Personal financialmanagement
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This document provides information on personal financial management and the importance of planning. It notes that few people have comprehensive financial plans and outlines biblical principles of stewardship. It then discusses establishing financial goals throughout life's stages and creating a budget that accounts for income, expenses, savings, and investments. Key steps outlined include identifying goals, determining monthly budgets, and beginning to save and invest now. The document emphasizes committing to a financial plan with concrete action steps and finding advisors to help ensure plans succeed.
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Personal financialmanagement
- 2. People don’t plan to fail….. they fail to plan! • Only 28% of households have a comprehensive financial plan • Only 19% express an interest in having a financial plan • Don’t understand the value • Don’t know what a comprehensive plan is • Believe the cost of having such a plan developed by a financial professional is high
- 3. Did you know? • God provides us with the knowledge and tools in the bible for sound money management. • New testament: • 215 verses pertaining to faith • 218 verses pertaining to salvation • 2084 versus dealing with stewardship of and accountability for money and finance
- 4. Your plan will move with you through the various life stages Life cycle planning periods retirement Pre-retirement Peak accumulation mid career early career Life cycles Disposableincome
- 5. FINANCIAL MANAGEMENT Personal financial management: the process of controlling your income and your expenses
- 6. FINANCIAL MANAGEMENT Income • Income: money coming in • Income may come from: • Parents • Grants • Student loans • Job • After college and starting your new career your income most likely will increase
- 7. FINANCIAL MANAGEMENT Expense • Expense: money going out • Common expenses include: • Tuition, text books, supplies • Housing • Transportation • Rent • Medical
- 8. PERSONAL FINANCIAL MANAGEMENT AFFECTS WORK PERFORMANCE • Personal finances impact all areas of your life • Finances assist you in reaching life goals • Keep debt under control • Affect your work situation
- 9. YOUR MONEY • Do not overdo spendingDo not overdo spending • Now is the time to manage yourNow is the time to manage your moneymoney • Create a budget to help you reachCreate a budget to help you reach your goalsyour goals • Financial success begins withFinancial success begins with discipline and planningdiscipline and planning
- 10. MONEY MANAGEMENT Cash Management • Cash management is the keyCash management is the key to good budgetingto good budgeting • Record all transactionsRecord all transactions • Carry a small amount ofCarry a small amount of cashcash • Reduce trips to the ATMReduce trips to the ATM
- 11. MONEY MANAGEMENT Budgeting • Budget:Budget: a detailed financial plan useda detailed financial plan used to allocate money for a specific timeto allocate money for a specific time periodperiod • Reflects your goalsReflects your goals • Controls and prioritizes spendingControls and prioritizes spending • Be honest and precise when creatingBe honest and precise when creating a budgeta budget
- 12. MONEY MANAGEMENT Steps to Creating a Budget 1.1. Identify goalsIdentify goals 2.2. Attach financial goals to personal goalsAttach financial goals to personal goals 3.3. Determine monthly income (money in)Determine monthly income (money in) 4.4. Determine monthly expenses (moneyDetermine monthly expenses (money out)out) • Budget on a monthly basisBudget on a monthly basis • Keep track of all spendingKeep track of all spending • Reduce money wastersReduce money wasters
- 13. MONEY MANAGEMENT • Fixed expenses: expenses that do not change from month to month • Flexible expenses: expenses that change from month to month • Money wasters: small expenditures that you do not realize are actually using up a portion of your income
- 14. Pharaoh's dream Genesis 41:25-36: “...seven cows, fat and sleek came up out of the Nile; and they grazed in the marsh grass…, seven other cows came up after them, poor and very ugly and gaunt…; and the lean and ugly cows ate up the first seven fat cows. Yet when they had devoured them, it could not be detected that they had devoured them; for they were just as ugly as before….I saw also in my dream seven ears, full and good, came up on a single stalk; and lo, seven ears, withered, thin, and scorched by the east wind, sprouted up after them; and the thin ears swallowed the seven good ears.”
- 15. The Parable of the Talents Matthew 25:14: • 5 talents – put his money to work and gained 5 more • 2 talents – put his money to work and gained 2 more • 1 talent – went out, dug a hole and hid the money For the 2 who put the money to work… “Well done, good and faithful servant! You have been faithful with a few things. I will put you in charge of many things. For the 1 who didn’t…. ‘Evil and lazy servant!.... Then you should have deposited my money with the bankers, and on my return I would have received my money back with interest!’
- 16. Wealth creation • The Power of Time • The Power of Compounding • The Importance of Rate of Return
- 17. SAVINGS AND INVESTMENTS • Begin saving nowBegin saving now • Put away funds for short-term goals orPut away funds for short-term goals or emergenciesemergencies • Rule of thumb: Have at least five months’Rule of thumb: Have at least five months’ income saved for emergenciesincome saved for emergencies • Have savings in a bankHave savings in a bank • Determine if you should use a regularDetermine if you should use a regular savings account or a Certificate of Depositsavings account or a Certificate of Deposit
- 18. SAVINGS AND INVESTMENTS • Begin investing nowBegin investing now • Opportunity to increase the valueOpportunity to increase the value of your moneyof your money • Long termLong term • Involves riskInvolves risk • Establish after you have aEstablish after you have a savings accountsavings account
- 19. If you fail to plan… • Inefficient use of resources • Risk of not meeting financial objectives • Unprepared for the storms of life • Pay higher taxes than necessary • Delay retirement; live on less money • May be difficult fulfilling God’s purpose for your life
- 20. Commit to action Concrete steps for action • Set goals – spiritual and practical • Assess current situation • Develop action plans • Put your plan into action • Track your progress • Celebrate your successes
- 21. Who can help? “Plans fail for lack of counsel, but with many advisors they succeed” Proverbs 15:22
Editor's Notes
- The Purpose Driven Life, Rick Warren God has not left us in the dark to wonder and guess. He has clearly revealed his five purposes for our lives through the Bible. It is our Owner’s Manual, explaining why we are alive, how life works, what to avoid, and what to expect in the future. It explains what no self-help or philosophy book could know. The Bible says, “God’s wisdom…..goes deep into the interior of His purposes….It’s not the latest message, but more like the oldest – what God determined as the way to bring out his best in us.”
