Money Management 101

1. Money Management 101 Budgeting & Planning The Financial Literacy Summitt III East Carolina University June 22, 2012

2. Money Management 101 • About the Presenter: Christopher E. Jenkins, Certified Public Accountant and Master’s in Business Administration Owner – Jenkins Management Consulting, P.C. (A CPA Firm) established in 1999 Registered Representative – Genworth Financial Securities Corp. Investment Advisor Rep. - Genworth Financial Advisers Corp.

3. Money Management 101 • Objective: To inform attendees of best approach to develop a budget and track performance against it and to focus discussion on key budget areas – Saving/Investing and Taxes • Format: Presentation & Dialogue (feel free to ask questions along the way)

4. Money Management 101 • How would you define the term budget? • How many have household and/or business budgets currently in use?

5. Money Management 101 • Dictionary definition of Budget: An estimate of income and expenditure for a set period of time • To estimate implies planning or thinking about income and expenses BEFORE they occur • Fail to plan; Plan to fail!!

6. Money Management 101 • The Bible encourages planning in Luke 14:28: • “For which of you, intending to build a tower, sitteth not down first, and counteth the cost, whether he have sufficient (money) to finish it?” • The moral of the words of Jesus: think about the future you want and plan for it so you will not be ashamed.

7. Money Management 101 • Benefits of having a budget: • Peace (less worry) • Helps you visualize your goals • Provide a written point of reference for household • Help family communication • Provide a written reminder • Reflect your spending habits.

8. Money Management 101 • How to develop a budget? (Simple but not easy!) • Determine where you are now! • Determine where you should be? • Set your budget based on your determinations above. • Be mindful of budget challenges

9. Money Management 101 • Where are you now? • Review all of your expenses for most recent 3 month period • List all your debts and total them • Write down EVERY expense (cash, credit card, debit, check) • Organize each expense into meaningful categories (see handout) • Total each category at end of a month and calculate the average for the 3 months • Consider hidden or infrequent expenses such as auto insurance, family loans, doctor bills, auto repairs, home repair, etc. (these are challenge areas)

10. Money Management 101 • Where should we be? • Consider Guideline budget • See example in handout

11. Money Management 101 • Set your budget… • See handout • This is the Not so easy part! • Determine your new monthly budget amount for each category of expense • When actual spending is greater than guideline spending, tough decisions must be made on modifying your spending behavior

12. Money Management 101 • How to make the budget work/stick! • Buy and use software such as Quicken, Microsoft Money or similar product to track income and expense versus budget • Use manual paper system (e.g., Excel spreadsheet) • Use envelope system (cash only)

13. Money Management 101 • Specific Budget Area Considerations • Savings & Investing • How much to save (need emergency savings – 6-12 months) • Time value of money (start early) (see handout) • Dollar cost averaging (be consistent)

14. Money Management 101 • Specific Budget Area Considerations • Taxes • Second highest living expense for most people approaching 10 to 30% of household income • Expense this great deserves special attention!! • Consider tax saving strategies for yourself before year-end (see handout)

15. Money Management 101 • Concluding Remarks: • Develop budget • Stick to it • Save regularly • Invest intelligently • Seek professional advice

16. Money Management 101 • Questions/Comments?? • Thank you!!