54991 wsu hbec household fin.indd 1 2/1/16 2:07 pm
TRANSCRIPT
54991 WSU HBEC_HouseHold Fin.indd 1 2/1/16 2:07 PM
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TableOfContents
Goals……………………………………………………………………………………3
ValuesAboutMoney……………………………………………………………4
NetWorth……………………………………………………………………………6
SettingFinancialGoals………………………………………………………..10
GoalSettingWorksheet………………………………………………………11
SavingsGoalWorksheet……………………………………………………..12
CreatingaMonthlySpendingPlan………………………………………13
MoneyLeaksExercise…………………………………………………………14
CostofLivingPlan………………………………………………………………15
ReverseBudgetingExercise………………………………………………..17
RetirementSpendingPlans………………………………………………..20
Resources…………………………………………………………………………..21
Wayne State University, Institute of Gerontology • 313-664-2600
Healthier Black Elders Center
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GOALS
Bytheendofthissessionyouwill:
• Understandyourmoneyvalues
• Understandnetworthandhowtocalculateyours
• Bebetterpreparedtosetfinancialgoalsandsticktothem
• Betterunderstandyourspendinghabits
• BeabletocreateyourownpersonalCostofLivingPlan
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VALUESABOUTMONEYValuesarepeople’sopinionsaboutwhatisrightandgood.Valuescomefromfamily,friends,church,schoolcommunityorganizationsandsociety.People’svaluesarereflectedinwhattheythinkisimportantinlife,andhelpthemdecidewhattodowiththeirmoney.Forexample:Carlagrewupinacommunitywhereeveryonehasdebt.Shecontinuedtoliveinthesamecommunitythroughoutheradultlife.CarlaneversavedforretirementandcurrentlyonlyhasSocialSecurityincometocoverherlivingexpenses.Whataresomeofthethingsyouhavelearnedaboutmoneythroughoutyourlife?_______________________________________________________________________
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Howdoyouthinkthismayhaveaffectedyourvaluesaboutmoney?
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MyMoneyValues
Readthelistofitemsbelow.Ifyouspendmoneyonactivitiesoritemsnotonthelist,addthemtothespacesmarked“other.”Crossoutthewaysofspendingonthelistthatarenotimportanttoyou.
Next,noticetherearetwocolumnsnexttothelist.Inthefirstcolumnprioritizeyourcurrentspendinghabits.Forexample,writea“1”nexttothemostimportantspendingitem,a“2”nexttothesecondmostimportantandsoonuntiltheentirelistisnumbered.
Finally,lookoverthewayyouprioritizedthelistanddetermineifyouwouldliketomakeanychangesinyourspendinghabits.Ifso,usethesecondcolumntoprioritizethewayyouwouldliketospendyourmoney.Rememberthereisnowrongorrightwayforthelisttobearranged
Automobileorothertransportation _____ _____Billspaidontime _____ _____Groceries _____ _____Housing _____ _____Churchcontributions _____ _____Savingforemergencies _____ _____Televisionorradio _____ _____Clothingandshoes _____ _____Familyorreligiouscelebrations _____ _____Payingoffdebt _____ _____Comfortablefurniture _____ _____Medications _____ _____ Vacation _____ _____Giftsforfamily _____ _____Lifeinsurance _____ _____Eatingatrestaurants _____ _____Householdappliances _____ _____Entertainment _____ _____Other___________________________ _____ _____Other___________________________ _____ _____
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NETWORTHWhereyoustandfinanciallyiscalledyournetworth.Networthisthevalueofyourassets(whatyouown),minusthetotalofallofyourliabilities(whatyouowe).
TotalAssets-TotalLiabilities=NetWorth
AssetsAssetsareanythingyouownthatcanbesoldor“cashedin.”Examplesrangefromretirementaccountstopersonalbelongings.Itisagoodideato:• Keeparecordofyourassets.• Keepreceiptsofwhatyoubuy.• Keepappraisalsofvaluableassets.• Takepicturesofvaluableassets.• Knowwhicharedepreciating(goingdowninvalue)andwhichareappreciating
(goingupinvalue).Debts/LiabilitiesDebtsorliabilitiesareanymoneythatyouowe.Examplesrangefrommortgagepaymentstounpaidutilities.• Ifyouneedrecordsofthedebt,contactthecompany.• Wheneveryouspeaktoacustomerservicerepresentative,writedowntheir
nameandIDnumber.• Alwayskeepfinancialinformation,evenifyoucannotpaythebillsnow.
