending Plan CashCouise “Spend less than you make. Avoid the use of debt. Build an emergency/ liquidity fund. Set long-term goals”. Time Transcendant Principles Ron Blue ‘‘If all of us had every dime that we have wasted in our lives, we'd be a nation of millionaires". Jane Bryant Quinn “Success is not solely about making more money. It is about knowing where the money you make is going”. Suze Orman “Make yourself a spending plan. Not for discipline not for tidiness, not because your mother told you to. Make it for your own sake. That's the only way to coerce your money into doing what you really want". Jane Bryant Quinn ill I1‘
    12. 12. Cashllourse 10 Reasons to have a Spending Plan To find out where you are spending money To extract money for saving and investing To get out of debt To show your spouse where the money goes To live within your income To prepare for big expenses To prepare for life's difficulties To prevent wasting money To handle unexpected expenses To define goals rather than spending defining life goals |12
    13. 13. Reasons & Excuses Not To Have a Plan CashCourse You are rich enough to buy anything you want and still have plenty left over. Making a spending plan takes too much time I will not keep it up I do not want to live in a straightjacket I hate arithmetic None of my friends do it I budget in my head 9°. ‘. °‘SJ"PS-°! ‘-’ I am too . ... ... . . . (fill in the blank, tired, young, old, busy poor, not poor enough) i13
    14. 14. The Secret Every Millionaire Knows Cashcouise Live within your income. “They became millionaires by budgeting and controlling expenses, and they maintain their affluent status the same way” The Millionaire Next Door
    15. 15. What about the Millionaire Next Door ? CashCouise ° 54% of millionaires have a budget ° >23% create a scarcity mentality by paying themselves first by saving a minimum of 15% before other expenses ° <23°/ o inherited money or are independently wealthy ° 62.4% know how much is spent on food clothing and shelter ° 64.3% have clearly defined daily, weekly, monthly, annual and lifetime goals ° 65.7% spend time planning their financial future The Millionaire Next Door The Millionaire Next Door. Thomas Stanley. William Danko, 1995, p. 40, 41, 45, 46 V , _ , E I, I 15
    16. 16. Why Care? It's Just Your Mone CashCouise ° Managing your money is possible! ' Reaching goals is possible! ° Avoiding unnecessary debt is possible! I I15
    17. 17. Creating a Spending Plan CashCourse 1. Define goals 2. Identify Income 3. Track Expenses 4. Define cash flow = Income — Expenses 5. Set priorities and make changes (evaluate needs, wants and desires) I I17
    18. 18. Eu-mars Wonxstrn mum Expengs wowtsocu izazi . .. . A. In I L. ., . ---I I -i u 2. to in ii mu ix- '4'. «l"’ , l.VV’i. r1 o-no--anon-sunny. ""“ lrrulcnnmllj I I I . , , mm, H _ , _ , ‘ 1 , Ismuuunn I I I (, _.. .. g | I M6 II‘ | 3 1 undo I I I lull I I I Ina-at-noun I I I fl-Anna: I I I ~_. ‘c, .,-. . . -._ I-. .. 1 I I B-"rel I I I ouuuaunn I I I on--an an I I I In inn. I I I wanna I I I ~. . I I I Wm-no I I I inn-mu: -cum I I I urn-tutu I I I &-u I I I lot: I I I on-u pen I I I &v-vbfloo I Qlbo I I I I I I Ioauuguvn-I-I-an I I I I I I In. .. I I I 1 I bgui I I I In-noun-II I I I an” ' I . N-~l -i-: < 05- ‘ . ' -. ru. -n. .-~-onu-vr-oa-au—Iu-o-uo-—cuc~-u---oo. - wfiwn-'~"‘—' : ‘I : I £o@4AI—a-on-—v-: - . I’ 3.. . I Inland h-not haul: -Ia unsung Worksheet available on Cashcourse Oibd jtlfiifdllkéw Ibo-or‘
    19. 19. How Students Spend Money Cashllourse Hobbies 4% Transportation Home 6% I Books 9% I Food 16% Health 3% Entertainment 7% I Housing 37% I Clothing/ Personal Care 6% I Telecommunication 4% I Vehicles 8% Note: Healtlvrclaled expenses did not include medical insurance. Monthly expenses did not include tuition. Arizona Pathways to Lite Success for University Students. The — a H ~ ‘l lr» University of Arizona, Soyen Sim, April 2009.
