Command Financial Specialist Training

Report
Module 1.1 Developing Your Spending Plan
Module 1.1
Core PFRP for Transition
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Module 1.1 Developing Your Spending Plan
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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 or
services 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 military
personnel 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.
Module 1.1 Developing Your Spending Plan
Learning Objectives
• Define long-term/short term
•
transition goals
• Determine cost of each goal
• Determine current financial situation
using Person Financial Spending
Worksheet for Transition
• Compare current financial spending
plan to goals
•
• Analyze current/desired financial state
• Anticipate future requirements
Complete the following sections in
their financial spending plan
– Net worth statement
– Living expense statement
– Credit obligations
– Action planning
– Spend plan
Develop a post-service, 12-month
transition spending plan
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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.
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Module 1.1 Developing Your Spending Plan
Spending Plan Characteristics
Guide & servant
No need to account for each penny
Easy to understand
Reflects wants & needs
Based on current income/expenses
Practical & realistic
Flexible
Provides for necessities and fun
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Module 1.1 Developing Your Spending Plan
Why 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
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Module 1.1 Developing Your Spending Plan
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The Financial Planning Worksheet
Six components of the worksheet
1. Net Worth Statement
2. Monthly Income
3. Monthly Saving/Expenses
4. Indebtedness
5. Action Plan
6. Expense Tracking Form
Module 1.1 Developing Your Spending Plan
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The Financial Planning Worksheet
Organizing the worksheet
• Top half for personal information
• Bottom half for net worth
• Left for listing the total value
of everything you own
• Right for listing the total balance
due for everything you owe
Income
Savings
Budget
Elements
Expenses
Debts
To calculate net worth, subtract balance from value
Module 1.1 Developing Your Spending Plan
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4.12
Module 1.1 Developing Your Spending Plan
Estimating Net Worth
www.savingsbond.gov
www.homegain.com
www.nada.com
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Module 1.1 Developing Your Spending Plan
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Income to Savings
Total pay + allowances =
Gross Income
Gross income – taxes =
Net Income
Net income – deductions such as allotments =
Take-Home Pay
4.13
Module 1.1 Developing Your Spending Plan
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Complete the Income and Savings
portion of the worksheet
4.13
Module 1.1 Developing Your Spending Plan
Gross Income – Deductions = Net Income
E-5
E-7
Military Compensation (A) 4774.64
6605.54
Deductions (B)
926.28
Net Income
351.29
4423.36 5679.26
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Module 1.1 Developing Your Spending Plan
Example 1
E-5 over 8 years w/dependents
Total compensation
Base Pay $2,845.20, BAS $384.44, BAH $1,581.00
(A)
$4,774.64
(B)
$351.29
NET INCOME (A – B) (C)
$4,423.35
Total deductions
SGLI (self/family/spouse), AFRH, federal taxes, FICA (social security/medicare)
Total additional deductions
Monthly savings $200, Monthly investing $63.83
TOTAL TAKE HOME PAY (C - D)
(D)
$263.83
$4,159.52
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Module 1.1 Developing Your Spending Plan
Example 1
E-8 over 20 years w/dependents
Total compensation
Base Pay $4256.10, BAS $384.44, BAH $2001.00
(A)
$6,605.54
SGLI (self/family/spouse), AFRH, federal taxes, FICA (social security/medicare)
(B)
$926.28
NET INCOME (A – B)
(C)
$5,679.26
(D)
$425
Total deductions
Total additional deductions
Monthly savings $200, Monthly investing $200
TOTAL TAKE HOME PAY (C - D)
$5,254.26
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Module 1.1 Developing Your Spending Plan
Living Expenses
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Module 1.1 Developing Your Spending Plan
Tracking Expenses
• Track spending for 2-4 weeks
• Record all expenses daily
• Group expenditures by category
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Module 1.1 Developing Your Spending Plan
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Calculate the living expenses on the
Financial Planning Worksheet
4.13
Module 1.1 Developing Your Spending Plan
Expenses
E5 over 8 years
E8 over 20 years
Rent
$1,600 Rent
Electric
$2001
$49 Insurance
Insurance
$190
$190 Cable/Internet
Cable/Internet
$124.50 Cell Phone
Cell Phone
$250
$200 Food
Clothing
Food
Transportation
$900
$43.50 Transportation
$250
$550 Child Support
$500
$275.50 Charity
$200
Personal
$100
Other
TOTAL EXPENSES
$23.93
$3,032.50 TOTAL EXPENSES
71.39% OF INCOME
$175
71% OF INCOME
$4,689.93
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Module 1.1 Developing Your Spending Plan
Debt Management
Creditor
Balance
Due
Minimum
Payment
Interest
Rate
Total
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Module 1.1 Developing Your Spending Plan
Income Summary
• Total pay equals all military
compensation
• Total military compensation
minus deductions equals take
home pay
• Take home pay divided by 2
(i.e. military pay periods) is
what you live on for the month
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Module 1.1 Developing Your Spending Plan
Income Summary
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.
