1              Module 1.1 Developing Your Spending Plan                Module 1.1Core PFRP for Transition
2                                                Module 1.1 Developing Your Spending Plan                                 ...
3                                            Module 1.1 Developing Your Spending Plan             Learning Objectives• Def...
4                                             Module 1.1 Developing Your Spending Plan                                 Why...
5                                    Module 1.1 Developing Your Spending Plan           Spending Plan CharacteristicsGuide...
6                  Module 1.1 Developing Your Spending PlanWhy a Spending Plan is Important          • Live within your in...
7                    Module 1.1 Developing Your Spending PlanThe Financial Planning WorksheetSix components of the workshe...
8                                 Module 1.1 Developing Your Spending Plan Elements of a BudgetIncome                     ...
9Module 1.1 Developing Your Spending Plan                                           4.12
10             Module 1.1 Developing Your Spending PlanEstimating Net Worth          www.savingsbond.gov          www.home...
11                               Module 1.1 Developing Your Spending Plan         Income to Savings               Total pa...
12                  Module 1.1 Developing Your Spending PlanComplete the Income and Savings   portion of the worksheet    ...
13                                        Module 1.1 Developing Your Spending Plan                     Example 1          ...
14                                           Module 1.1 Developing Your Spending Plan                       Example 2     ...
15          Module 1.1 Developing Your Spending PlanLiving Expenses
16                      Module 1.1 Developing Your Spending Plan     Tracking Expenses• Track spending for 2-4 weeks• Reco...
17                     Module 1.1 Developing Your Spending PlanCalculate the living expenses on the  Financial Planning Wo...
18                                            Module 1.1 Developing Your Spending Plan             Expenses           E5 o...
19                     Module 1.1 Developing Your Spending Plan  Debt ManagementCreditor   Balance            Due         ...
20                               Module 1.1 Developing Your Spending Plan        Summary• Total pay equals all compensatio...
21                                                  Module 1.1 Developing Your Spending Plan            70-20-10 Ratio    ...
22                         Module 1.1 Developing Your Spending PlanCalculate the indebtedness & summary section    of the ...
23                          Module 1.1 Developing Your Spending PlanTotal Monthly Debt Payments / Net Income x 100        ...
24                              Module 1.1 Developing Your Spending Plan          70-20-10 Ratio                          ...
25             Module 1.1 Developing Your Spending PlanThe Action Plan
26                   Module 1.1 Developing Your Spending Plan     Improving a Spending PlanIncrease    Decrease           ...
27             Module 1.1 Developing Your Spending PlanSources of Help
28                                                                                                                        ...
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Spending plan module 1

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Spending plan module 1

  1. 1. 1 Module 1.1 Developing Your Spending Plan Module 1.1Core PFRP for Transition
  2. 2. 2 Module 1.1 Developing Your Spending Plan 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 orservices 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 militarypersonnel 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. 3. 3 Module 1.1 Developing Your Spending Plan Learning Objectives• Define long-term/short term – Income Statement transition goals – Savings & Expenses• Determine cost of each goal – Indebtedness Summary• Determine current financial situation – Action plan / Goals using the Financial Planning – Daily Expense / Spend Plan Worksheet for Transition • Develop a post-service, 12-month• Compare current financial spending transition spending plan plan to goals• Analyze current/desired financial state• Anticipate future requirements• Complete the following sections in their financial spending plan – Net Worth Statement
  4. 4. 4 Module 1.1 Developing Your Spending Plan Why?A spending plan is a tool that helps you build the financial part of your plan to meet your transitional goals.
