5/24/2010

Strengthen Your Finances:

Tips & Tools

Brenda Williams, A.F.C.

Financial Fitness Program

3 Key Focus Areas

• Develop a Spending Plan

• Create an Emergency Fund
• Manage your Credit Wisely

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Spending Plan Tips

• Develop Financial
Goals
• Use Budget Ratios
• Make your savings
automatic
• Shop smarter!
• Institute budget
controls that fit your
personality
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Develop Financial Goals

• Short term
– Less than 1 year
• Buy a new winter coat

• Intermediate
– 1-5 years
• Build a 3-month emergency fund

• Long Term
– 5 years or more
• Pay off student loan debt in 10-15 years
• Save for a down payment on a condo
• Start saving for retirement as soon as get job

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70/20/10 Budget Ratio

70% Living Expenses

Rent/Mortgage (35%), Food, Clothing, Gas
Money, Utilities, Entertainment

20% Save
5% Emergency Fund
5% Specific Goals (irregular expenses, down
payment, vacations)
10% Long Term

10% Debt repayments

Car Payment, Student Loans, Credit Cards
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Pay Yourself First!

• Look at savings
as a bill.
• Save consistently.
• Make it automatic.
– Direct Deposit
• Research interest
rates using
www.bankrate.com

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Set S.M.A.R.T. Action Plan for

Savings Goals
Time to Monthly
Goal Cost Estimate
Accomplish Cost
Action Plan

Buy a new winter $200 4 mos. $50/mth Cut back

coat (short term) ($12.50/week) Starbuck’s lattes to
twice a week
Build an $3000 2 years $125/mth Cut back weekend
emergency fund ($32/week) restaurant
(intermediate) spending to once
per week
Down payment $10,000 4 years $209/mth Automatically
on condo ($53/week) transfer to money
(long term) market account
Be a millionaire $1,000,000 43 years $200 Enroll in company
when I retire 403b/Meet with
(long term) planner
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Know your repayment options: $30,000 Debt

Income
Standard Extended Graduated Contingent

Repayment 120 180 120

Period payments payments Payments ---
(10 years) (15 years) (10 years)
Starting $170 (24 mos.) ($35,000 salary)
$265 (18 mos.)
Monthly $345 $266 $190
$366 (18 mos.)
Payment $478 (60 mos.)

Interest
Paid $11,428 $17,934 $14,179 ---

Total
Amount $41,428 $47,934 $44,179 ---
Paid

Handling Debt

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Shop Smarter
• General
– www.billshrink.com (deals on credit cards and cell phone plans)
– Freeshipping.org
– BeatMyPrice.com
– DiscountMore.com
• Groceries
– Couponmom.com (also good for restaurants)
– Coupons.com
– Penny Pincher Gazette
• Coupons
– Couponcode.com
– Couponcabin.com
– Retailmenot.com
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Shop Smarter cont.

• Restaurants
– Restaurants.com (sells gift cards at discount prices)
– Dinnerbroker.com (fine dining discounts)
– KidsMealDeals.com (free or discounted kids meals)
• Clothes
– www.thebudgetfashionista.com
– Bluefly.com (designer clothes for less)
• Entertainment
– Discounts.depaul.edu
– Metromix.com
• Travel
– Farecast.com (tracks airline price trends)
– Kayak.com (searches several travel sites simultaneously)
– MouseSavers.com

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What am I really spending?

Weekly Yearly
Item Cost
Cost Cost
Starbuck’s coffee $4.00 $20 $1040

Lunch take-out (M-F) $6 – $30 – $50 $1560 -

$10 $2600
DVD/CDs $10 $20 $1040

2 packs $7.00 $14 $728

cigarettes/week each

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The Fees Add Up!

Type of Fee Cost Yearly Cost

Monthly maintenance fee $7 $84
on checking account
ATM charges for non- $3.50 every transaction $182 - $364
bank machines
Late payment charge for $25 $25 - $300
credit card bill
$55 ($30 bank & $25 $55 - $660
Overdraft fees vendor)
$591-$1408

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Budget Controls
Trouble curbing spending?
- Envelope method
Hate tracking expenses?
- Mint.com
- Wasabe.com
Don’t like online banking?
- Traditional excel sheet
- Collect receipts

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Spending Plan Evaluation

• Am I making expected progress towards my personal and
financial goals?
• Am I adhering to my established budget?
– If not, where do I need to make adjustments?
– If there is surplus money, how can I use it to further my
goals?
• What new money saving tips can I integrate into my
budget?

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Credit Management Tips

• Know how to develop
good credit

• Know how your score is

calculated

• Check your credit report

annually

• Use the roll-down method

to eliminate debt
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Tips for Developing Good Credit

• Pay on time!
• Try never to exceed more than 20% of your
limit.
• Establish credit as early as possible and keep
your oldest cards open and current.

• Show that you can handle different types of

credit.
• Watch number of credit inquiries.

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What’s In Your Credit Score

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Credit Reporting Agencies

*Free credit reports: www.annualcreditreport.com

• Equifax
– www.equifax.com
– 1-800-685-1111
• Experian
– www.experian.com
– 1-888-397-3742
• Trans Union
– www.transunion.com
– 1-800-888-4213

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Sites for Free Credit Scores

•Credit Karma
•Pulls information and gives you a credit score. Suggests products
and services based on your score.

•Credit.com
•Provides an estimated score

•Quizzle.com
•Provides a score and report from Experian. Can only use twice a
year

Debt 101

Retirement Planning Tips

• Invest some time to learn
about investing
• Meet with a financial
planner periodically
• Late starters:
– May need to save 25%
• For earlybirds:
– 10% for basics
– 15% for comfort
– 20% for luxury

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Educational Resources
• Path to Investing
– www.pathtoinvesting.org
• Kiplinger
– www.kiplinger.com/investing
• Investing for Success
– www.icief.org
• Dollars From Sense
– www.dollarsfromsense.com (college students)

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Planners & Calculators

• Calculators
– Are you saving enough?
• Kiplinger’s Retirement Savings calculator
– What is your risk tolerance?
• Kiplinger’s Your Risk Tolerance and Asset
Allocation calculator
• Locating a Financial Planner
– www.napfa.org
– www.garrettplanningnetwork.com
– www.fpanet.org

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Time is on Your Side!

Age Save per month Amount at 65

25 $286 $1,000,000

35 $671 $1,000,000

45 $1,698 $1,000,000

55 $5,466 $1,000,000

Saving & Building Wealth

True Cost of Procrastinating

Age 20 Age 30

Initial Investment $100 $100

Monthly contributions $100 $100

Rate of Return 8% 8%

Amount at age 65 $505,303 $226,001

*The $12,000 you didn’t

invest, cost you
$279,302.

Saving & Building Wealth

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