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4.18
Module 1.1 Developing Your Spending Plan
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Calculate the indebtedness & summary section
of the Financial Planning Worksheet
4.13
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Module 1.1 Developing Your Spending Plan
Debt-to-Income Ratio
Total Monthly Debt Payments / Net Income x 100
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Module 1.1 Developing Your Spending Plan
Income Summary
Savings
10%
Debt
20%
Expenses
70%
OK to add credit
Fully extended
<15%
15-20%
Overextended
Seek assistance
21-30%
>30%
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4.18
Module 1.1 Developing Your Spending Plan
The Action Plan
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Module 1.1 Developing Your Spending Plan
Improving a Spending Plan
Increase
Income
Decrease
Living
Expenses
Decrease
Indebtedness
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Module 1.1 Developing Your Spending Plan
Sources of Help
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Module 1.1 Developing Your Spending Plan
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Spending Plan
MONTHLY EXPENSES
MEMBER AND SPOUSE'S NAME
TAKE HOME PAY
SAVINGS
GOAL: 10% OF NET INCOME
EMERGENCY FUND (1-3 MONTHS)
RESERVE FUND
"GOAL-GETTER" FUND
INVESTMENTS/IRAS/TSP/ETC
PAY PERIOD SAVINGS AND INVESTMENTS (10%)
0
ACTUAL
0
PROJECTED
REMARKS
For comparison purposes only
0
0
0
0
LIVING EXPENSES
HOUSING
ACTUAL
0
PROJECTED
REMARKS
MORTGAGE/RENT
MAINTENANCE/REPAIRS
FURNISHINGS
TAXES/FEES
UTILITIES
CABLE/SATELLITE TV/INTERNET
CELLULAR/PAGES/PHONE CARDS/TELEPHONE
ELECTRICITY
NATURAL GAS/PROPANE
WATER/GARBAGE/SEWAGE
OTHER
FOOD
DINING OUT
GROCERIES
LUNCHES
VENDING MACHINES
MEAL DEDUCTIONS
TRANSPORTATION
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/OTHERS
HEALTHCARE
DENTAL
EYE CARE
HOSPITAL/PHYSICIAN
PRESCRIPTIONS
SUBTOTAL (PAGE 1) OF MONTHLY LIVING EXPENSES
0
0
MONTHLY EXPENSES (PAGE 2)
MEMBER AND SPOUSE'S NAME
LIVING EXPENSES
CLOTHING
ACTUAL
PROJECTED
REMARKS
LAUNDRY/DRY CLEANING
PURCHASES ($50 MONTHLY PER PERSON)
CHILD CARE
ALLOWANCES
DAYCARE
CHILD SUPPORT
DIAPERS/WIPES, ETC
PET 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 9/11
LEISURE/HOBBIES
ATHLETIC EVENTS/SPORTING GOODS
BOOKS/MAGAZINES
COMPUTER PRODUCTS (SOFTWARE/HARDWARE)
DVD/VIDEO GAME RENTALS
DOWNLOAD MOVIES/MUSIC
DVDs & CDs
ENTERTAINMENT
LESSONS
TOYS & GAMES
TRAVEL/LODGING
CONCERTS/CLUBS/THEATER/OTHER
CONTRIBUTIONS
CHARITIES (CFC/NMCRS)
RELIGIOUS
SOME CHARITABLE CONTRIBUTIONS ARE ALLOTMENTS DON’T COUNT TWICE
GIFTS
HOLIDAYS/BIRTHDAYS/ANNIVERSARIES
MISCELLANEOUS
DEPLOYMENT & TEMPORARY DUTY EXPENSES
ATM FEES/STAMPS/ETC
OTHER (TOILETRIES, SUPPLEMENTS, ETC)
SUBTOTAL (PAGE 2) OF MONTHLY LIVING EXPENSES
GRAND TOTAL OF MONTHLY EXPENSES (70%)
0
0
0
0
4.17

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