GroupExercise:Paul’sNetWorthPaul,61,livesinahousehepurchasedyearsagofor$200,000.Thehouseiscurrentlyworth$190,000with$150,000remainingonthemortgage.Althoughhismonthlypaymentsareuptodate,Paulisworriedaboutwhatwillhappenifheloseshisjob.Hismonthlyincomejustbreaksevenwithhismonthlyexpenses.
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Recently,theoldgasfurnaceinPaul’shomebrokedownforthelasttime.Paullivesinacitywithbrutallycoldwinters,andhedecidestoreplacethefurnacewithaheatpumpusinga$10,000lineofcreditofferedbytheheatingandcoolingcompany.Heisstillpayingoff$16,000inmedicaldebtincurredduringhislatewife’sillness.Paulalsooweshissister$600forapersonalloanshegavehimwhilehewasonunpaidleavetotendtohiswife.
Paulhas$1,000inacheckingaccountand$4,000inasavingsaccount.Hehas$100incashinhiswallet.Heregularlyusestwocreditcards.Heowes$3,000ononeand$2,000ontheother.Pauldrivesa1998HondaAccord,fullypaidfor,worthabout$2,500.Heownsfurniturevaluedat$2,000andacollectionofsnowglobesvaluedat$1,000.
Paulistryingtofigureouthowtheexpenseofpurchasingtheheatpumpwillimpacthisnetworth.
NetWorthWorksheet
Assets Value Liabilities Value
Home Mortgage
Car FurnaceLineofCredit
Collectibles PersonalLoan Furnishings/HouseholdItems CreditCard
CheckingAccount MedicalDebt
SavingsAccount
Cash
TotalAssets TotalLiabilities Paul’sNetWorthaftertakingoutheatingpumplineofcredit??TotalAssets-TotalLiabilities=
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AssetTrackerWorksheet
Asset Value Ownership
(Example)House $95,000 JointIndividual
JointIndividual
JointIndividual
JointIndividual
JointIndividual
JointIndividual
JointIndividual
JointIndividual
JointIndividual
TotalAssetsValue
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DebtTrackerWorksheet
Filloutthechartbelow,listingthebalanceswiththehighestinterestratesfirstandthelowestinterestrateslast.Ifyoudon’tknowallofyourbills,youcanfilltheminasyougettheinformation.
Company InterestRate
TotalAmount
MinimumMonthlyPayment
AmountYouCanPay
Ownership
o Jointo Individualo AuthorizedUser
o Jointo Individualo AuthorizedUser
o Jointo Individualo AuthorizedUser
o Jointo Individualo AuthorizedUser
o Jointo Individualo AuthorizedUser
o Jointo Individualo AuthorizedUser
o Jointo Individualo AuthorizedUser
Whydowelistthedebtswiththehighestinterestratesfirst?Dependingontheinterestrate,adebtwithalowprincipleamountandhigherinterestratecouldendupcostingyoumorethanadebtwithahigherprincipleamountandlowerinterestrate.
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SETTINGFINANCIALGOALSInalllifestages,individualsaremorethanlikelytohavesomeshort-andlong-termfinancialgoals.Settingtangibleandrealisticgoals,followingthemandtrackingyourprogressisthekeytobeingsuccessfulinachievingyourgoals.Short-TermGoals-Ashort-termgoalisoneyouplantoachieveinoneortwoyears.Mid-TermGoals-Mid-termgoalsareprioritiesthatcanbeaccomplishedintwotofiveyears.Long-TermGoals–Long-termfinancialgoalsareprioritiesthatmaytakemorethanfiveyearstoaccomplish.
SMARTGoalsSpecificMeasurableAttainableRealisticTimely
ExamplesofSMARTGoals?Statement:Iwanttopayoffmycreditcards.SmartGoal:Overthenext12months,Iwillpayoffthebalancesonmycreditcards.Statement:Iwanttotakeavacation.SmartGoal:Iwillsave$100amonthoverthenext12monthsandusethemoneyforatriptoMexico.Statement:Ineedanewcar.SmartGoal:Overthenext6monthsIplantoassessmycreditsituation,saveadownpaymentandshopforanewcar.
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GoalSettingWorksheet
Short-TermGoals AmountNeeded
WhenNeeded
#ofMonthstoSave
$PerMonthNeededtoMeetGoal
Mid-TermGoals AmountNeeded
WhenNeeded
#ofMonthstoSave
$PerMonthNeededtoMeetGoal
Long-TermGoal AmountNeeded
WhenNeeded
#ofMonthstoSave
$PerMonthNeededtoMeetGoal
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SavingsGoalWorksheet
CurrentDate
Goal
Cost
TargetDate
Months
MonthlySavings
WeeklySavings
DailySavings
6/1/15 FloridaVacation $1500 6/1/17 24 $62.50 $15.63 $2.23
TotalMonthlySavings
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CreatingaMonthlySpendingPlanMoneyPlanningDefinitions
Itisimpossibletoreachanygoalwithouttheproperplanning.Thisistrueoffinancialgoalsaswell.Belowaresometermsanddefinitionsassociatedwithmoneyplanning:
MonthlySpendingPlan(Budget)Adetailedplanofhowyouspendmoneythroughoutthemonth.Canbeadaptedtobeweekly,yearlyormonthly.
