The Mistakes Even Smart People Make With Their Money

Dian N. Rowe

Extension Educator

Baltimore County

“It is the policy of the University of Maryland, Agriculture Experiment Station and Maryland Cooperative Extension, that no person shall be subjected to discrimination on the grounds of race, color, gender, religion, national origin, sexual

orientation, age, marital or parental status, or disability.”

“The real measure of your Wealth is how much you would have if you lost all

your money.”

Anonymous

# 1

They fail to acknowledge and take care of their own needs!

Statistics

Married working women with children carry the heaviest workload of any group – about 77 hrs. per week.

Six out of every ten mothers of children under the age of 3 were in the work force (March 2000).

Nine percent of women care for a sick or disabled family member.

2.4 million grandparents (high percentage of grandmothers) care for grandchildren.

Care-giving begins with caring for self…

emotionally, socially, physically, intellectually and financially.

# 2

They under estimate

their ability to

manage money!!

Balancing Income and Expenses

If expenses exceed income, earn more or spend less.

# 3 They fail to make a financial plan.

Financial Goals

Life Cycle Planning

Opportunity Costs

# 4 They fail to budget.

Spending plan vs. budget

Current vs. future consumption

Flexible vs. fixed expenses

Periodic expenses

Include Savings

Prepare a balance sheet annually.

Same date each yearExample. December 31

Net worth = assets - liabilities

# 5 They fail to raise financially responsible children.

Family meetings

Allowances

Entrepreneurs

Gifts

Girls vs. Boys

Understanding your money profile

Fending off fights

Saving starts early

# 6 They fail to appropriately manage risk.

Disability insurance

Life insurance

Property and Casualty Insurance

Health Insurance

How to Save On Insurance

Drive Safely

Use deductibles

Take advantage of discounts

Pay premiums annually

Consider insurance costs

Reduce or eliminate coverage

Do not duplicate coverage

# 7

They commit tomorrow’s

dollars to today’s treasures.

Credit is really debt.

Opportunity costs

Costs of credit

The magic of cards

Secured vs. non-secured credit

Credit counseling

Credit repair clinics

What to do if…

You need to know what your credit report says ?

You need to correct your credit report ?

You can’t pay your bills ?

Creditors call you at home or work ?

You can’t get a credit card ?

You think you need to go bankrupt ?

Signs of Credit Abuse

Paying only the minimum on credit cards

Failing to pay bills by the due date

Over 20 % of your take-home pay committed to paying off credit

Borrowing to make monthly payments

Not opening bills

Using savings to meet monthly bills

Planning on tax refunds to catch up on late bills

Hiding financial facts from your family

Being turned down for credit

# 8

They fail to save for retirement.

Women have a lower income in retirement than men, thus higher poverty.

Women face greater economic challenges in retirement…live longer…lower lifetime earnings.

Divorced women have higher poverty in retirement.

Women are less likely to have pension coverage at work than men.

AARP recommends having 75 % of your pre-retirement income available as retirement income.

Many are postponing or delaying retirement to accumulate more savings.

Health care costs are frightening to many retirees.

Work is adding a fourth leg to the Retirement three legged stool…Social Security, Pension and Savings.

# 9

They fail to make a will.

A will enables you to select who receives your property.

A will allows you to manage your estate.

A will allows you to name a personal representative.

A will allows you to name a guardian for minors.

Letter of last instruction

Living Will

Other tools for transferring property

# 10

They don’t realize that the time to begin improving their financial stability and

security is now.

Financial Security in Later Life

http://www.reeusda.gov/financialsecurity/