MATH QUIZ• Choose a number between 1 and 7• Multiply the number X 2• Add 5• Multiply X 50• If you have already HAD your birthday in

2014, add 1764• If you HAVE NOT had your birthday yet this

year, add 1763• Subtract the 4 digit year you were born• Should have a three digit remainder

PERSONAL FINANCIAL MANAGEMENT (PFM)

INSIGHT TOTHE NAVY’S PFM PROGRAM

BRIAN PAMPURO, AFCFLEET AND FAMILY SUPPORT CENTER

NAVAL SUPPORT ACTIVITYBETHESDA, MD

301 400-2414brian.pampuro@med.navy.mil

dochmcm@aol.com & Facebook/LinkedIn

TERMINAL OBJECTIVES• Understand the United States Navy policies applicable to sound personal financial management and the career benefits to effective money management.

• Be able to reference the United States Navy Personal Financial Management Education, Training and Counseling Program directive (OPNAVINST 1740.5B) as a leadership tool.

• Be familiar with resources that can assist service members and/or their families in achieving personal financial fitness.

ENABLING OBJECTIVES

• Identify techniques for increasing income, decreasing living expenses, decreasing indebtedness and improving a spending plan.

• Identify least two sources of assistance for personal financial management information and referral, education and counseling.

• Identify at least two career benefits of maintaining an effective spending plan.

• Define three levels of the Financial Planning Pyramid.

• Define net worth, monthly income, net income and gross income, monthly savings, living expenses and debt-to-income ratio.

LIFE, UHG!Debt!

Debt!

Debt!Taxes!

Debt!

Daycare!Car Registration! Debt!

PLUS MORE DEBT!

Kids Braces!

New transmission!

Home Repairs

LIFE !!!!!

Do you (or someone you know) constantly worry about finances ?

• At work ?

• At home ?

• At night ? Lose sleep because of financial concerns or situation ?

• Living paycheck to paycheck and still wondering if ends will meet ?

• What about your Troops?

Stress Continuum Model

READYREADY(Green)

REACTINGREACTING(Yellow)(Yellow)

INJUREDINJURED(Orange)(Orange)

ILLILL(Red)(Red)

• Distress or impairment• Mild and

temporary• Anxious,

irritable, or sad• Physical or

behavioral changes

•More severe or persistent distress or impairment•May leave

lasting memories, reactions, and expectations

• Stress injuries that don’t heal without help• Symptoms

persist for >60 days, get worse, or initially get better and then return worse

Caregiver Responsibility

Caregiver Responsibility

Unit LeaderResponsibilityUnit LeaderResponsibility

• Good to go• Well trained• Prepared• Fit and

focused• Cohesive

units & ready families

Individual, Shipmate, Family Responsibility

Individual, Shipmate, Family Responsibility

StressorStressor

• Not educated – No financial training.• Don’t distinguish our wants from our needs. What are our basic needs in life?• We are a “need it now” society. • We are victims of social media and advertising!

• We develop bad spending habits way too early in life.

THINGS I NEVER LEARNED IN HIGH SCHOOL:

- How to do taxes- What taxes are- How to set up a budget and manage a household income- How to buy a house or car- Anything to do with banking

But I’m so glad I know the Pythagorean Theorem

Key Contributing Factors to Financial Struggles (My

Thoughts)

FROM WOMB to TOMB

IMPORTANCE OF MONEY MANAGEMENT

Poor money management leads to poor operational readiness, it also leads to poor performance, lower quality of living, and lowers chances for reenlistment.

Poor money management can affect you in:• Obtaining a security clearance• Getting assignments overseas• Getting special assignments• Getting better interest rates

and credit ratings

10

Military Policies• NAVY:

– “Members of the naval service are expected to pay their just debts and financial obligations in a proper and timely manner.”

– OPNAVINST 1740.5B Admiral Jonathan W. GreenertCHIEF OF NAVAL OPERATIONS

NAVY’S PERSONAL FINANCIAL MANAGEMENT & EDUCATION

PROGRAM• OPNAVINST 1740.5B (May 2007)

• Applies to all USN/USNR personnel assigned to Regular and Reserve commands

• Directs the accountability and responsibility of all Navy service members regarding management of their personal finances.

NAVY’S PERSONAL FINANCIAL MANAGEMENT PROGRAM

• MISSION – Provide education, counseling, information and referral to service personnel and commands in an effort to increase personal, family and operational readiness.

• # 1 Purpose – of financial difficulties !

PREVENTION

Options, Commoditie

s, etc.

Spending Plan

Wise Use of Credit

How to build Financial Security

Financial Planning Pyramid

Base PayBAHBAS

Special PayIncentive PayHaz Duty Pay

SGLIFSGLITSGLI

DICVA Benefits

Financial Success happens by

“FINDING A BALANCE”

FINANCIAL PLANNING ISN’T SQUEEZING EVERY DOLLAR BILL SO TIGHT

THAT WASHINGTON HAS A TEAR IN HIS EYE!

“Many people report

finding more money than they thought they had when they create a realistic spending plan and stay with it.”

— Dave Ramsey

What can Budgeting do for you?

• A written method to help you achieve

your financial goals by measuring and

managing your money! (Gives every

dollar you earn a name)

16

17

Why is my budget not working?Why is my budget not working?

18

We Forget the Little Stuff

$19.00 X 20$380.00

ANOTHER

TWENTY

MISSING

Out of Pocket SpendingWhere does it all go?

BUDWEISER

STARBUCKS

MARLBORO

KRISPY KREME

WHAT ABOUT YOUR SPENDING HABITS?

IMPULSE SHOPPING IS A BUDGET KILLER !!!!!

