Financial guidance is a mentorship program for individuals or seminar series for employees geared to improve their financial intelligence. Financial intelligence is a function of your knowledge of financial terms, strategies, markets and current law.
Benefits selection is a mentorship program for individuals or seminar series for employees geared to improve their knowledge about benefit selection, guidelines for family protection, personal and tax savings strategies, and leveraging group with individual coverage.
A personal budget is a financial plan which sets limits on the amount of money that will be spent on each category of expenses in a given month. A good budget will take into consideration such factors as the amount of income being received, outstanding debt to be retired, retirement savings, and an emergency fund.
Create and Execute It’s not enough to create a plan. Discipline is required to execute and at times can be difficult, particularly if you have habit of freely spending without a second thought. However, the long term benefits of financial freedom, debt-free living, and a comfortable retirement far outweigh any potential difficulty.
Steps to Creating a Spending Plan:
List all monthly income.
List all monthly expenses.
Subtract monthly expenses from monthly income.
If your expenses outweigh your income, consider reducing discretionary expenses, downsizing, or seeking additional employment.
If you have excess income, consider adding a retirement plan, an emergency plan, and debt reduction.
Savings Savings should be 5 to 10% of your income per month plus emergency cash. (3 months with 2 wage earners, 6 months for 1 wage earner and more cash during times of economic hardship)
Retirement savings should not be included in your savings rate calculation.
Credit is using someone else's money, usually a credit card company or a bank, to pay for purchases. Credit can be a useful tool. It enables you to purchase large items, such as a house or car that few can afford to buy with cash.
Advantages
Convenient
Make purchases when needed
Use an article or service while paying for it
Save money by buying on sale
Pay for emergencies such as illness
Pay for cell-phones, mail, and internet purchases
Disadvantages
Service usually costs more
Purchase items you don’t need
Ties up your future income
Monthly payments may cause you to give up needed items
Debt has become a product sold to the consumer. If you don’t have the money to cover a purchase, any sale made creates personal debt.
Debt Management: the best way to manage debt is to understand how it works. Have you heard this before?
"Nothing Down or 90 days same as cash"
It seems like a good deal, when in fact what’s happening is the product has been priced higher. After you buy the higher priced product, it is re-sold to a finance company at a discount. When you pay on the 89th day, the finance company makes a profit. About 70% of the time, you do not pay in 90 days and are charged 24% interest. You get a pre-payment penalty plus interest on the original 90 days.
Debt Stacking: a simple principle in which all debts are paid off in a pyramid-like fashion. For example, let’s say that you have three Debts.
Debts
Balance
Payment
APR %
Payoff Date
Credit Card
$6,721
$168.03
12.0
March 2036
(32 years and 7 months
Car
$13,450
$324.72
5.5
July 2010 (3 years and 11 months)
Home
$130,000
$821.69
6.5
Aug 2033
(30 years)
Total Monthly Payment
$1,313.44
First, concentrate all your efforts on the highest interest rate first (Credit Card). Each month, you’ll pay $168.03 until the Credit Card is paid off. Meanwhile, the Car would be paid off in 3 years and 11 months. Take the Car payment of $324.72, and add it to the Credit Card payment to come up with a new Monthly Payment for the Credit Card of $492.75 a month. Once the Credit Card is paid off, take the $492.75 and add it to the Home mortgage payment to come up with a new monthly payment of $1,314.44.