  5. 5. 5 Module 1.1 Developing Your Spending Plan Spending Plan CharacteristicsGuide & servantNo need to account for each pennyEasy to understandReflects wants & needsBased on current income/expensesPractical & realisticFlexibleProvides for necessities and fun
  6. 6. 6 Module 1.1 Developing Your Spending PlanWhy 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. 7. 7 Module 1.1 Developing Your Spending PlanThe Financial Planning WorksheetSix components of the worksheet 1. Net Worth Statement 2. Income Statements 3. Savings & Expenses 4. Indebtedness Summary 5. Action Plan / Goals 6. Daily Expense / Spending Plan
  8. 8. 8 Module 1.1 Developing Your Spending Plan Elements of a BudgetIncome Savings Budget ElementsExpenses Debts To calculate net worth, subtract balance from value
  9. 9. 9Module 1.1 Developing Your Spending Plan 4.12
  10. 10. 10 Module 1.1 Developing Your Spending PlanEstimating Net Worth www.savingsbond.gov www.homegain.com www.nada.com
  11. 11. 11 Module 1.1 Developing Your Spending Plan Income to Savings Total pay + allowances = Gross Income Gross income – tax deductions = Net IncomeNet income – additional deductions such as allotments = Take-Home Pay 4.13
  12. 12. 12 Module 1.1 Developing Your Spending PlanComplete the Income and Savings portion of the worksheet 4.13
  13. 13. 13 Module 1.1 Developing Your Spending Plan Example 1 E-5 over 8 years w/dependents Total compensation Base Pay $2,845.20, BAS $348.44, BAH $1,581.00 (A) $4,774.64 Total tax deductionsSGLI (self/family/spouse), TSGLI, AFRH, federal taxes, (B) $351.29 FICA (social security/medicare) NET INCOME (A – B) (C) $4,423.35 Total additional deductions Monthly savings $200, monthly investing $63.83 (D) $263.83 TOTAL TAKE HOME PAY (C - D) $4,159.52
  14. 14. 14 Module 1.1 Developing Your Spending Plan Example 2 E-7 over 20 years w/dependents Total compensation Base Pay $4256.10, BAS $348.44, BAH $2001.00 (A) $6,605.54 Total tax deductionsSGLI (self/family/spouse), TSGLI, AFRH, federal taxes, FICA (B) $926.28 (social security/medicare) NET INCOME (A – B) (C) $5,679.26 Total additional deductions Monthly savings $200, Monthly investing $200 (D) $425 TOTAL TAKE HOME PAY (C - D) $5,254.26
  15. 15. 15 Module 1.1 Developing Your Spending PlanLiving Expenses
  16. 16. 16 Module 1.1 Developing Your Spending Plan Tracking Expenses• Track spending for 2-4 weeks• Record all expenses daily• Group expenditures by category
  17. 17. 17 Module 1.1 Developing Your Spending PlanCalculate the living expenses on the Financial Planning Worksheet 4.13
  18. 18. 18 Module 1.1 Developing Your Spending Plan Expenses E5 over 8 years E8 over 20 yearsRent $1,600 Rent $2001Electric $49 Insurance $190Insurance $190 Cable/Internet $175Cable/Internet $124.50 Cell Phone $250Cell Phone $200 Food $900Clothing $43.50 Transportation $250Food $550 Child Support $500Transportation $275.50 Charity $200 Personal $100 Other $23.93TOTAL EXPENSES $3,032.50 TOTAL EXPENSES $4,589.93 73% OF INCOME 87% OF INCOME
  19. 19. 19 Module 1.1 Developing Your Spending Plan Debt ManagementCreditor Balance Due Minimum Payment Interest Rate Total
