Budgeting and Savings

Report
Anne Marie Anderson, CPA
& SIFE
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Goal setting
◦ Short-term (< 3 months)
 Present for boy/girl friend
 Duke Nukem video game
◦ Intermediate (3 months – 1 year)
 iPad
 Phone
◦ Long-term (> 1 year)
 Car
 4 year college
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Determine your time frame
Income
◦ Gross vs net pay
 Who is FICA and why does he take all my money?
◦ Understand all items being taken out of your
paycheck
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Expenses
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◦
◦
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Fixed
Variable
Out of pattern
Goals as expenses
Savings
Fun!
Needs vs. wants
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Evaluate your budget (positive/negative cash
flow)
Monitor over time
◦ Make adjustments as needed
◦ Be flexible
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Income - ??????
--Expenses:
◦ $400,000 NJ home, 30 year mortgage, $10K taxes
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Income - ??????
--Expenses:
◦
◦
◦
◦
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◦
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$2,800 Mortgage/Real estate tax
$300 Utilities
$150 Phone/Cable/Internet
$250 Car/Home Insurance
$200 Gas
$75 Clothes
$200 Food/Groceries
Total Expenses = $3,975
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Breakeven:
◦ Net pay = Expenses, so you must bring home
$3,975 per month or $47,700 per year to
breakeven
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$47,700 net pay is ≈ $70,000 gross pay after
Federal, state, and FICA taxes
What did I leave out?
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Goals on index cards – put them in the cash
or credit card slot of your wallet
Make a picture of your goal the backdrop of
your computer
Tell friends/relatives of your goals so they
can help reign you in
Envelope system…..
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Where to put what you save….
◦ 401K
◦ Roth accounts
◦ CD’s
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Some places are better than others, but
starting to save early is the key
1,000,000
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
-
Person A
74
70
66
62
58
54
50
46
42
38
34
30
Person B
26
22
Savings
Savings Comparison
Age
1-11
Person A: Saves $2000 per year from age 22 to age 35 and then stops
Person B: Starts saving $2000 per year beginning at age 35 and never
stops
Both earn 8% on their investments.
At age 75:
Person A has $1M in savings
Person B has $561K in savings
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College students – I don’t have money to
save!
◦ Where can you cut?
◦ Break your habits!
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Include savings as an expense item in your
budget - out of sight/out of mind
Direct deposit – split a portion into savings
Coins count - $15 billion in loose change
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Credit cards……..
◦ Be wary, credit card companies prey on college
students.
◦ Rule of thumb – if you don’t have the cash to buy
something, wait until you do!
◦ Pay more than the minimum payments – ALWAYS!
◦ Debt consolidation companies…..more harm than
good?
◦ Call credit card companies directly
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The average person spends money 3 times a day.
Putting aside every coin you touch results in
saving about $50 a month.
A $5 sandwich usually has less than $1 of
ingredients.
Some 40% of American families annually spend
more than they earn.
Americans spend more than 40% of their food
dollars each year eating out.
One out of every four Americans believe their
best chance of getting rich is by playing the
lottery.
The average interest rate on credit cards is
18.9%.
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College Money Insider
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Managing your money while in college
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360 degrees of Financial Literacy
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Debt consolidators (reputable ones…)
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Student budget calculator
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Feed the Pig
◦ http://www.overturemarketplace.com/insider
◦ http://moneyfor20s.about.com/od/makethemostofyourmo
ney/tp/collegemoney.htm
◦ http://www.360financialliteracy.org/Life-Stages/CollegeStudents
◦ http://www.360financialliteracy.org/Topics/Credit-andDebt/Credit-Cards/I-m-one-of-those
◦ http://www.360financialliteracy.org/Topics/BudgetingSpending/Budgeting-and-Saving/Student-Budget
◦ http://www.feedthepig.org
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http://www.youtube.com/watch?v=gZkuWLdS
puk

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