IncomeAnymoneyyouhavecomingintoyourhome.Salary(formalorinformal),disability,SocialSecurity,etc.
ExpenseAnythingthatcostsyoumoney.
DesignatedIncomeMoniesdesignatedtopayforaspecificexpense.FoodStamps,Section8Voucher,etc.
PlannedExpenseAnyexpenseyouplanfor.Includedinyourcostoflivingplan.
FixedMonthlyExpenseAnyexpensethatisthesameeverymonth.Rent,CarNote,etc.
ChangingMonthlyExpenseAnyexpenseyoupaymonthly,buttheamountchanges.Food,utilities,etc.
OccasionalExpenseExpensesthatdonotoccureverymonth(sometimesdifficulttoplanfor).Carrepairs,birthdays,holidays,etc.
MoneyLeaksAreoccurringexpensethatisnotincludedinyourCostofLivingPlan.Anexpenseyoudonotplan.Fastfoodhabits,cigarettes,coffee,etc.
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MoneyLeaksExercise
Sometimesmoneyseemstoevaporateintothinairrightfromourpockets.Ileftthehousewith$20thismorning.Ididnotdoanyshoppingorsignificantspending.WhenIreturnedhomeIonlyhad$7.56.Thinkingback,Iboughtcoffee,abagelandapackofcigarettesthismorning.Then,Ipurchasedasaladatlunch.ThesetypesofexpensesareexamplesofMoneyLeaks.IdentifyingMoneyLeakshelpswithyourCostofLivingPlanbecauseyoucanidentifywhereyourspendingistakingplaceandaddittotheplanorcutexpensesthatmaybehinderingyouinreachingyourfinancialgoals.TheactivitybelowwillhelpyouidentifyyourMoneyLeaksandturnthemintoplannedexpenses.MoneyLeak Cost/Time WeeklyCost MonthlyCostStarbucksCoffee $4.00 $4.00X5=$20.00 $20.00x4=
$80.00Starbucksonceaweek $4.00 $4.00x1=$4.00 $4.00x4=$16.00
PlannedExpense MonthlySavings $16.00 $80-$16=$64.00
MoneyLeak Cost/Time WeeklyCost MonthlyCost
PlannedExpense MonthlySavings
MoneyLeak Cost/Time WeeklyCost MonthlyCost
PlannedExpense MonthlySavings
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CostofLivingPlanNowthatwehavedeterminedyournetworth,thoughtaboutyourfinancialgoalsandidentifiedyourunplannedspending,itistimetocompletetheCostofLivingPlan.Thiswillbeoneofthemostimportantdocumentsinhelpingyoutakechargeofyourhouseholdfinances.Thefirstthingyouwillhavetodoiscalculateyourtotalmonthlyincome.Pleaseremembertoincludeallsourcesofincome,formalandinformal,designated,etc.MonthlyIncome(AfterTaxesandDeductions)MonthlyWages/Salary GovernmentBenefits(SocialSecurity,SSI,TANF,etc) GovernmentFoodBenefits(SNAP) ChildSupport/Alimony SupportfromFamilyorFriends Other: Other: Other:
MonthlyIncomeTotal
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ExpensesHousingandUtilities PrescriptionMedicines
Rent/Mortgage OtherMedicalBills Electric Gym/HealthClub Gas Grooming(hair,nails,etc) HomeMaintenance PersonalHygieneProducts Phone(celland/orlandline) Food,ClothingandEntertainmentCable Groceries Internet MealsOut Water Tobacco/Alcohol RentersorHomeInsurance Clothing PropertyTaxes Shoes Other: SportingEvents
Transportation GoingOut CarPayment Movies AutoInsurance Books/Music Gas Hobbies Maintenance Clubs PublicTransportation LaundryandDryCleaning Other: Other:
LoansandCreditCards Other: CreditCard1 MiscellaneousCreditCard2 Charities CreditCard3 Gifts PersonalLoanPayments Vacation StudentLoanPayments Travel Other: LifeInsurance
SavingsandInvesting DisabilityInsurance EmergencySavings EducationalExpenses RetirementAccounts Other: OtherInvestmentAccounts Other: Other: Other: Other: Other:
HealthandGrooming Other: HealthInsurance(monthly) MedicalVisits(copays) TotalMonthlyExpenses
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NetIncomeNowthatyouhaveanestimatedCostofLivingPlan,youcangetamorerealisticideaofyourmonthlyhouseholdfinancialsituation.Thenextstepistofigureyournetincome,theamountofincomeyouhaveleftoverafteryoumeetyourmonthlyexpenses.