  20. 20. 20 Module 1.1 Developing Your Spending Plan Summary• Total pay equals all compensation• Total compensation minus all deductions equals take home pay• Take home pay is what you live on for the month
  21. 21. 21 Module 1.1 Developing Your Spending Plan 70-20-10 Ratio Savings 10% Debt 20% Expenses 70%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 21
  22. 22. 22 Module 1.1 Developing Your Spending PlanCalculate the indebtedness & summary section of the Financial Planning Worksheet 4.13
  23. 23. 23 Module 1.1 Developing Your Spending PlanTotal Monthly Debt Payments / Net Income x 100 23
  24. 24. 24 Module 1.1 Developing Your Spending Plan 70-20-10 Ratio Savings 10% Debt 20% Expenses 70%Use caution <15%Fully extended 15-20%Overextended 21-30%Seek assistance >30% 4.18 24
  25. 25. 25 Module 1.1 Developing Your Spending PlanThe Action Plan
  26. 26. 26 Module 1.1 Developing Your Spending Plan Improving a Spending PlanIncrease Decrease Decrease Income Living Expenses Indebtedness 26
  27. 27. 27 Module 1.1 Developing Your Spending PlanSources of Help
  28. 28. 28 Module 1.1 Developing Your Spending Plan Spending Plan MONTHLY EXPENSESMEMBER AND SPOUSES NAMETAKE HOME PAY 0 0SAVINGS ACTUAL PROJECTED REMARKSGOAL: 10% OF NET INCOME For comparison purposes onlyEMERGENCY FUND (1-3 MONTHS) 0RESERVE FUND"GOAL-GETTER" FUND 0INVESTMENTS/IRAS/TSP/ETC 0PAY PERIOD SAVINGS AND INVESTMENTS (10%) 0 0LIVING EXPENSES ACTUAL PROJECTED REMARKSHOUSING MORTGAGE/RENT MAINTENANCE/REPAIRS FURNISHINGS TAXES/FEESUTILITIES CABLE/SATELLITE TV/INTERNET CELLULAR/PAGES/PHONE CARDS/TELEPHONE ELECTRICITY NATURAL GAS/PROPANE WATER/GARBAGE/SEWAGE OTHERFOOD DINING OUT GROCERIES LUNCHES VENDING MACHINES MEAL DEDUCTIONSTRANSPORTATION GASOLINE MAINTENANCE/REPAIRS (INCL. SAVINGS FOR FUTURE) OTHER TRANSPORTATION (TAXI/BUS FARE, PARKING) OTHER (TAXES/REGISTRATION/LICENSING)INSURANCE AUTOMOBILE HOMEOWNERS/RENTERS HEALTH/LIFE/LTD/DENTAL WARRANTIES/OTHERSHEALTHCARE DENTAL EYE CARE HOSPITAL/PHYSICIAN PRESCRIPTIONSSUBTOTAL (PAGE 1) OF MONTHLY LIVING EXPENSES 0 0 MONTHLY EXPENSES (PAGE 2)MEMBER AND SPOUSES NAMELIVING EXPENSES ACTUAL PROJECTED REMARKSCLOTHING LAUNDRY/DRY CLEANING PURCHASES ($50 MONTHLY PER PERSON)CHILD CARE ALLOWANCES DAYCARE CHILD SUPPORT DIAPERS/WIPES, ETCPET CARE FOOD/SUPPLIES VETERINARIAN/SERVICES (BOARDING/GROOMING)PERSONAL BEAUTY SHOP/NAILS/BARBER SHOP CIGARETTES/OTHER TOBACCO/LIQUOR/BEER/WINE VENDING MACHINES HEALTH CLUB/ORGANIZATIONAL DUES PERSONAL SPENDING FUNDS OTHER (TOILETRIES, SUPPLEMENTS, ETC)EDUCATION BOOKS & SUPPLIES FEES (OTHER/ROOM & BOARD) TUITION/MGIB/POST 9/11LEISURE/HOBBIES ATHLETIC EVENTS/SPORTING GOODS BOOKS/MAGAZINES COMPUTER PRODUCTS (SOFTWARE/HARDWARE) DVD/VIDEO GAME RENTALS DOWNLOAD MOVIES/MUSIC DVDs & CDsENTERTAINMENT LESSONS TOYS & GAMES TRAVEL/LODGING CONCERTS/CLUBS/THEATER/OTHERCONTRIBUTIONS CHARITIES (CFC/NMCRS) SOME CHARITABLE CONTRIBUTIONS ARE ALLOTMENTS DON’T COUNT TWICE RELIGIOUSGIFTS HOLIDAYS/BIRTHDAYS/ANNIVERSARIESMISCELLANEOUS 4.17 DEPLOYMENT & TEMPORARY DUTY EXPENSES ATM FEES/STAMPS/ETC OTHER (TOILETRIES, SUPPLEMENTS, ETC)SUBTOTAL (PAGE 2) OF MONTHLY LIVING EXPENSES 0 0GRAND TOTAL OF MONTHLY EXPENSES (70%) 0 0

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