    20. 20. Fixed Expenses CashCourse ° Housing ° Tuition ° Utilities ° Car Insurance ° Cell Phone |20
    21. 21. Variable Expenses CashCourse ° Books - Food - Entertainment ° Gifts and celebrations ° Gas or transportation l |2'
    22. 22. Choices, Choices, Choices CashCourse ° Electronics ° Cable TV - Bus pass - Internet ° DVDS ° Manicure ° Shoes ° Eating out ° Clothing - Entertainment l I22
    23. 23. Nssos vs. Wmrs Woaxsneer Lia-hauwunallaurs sun -can dyoarrn-uinuduma. --ulna-v on utoUyalvu*yoJv-ran Lari Not. raw yuurisl -ndtvl it-cnlvlufnvury vrautmrtu pm In! -mi 'vn‘sIn¢ um. - I): hum-flyrluuldnlrla-(V1:-Q myuurlm Pm. nn. ::| .: ' Mum r-ctr uryunts? Crmsfhuburmzrwixma ~ lpmlndmtnarr-o1,v: rinn': xa'nunna: n.us_ Mu-damuriinruunaruaurulwlx htpzlntwhnt Needs Coal Wants Cost Attemauves to W3 nta Ololmlovni 951:-v-vntfaflvsnoli-Inaicvl A runs until
    24. 24. I| w. II III gf B You Must Be Kidding! , . J‘. .. 1 Starbucks” drink @ $3.50 $3.50 x 7 days = $24.50 $3.50 x 365 days = $1,227.50 1 Sonic“ burger @ $4.25 $4.25 x 7 days = 29.75 $4.25 x 365 days = $1,551.25 1 carton of cigarettes @ $32.00 ri $32.00 x 12 months = $384.00 $32.00 x 26 weeks = $832.00 ‘ 2-'1
    25. 25. Cashflouise cut backon cut back on cut not cut back on Postponed Retired useo high - Used one Tool lean urtertaimnorit parsmal care on food conmunication medical! number at intiaest crsiit card to oi absence apeoses expenses menses apenses duital care classes loans ooryofi another inn school We Percentages ol students using vanoiis strategies tor cqunu with short-terln financial shomalis uw. “.-. ‘ —: ‘~c'i l‘l. '~. v' I i: }“| |‘. i'
    26. 26. Your Next Best Alternative CashCourse ° Bus/ walk/ carpool 0 Free concerts on campus ° Movies on campus ° Volunteer at event ° Grind your own coffee beans ' Use student discount I I26
    27. 27. Now What? "’ Identify where your money comes from. Track where your money goes — keep a spending diary for a month! I Create a budget and monitor your spending. Reconsider your wants and needs. " Live within your income. Check out the Budget Wizard on CashCourse!
    28. 28. Open a Roth Contribute to 401 -K Give to others Pay yourself first Save, Save, Save Establish credit & build FICO Pay School loans
    29. 29. The FICO Ranges CashCourse Ranges 720-850 BEST 700-719 675-699 620-674 560-619 500-559 WORST
    30. 30. Cashllourse Your FICO Score Factors included in your FICO credit score: Amounts owed Payment history How much do you Have you paid your owe on each account. bills on time? And if and how much of not, how late were your credit limit have you, when were you you used? late and how often? Types of credit —/ 15% Credit history What kinds of debt 10% —/ How long have you do you have? -1 had each account? New credit How many new accounts or queries have you had? Source: MyFico. com | an
    31. 31. I What defines a FICO Score? Description CashCouise (%l Paying bills on time. 35 Total balance on credit cards and other 30 loans in relation to credit limit. Length of credit history. New accounts and recent applications for credit. Mix of credit cards and loans.
    32. 32. Get Educated & Know Your Fnends CashCouise Subscribe to or read a magazine @ the library — Money, Kiplinger, Smart Money, Consumer Report - Read the Wall Street Journal - Read books on financial subjects — Ron Blue — Larry Burkett — Dave Ramsey — Jane Bryant Quinn ° Better Business Bureau - Missouri Attorney General Office i 32
    33. 33. National Endowment for Financial Education CashCouise These materials are for non-commercial educational use only. Portions of the content © 2008 National Endowment for Financial Education. All rights reserved. Cashcourse is a trademark of the National Endowment for Financial Education www. nefe. org www. CashCourse. org | 33
    34. 34. Exraosia Woaxsntn 4' 9115 Exrzuzs Wowxsozn :2 an n. .. i . . *. ... ii_, .4 VVI 1. m, 1n M, 1.. ., ~‘I| IV“' A. .. Mi’ W [V , _ , ,‘_. ... .»_ H. .. >0’-KI V. 41-07 vV‘r“V‘i nmmn on-Io-In-aIuI—---pg """' ""'"'--*-‘I9! I ‘ l "rlA'AI1'»1§Av§wvVVi; v1.4‘l I 1 I nu-um-an I I I 5-‘. .. . . . ran by I I I _, .., . . . I-- I I I In-I-.1-. .~—-. I I I scan. no-u I I I In-ucgu-I-g n-— -an-I I I I 9'’''| ' I 3 | ouuuunu I I I wmnouuwln I I I 5.. , . -.. _ . . . in-nun-an I I I ~. . g . . WC III: I I I Inn-pp: on: just. I I I can-mm I I I g. .- . . . It-nu I I I an‘: Inc: I I I on v-nun» 1 coins I I I vacuum. I I I Ioaunsnnuuuuuunn I I I my I I I bonus I I I 4.“ . ... ... . I I - oogcu I I I &-not-In-«I I I I W . <——. ~ ' N-~II| !:' °‘_ . . . II : 'TIn~'-A--o4h~Iv. na-I--oAI-I-ooon. uI-u-nn- vnbqnan uuann I I I ' 3 cpv-n pr--no nun. .- . -.v7E’: '3 . -aw I I I I than ht: -U Ito-Iounor In'ca—fi This worksheet available on Cashcourse Oibflfiiflflitallldntl 15%| .‘

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