- = MonthlyIncome MonthlyExpenses NetIncome
Ifyourmonthlyexpensesexceedyourincome,youmayneedtolookforwaystocutyourexpensesorsupplementyourincome.Onewaytosupplementyouincomemaybegettingapart-timejob.Seetheactivitybelowonreversebudgetingtohelpunderstandhowtocalculatetheamountyoumustearnatapart-timejobtocoverallyourmonthlyexpenses.ReverseBudgetingExerciseMaryisawidowlivingonafixedincome.ShereceivesamonthlypensioncheckforherdeceasedhusbandJohnintheamountof$636andherownSocialSecuritycheckmonthlyintheamountof$250.Mary’ssonJoshuaalsoprovidesMarywith$150eachmonthtocoverherexpenses.However,Maryisnoticingthatthereneverseemstobeenoughmoneyeachmonthtocoverallofherexpenses,andshealwaysfeelsbehind.Maryhasestimatedhermonthlyexpensesat$1700,whilehermonthlyincomeisonly$1036currently.Althoughsheidentifiedplacesshecouldcutback,Marycouldonlygetherexpensesdownto$1500evenwithmakingnecessarycutstoherCostofLivingPlan.Maryhasdecidedtogetapart-timejobtoearntheremaining$464sheneedstocoverherexpenseseverymonth.Shewouldliketogetabetterideaofhowmanyhourssheneedstoworkandhowmuchsheneedstoearnperhourtocoverherexpenses.Maryhasfoundareversebudgetingtechniquethatwillhelphertodeterminejustthat.
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Step1: Determinemonthlyexpenses
$1500Step2: Subtractanyconsistentincome
$1500-$1036=$434Step3: Multiplytoestimatetaxesandotherdeductions.Thiswouldinclude
benefitspaymentsdeducteddirectlybytheemployer.Thispercentagemaybesmallerifyouhaveotherbenefitsandwillnotbeparticipatinginhealthcare,retirementorotherprogramsofferedbytheemployer.InMary’scase,wewillestimatethisat20%.
$434X.20=$86.80 $434+$86.80=$520.80Step4: Determinetheannualincome.Multiplymonthlyincomeby12. 520.80X12=$6249.60Step5: Determineweeklyincome.Divideannualincometotalby52. $6249.60÷52=$120.18Step6: Determinehowmanyhoursyoucouldworkeachweek. 15Step7: Determinethehourlywageneeded.Dividetheweeklyincomebythe
numberofhoursavailabletoworkeachweek. $120.18÷15=8.01Usingthisformula,Maryhasdeterminedsheshouldbelookingforapositionpayingatleast$8.00perhourandofferingaminimumof15hoursperweektomaketheadditionalfundssheneedstocoverhermonthlyexpenses.AlsopleaserememberifyoureceiveSocialSecurityorothergovernmentbenefits,theremaybesomerestrictionsonhowmuchyoucanworkbeforeyourbenefitsareaffected.Checkwiththeagencyadministeringthebenefitstolearnabouttheserestrictions.
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Toincreaseincome:• Findapart-timejob,ifpossible.• Besuretomaximizeyouruseofpublicbenefits.• Startasmallbusinessoutofyourhobby.• Sellexcessitemsorthoseyouarenotusinganymore.• Rentoutanextraroominyourhome.
Toreduceexpenses:• Thinkaboutmovingtoamoreaffordablehome.• Checkifthereareanyfamilyandfriendsyoucouldlivewithtoshareliving
expenses.• Seeifrefinancinghigherinterestdebtispossible.• Lookatyourfoodcostsandseeifthereareareasyoucancutback.• Lookforwaystocutbackonenergycosts.