- -- in fact the true high cost is in avoiding building a solid financial foundation -let’s have a look at this and overcome the fear factor!
- We have a great info sheet at the drop-in booth highlighting these verses. If you’re interested in a copy, following the seminar please stop by and one of the representatives will be pleased to help you.
- At different stages your plan will need to emphasize different aspects of the financial planning pyramid Where are you? What stage of your financial life are you in? Take a moment to find yourself. … each age and stage has different needs and so your financial plan is holistic, changing and growing with you: Early career – paying off debt, purchasing a home, first child Mid-career – focus on children, education, travel and vacation Peak accumulation – getting children through school, pay off mortgage, savings increased Pre-retirement – making plans, revising will, caring for elderly parents Retirement – maintaining comfortable lifestyle and estate planning
- 4 minute slide: This story emphasizes the importance of preparing for the uncontrollable events in our lives – saving for the future…i.e. pennies on the dollar (premium) – should disaster strike. Joseph said to Pharaoh, “God has told to Pharaoh what He is about to do. The seven good cows are seven years; and the seven good ears are seven years; the dreams are one and the same. And the seven lean and ugly cows that came up after them are seven years, and the seven thin ears scorched by the east wind shall be seven years of famine. It is as I have spoken to Pharaoh: God has shown to Pharaoh what He is about to do. Behold, seven years of great abundance are coming in all the land of Egypt; and after them seven years of famine will come, and all the abundance will be forgotten in the land of Egypt; and the famine will ravage the land.” What can Pharoah do? Pharaoh take action to appoint overseers in charge of the land, and let him exact a fifth of the produce of the land of Egypt in the seven years of abundance. Then let them gather all the food of these good years that are coming, and store up the grain for food in the cities under Pharaoh’s authority, and let them guard it. And let the food become as a reserve for the land for the seven years of famine which will occur in the land of Egypt, so that the land may not perish during the famine” (Genesis 41:25-36).
- The Parable of the Talents - Matthew 25:14 25:14 “For it is like a man going on a journey, who summoned his servants and entrusted his property to them. To one he gave five talents, to another two, and to another one, each according to his ability. The one who had received five talents went off right away and put his money to work and gained five more. In the same way, the one who had two gained two more. But the one who had received one talent went out and dug a hole in the ground and hid his master’s money in it. After a long time, the master of those servants came and settled his accounts with them. The one who had received the five talents came and brought five more, saying, ‘Sir, you entrusted me with five talents. See, I have gained five more. His master answered ‘Well done, good and faithful servant! You have been faithful in a few things. I will put you in charge of many things. Enter into the joy of your master. The one with the two talents also came and said, ‘Sir, you entrusted two talents to me. See, I have gained two more. His master answered, ‘Well done, good and faithful servant! You have been faithful with a few things. I will put you in charge of many things. Enter into the joy of your master. Then the one who had received the one talent came and said, ‘Sir, I knew that you were a hard man, harvesting where you did not sow, and gathering where you did not scatter seed, I was afraid, and I went and hid your talent in the ground. See, you have what is yours. But his master answered, ‘Evil and lazy servant! So you knew that I harvest where I didn’t sow and gather where I didn’t scatter? Then you should have deposited my money with the bankers, and on my return I would have received my money back with interest! Therefore take the talent from him and give it to the one who has ten. For the one who has will be given more,and he will have more than enough. But the one who does not have, even what he has will be taken from him. And throw that worthless servant into the outer darkness, where there will be weeping and gnashing of teeth.’
- The first step to successful financial management is educating yourself about finances and how money works. Is it safe to say that we all want to make our hard-earned money work for us … so we can work less hard for our money? Let’s unlock the secrets and look at key principles in growing your money! Read Slide
- Make a commitment Pray -- Ask for help, trust in God Organize -- Know where you stand Use a budget Prioritize Share with family and trusted friends Reward yourself!
- Credit Counselling Services Crown Ministries Mennonite Foundation of Canada - just to name a few…..and of course FaithLife Financial. Financial Advisors in general….act as a coach. When you meet with an advisor – the most important aspect to consider is trust, philosophy and committed to ongoing client service. Financial plans should be reviewed annually and for sure no less then every 2 years….because your priorities will change, you will go through different lifestages and your situation will likely have changed…..this could mean significant updates or modifications to your plans. Some will charge a fee for the plan and will not provide any products that will help put your plan into action. Some will create the plan and work with you ongoing at no charge, with an aim however that you will put your plan into action using the products they are licensed to put into place (insurance and investments) and some advisors will combine both of those.