22

Chain Reaction ShoppingOne purchase leads to more purchases

Building A Spending Plan(Budget)

Six key components Six key components

1. Net Worth Statement

2. Monthly Income

3. Monthly Saving/Expenses

4.Indebtedness

5.Track Spending

6.Action Plan

24

The Net Worth

Section(Page 1-Go-

By)

Step 1 – What is your Net Worth?

Assets - Liabilities = Net Worth

(What you OWN minus what you OWE)

A measure of your wealth at a certain point in time

Calculate yearly

Assets - Liabilities = Net Worth

(What you OWN minus what you OWE)

A measure of your wealth at a certain point in time

Calculate yearly

Why should you care about your Net Worth?

Knowing your Cash Flow

1 2

3

EVERY DOLLAR GETS A NAME

4

27

The IncomeSection

(Page 2–Go-By)

28

Hawk Your Income

29

The Savings

(10%) andLiving

Expense (70%)

Sections(Page 3–Go-

By)

How many of your Piggy Banks look like this?

START NOW! – “PROCRASTINATION IS THE THIEF OF TIME”

ESTABLISH LONG TERM AND SHORT TERM FINANCIAL GOALS

REMEMBER – “SAVINGS ISN’T SAVINGS UNLESS YOU SAVE IT”

Assess Your Monthly Savings

• Monthly Contributions to– Emergency Fund– Reserve Fund– Goal-Getter Fund– Investments/IRAs, etc.– TSP

• Use Savings for “Short Term Goals”• Use Investments for “Long Term Goals”

What‘s the difference between “Saving” and “Investing” ?

Find ways to save SOMETHING each month !!!

Not necessarily by giving yourself

your own haircut

The decision to save and invest is simple -WOULD YOU RATHER BE DOING THIS

WHEN YOU RETIRE?OR THIS?

THIS WILL BE YOU IN A FEW YEARS.

BE PREPARED !!!

Define Your Living Expenses

• Monthly Amounts• Typical Expenses

– Housing and Utilities– Food– Transportation– Child Care– Clothing– Insurance and Healthcare– Leisure, etc.

Track Expenses• Track for 30 to 60 days• Record all expenses each day• Identify expense category & compare

to Living Expense section (Page 3)• Total monthly expenses for each

category

37

The Debt(20%) and

Summary Sections

(Page 4–Go-By)

CASHIS KING !!!

Tackle Your Indebtedness• List Creditor and Total Balance Due

• List only the Minimum Monthly Payment Amount

• List Interest Rate

• Total it up!

Discovering YourDebt-to-Income Ratio

Example of Formula:

Net income = $2980

Total minimum monthly debt payments= $545

545 / 2980 = .1829

.1829 * 100 = 18.29

Debt-to-income ratio = 18.29%

What does that mean?

Debt-to-Income Explained

414.18

Free Credit “Stuff”www.saveandinvest.org

Code good until 28 Feb 2014

PPALIJB8

(202) 728-8920

CreditScore@finra.org (Marlene Cohen)

--------------------------------------------

www.creditkarma.com

--------------------------------------------

www.annualcreditreport.com

Guidelines for Total Net Income

– 70% - Living Expenses

– 20% - Indebtedness

– 10% - Savings______= 100%

SHOULD ACCOUNT FOR 100% OF YOUR INCOME

– 70% - Living Expenses

– 15% - Indebtedness

– 15% - Savings______= 100%

*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.

HERE IS A SNAPSHOT OF A

FINANCIAL SUMMARY

00.00%

76.00%

15.56%

91.56%Total

INDIVIDUAL IS NOT ACCOUNTING FOR 8.44% OF HIS NET INCOME ($380.00)

46

The Action Plan

Increase IncomeIncrease Income

Decrease Living

Expenses

Decrease Living

Expenses

Decrease Indebtednes

s

Decrease Indebtednes

s

KNOWLEDGE IS GREATER THAN RICHES !

----------------------------------------IT IS OKAY FOR YOU TO KNOW MORE THAN YOU

ARE EXPECTED TO !

Teach Kids how to Save NOW!

THE THREE PIGGY BANK CONCEPT FOR KIDS

$20.00 ALLOWANCE – Use singles and or change

1 2 3

SAVINGS10 – 20 %

$4.00Can add interest

GIVING BACKChurch, Charity, Community

10 – 20 %$4.00

FUN MONEYNeeds

vs.Wants$12.00

You can help

“Survival suggestions from the doctor”

• Establish financial goals. Prepare a written budget. Make it realistic and plan to stick with it. You can make your money go 10% farther.

• Limit credit cards to those you absolutely need.

• To avoid interest penalties, pay all accounts within 30 days.

• Set up a category in the budget for entertainment. This is an expense that often drags families down.

• Establish two reserves, one of them an emergency fund in the checking account, the other a larger fund, in an accessible savings account, equal if possible to a month’s income.

• Before going to a store, make a list. Avoid buying anything that isn’t on the list.

• Get in the habit of realizing that dollars add up. Spend each one as if it were your last.

LIFE Magazine article – February 13, 1970 edition “ Side Stepping the Money Gap”

51

Where are you now?Where do you want to be?

1. Do you know your LES?

2. Do you use a budget or spending plan?

3. Do you track your spending?

4. Do you know your current Net Worth?

5. Do you know your Debt-To-Income Ratio?

6. How is your Net Income being disbursed? (Living Expenses/Debt/Savings)

7. What does your Credit Report/Score say?

8. Financial Goals (long & short term)? (What should your priorities be?)

YOU NEED TO KNOW WHERE YOU ARE BEFORE YOU CAN GET TO WHERE YOU

WANT TO BE !!!

THE 8 LIST

+ +

=

TRY TO PLANT AN ACORN DAILY !!!

THE FUTURE OF OUR NAVY DEPENDS ON IT