Additionalideasforincreasingincomeanddecreasingexpenses:
1. _____________________________________________________________
2. ______________________________________________________________
3. ______________________________________________________________
4. ______________________________________________________________
5. ______________________________________________________________
6. ______________________________________________________________
7. ______________________________________________________________
8. ______________________________________________________________
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RETIREMENTSPENDINGPLANSReadytoretire??Youhaveplanned,savedthemoneyandmadegoodinvestments,nowit’stimetospendit.Oneofthebestwaystoensureyouspendwiselyandhaveenoughmoneytolastyouthroughoutyourretirementistocomposearetirementspendingplan.StepOne:CompleteyourCostofLivingPlan.Itisimportanttocompletethissteptoknowwhatyourprojectedexpenseswillbeduringretirement.Theremaybeareaswhereyouwillbeabletoadjustexpensesonceyouretire.Forexample,downsizingyourhome,transportationcosts,workrelatedclothing,contributionstoretirementaccounts,etc.Andtheremaybeareasyouwouldliketoaddmorefunds,suchashobbies,travel,etc.StepTwo:CalculateallofyourFixedMonthlyIncomestreams.Forexample,SocialSecurity,employerpensionpayments,annuitymonthlypayouts,etc.Thiswillhelpyoudetermineifyouneedtouseyourretirementportfolioincomesources,andifso,howmuchyouwouldneedtodrawfromtheseaccountsannuallytomeetyourretirementlivingexpenses.StepThree:Createaninventoryofyourportfolioincomesources,investments,401Kaccounts,IRAs,etc.DuringthisstepitisbesttositdownwithaFinancialAdvisor.Anadvisorcanhelpyouunderstandwhattheaverageratesofreturnare,howmuchyoucanaffordtodrawfromthefundeachyear,andhowlongyourretirementportfoliowilllastifyousticktotheplan.
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RESOURCESEducationalResourcesWayneCountyCommunityCollegeDistrict(WCCCD)CitizenswhoareresidentsoftheWCCCcollegedistrictand60yearsofageoroldermayreceiveaWCCCDtuition-freewaiver.MainCampus801WestFortStreetDetroit,MI48226313-496-2600EmploymentResourcesDetroitAreaAgencyonAgingMatureWorkersEmployment&TrainingPrograms1333BreweryParkBlvd,Suite200DetroitMI48207313-446-4444ext.5296FosterGrandParentProgram517-373-8230Thisprogramofferslow-incomemenandwomenage55andoldertheopportunitytoprovidecompanionshipandguidancetochildrenwithspecialandexceptionalneeds.Volunteersserveonaverage20hoursperweekandinreturn,receiveamodesttax-freestipend.OperationABLEWhethercurrentlyunemployedorlookingtodevelopskillsnecessaryformaintainingfutureemployability,OperationABLE'sservicesareaimedathelpingmaturejobseekers.4850Woodward,Suite201DetroitMI48201313-832-0922
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SeniorsHelpingSeniorshttp://seniorshelpingseniors.com/Want-to-Help.htmlSeniorsHelpingSeniorsisalwayslookingforloving,giving,caring,compassionatepeopletoworkwithseniors.Eachhelperworksasmanyhoursaweekasheorshewants.Mostofthepeoplewhoworktherewerelookingforvolunteerjobs,seekingactivitiesthatwouldaddmeaningtotheirlives.Workingasaseniorhelpingotherseniorsmeansyouwillbemakinganimportantcontribution.Italsoprovidesyouwithanhourlywagethatcanhelpcovertheextras.ClintonTownship37040GarfieldRd.,SuiteC-3ClintonTwp,MI48036586-286-5820OaklandandNorthwestWayneCounty25128ToddyLaneFarmingtonHills,MI48335248-224-2477Volunteer–SeniorCompanionProgram(SCP)Thisprogramoffersyouvolunteeropportunitiestoprovidecommunityserviceactivitiesservingseniorswithphysical,mental,oremotionalimpairments.Servicesmayincludeshort-termcareassistance,non-medicalpersonalcare,andsocialorrecreationalactivities.Ifyouvolunteer,youmayreceiveastipendandotherbenefits.Mustbeover55.SCPofWayneCounty9851HamiltonDetroit,MI48202Phone:(313)883-2362OaklandCountySCP18310W12thMileRoadSouthfield,MI48076Phone:(248)559-1147ext.3424
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FoodResourcesMealsonWheels
DearbornHeights313-791-3550
Detroit313-446-4444
GrossePointe313-882-9600
MacombCounty586-469-5228
OaklandCounty800-317-0532
GovernmentBenefitsEconomicCheckUpNationalCouncilonAgingwww.benefitscheckup.org/Answerssomequestionstofindbenefitprogramsthatcanhelpyoupayformedications,healthcare,food,utilitiesandmore.MichiganDHSFoodAssistanceProgramTemporaryfoodassistanceforeligiblelow-incomefamiliesandindividualsisavailablefromtheU.S.DepartmentofAgriculture.UseMIBridgestoapplyforassistance,checkyoureligibilitystatusandmanageyouraccountonline.https://www.mibridges.michigan.gov/access/1-855-275-6424
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