1. Building Your Financial House WELCOME !

2. Program Objectives Become more comfortable talking about money issues
Identify the Framework for Building Your Financial House
Walk away with facts and skills needed to build your financial house
Gain confidence to make good money choices for your situation
Be in a better position for long-term financial stability and success upon re-entry.

3. Program Objectives Become more comfortable talking about money issues
Identify the Framework for Building Your Financial House
Walk away with facts and skills needed to build your financial house
Gain confidence to make good money choices for your situation
Be in a better position for long-term financial stability and success.
Module 3: Spend Sensibly

4. Modules 1. Invest in Yourself 2. Maximize Earnings 3. Spend Sensibly
4. Check Taxes
5. Make Money Work
6. Protect Your Potential
7. Borrow to Grow
Module 3: Spend Sensibly

5. Recap: Maximize Earnings
Last time, we talked about:
Earnings and other resources
Pay statements and deductions
Employee benefits
The actual dollar value of pre-tax benefits
Completing the Form W-4
Net economic benefit comparison of a job
Module 2: Maximize Earnings

6. Did You Set a Goal?
Module 2: Maximize Earnings (PAGE ME-3)

7. Did You Practice?
Module 2: Maximize Earnings (PAGE ME-3)

8. Did You Learn More?
Module 2: Maximize Earning (PAGE ME-23)

9. Did You Make Progress?
Module 2: Maximize Earnings (PAGE ME-3)

10. Module 3 Spend Sensibly
Module 3: Spend Sensibly

11. Spend sensibly to fill your home with the things you need and keep it in order; overspending can result in both physical and financial chaos. 3
Spend Sensibly
Adrian
Review where this module fits within the Framework for Building Your Financial House.
-Next-

12. Self-Assessment 1
Module 3: Spend Sensibly (PAGE SS-3)

13. Objectives Knowledge Actions Identify money values & spending habits
Distinguish between needs & wants to prioritize spending
Identify the steps to create & use a money map
Recognize the role of transactional accounts and services in managing cash
Live within means
Track and prioritize spending
Create & use a manageable money map
Establish a relationship with a government insured financial institution
Module 3: Spend Sensibly

14. Spending
Module 3: Spend Sensibly

15. What Do You Value?
Module 3: Spend Sensibly (PAGE SS-5)

16. Values Influence Our Goals
Module 3: Spend Sensibly

17. Creating Your Money Map
1. Identify Income
You are X
here
3. Income Expenses
4. Make Choices
5. Plan Route
6. Follow Route!
2. Track Expenses
Module 3: Spend Sensibly (PAGE SS-9)

18. Creating a Money Map Module 3: Spend Sensibly (PAGES SS-10 thru 14)
Adrian
Explain:
These four pages are designed to help you know, plan, and follow your map.
Notice on each page there is a Current, Plan, and Actual column.
The Current column will contain the amounts for where you are now.
The Plan column is for the amounts that will get you to your goal.
The Actual is a follow-up column to show what you’ve actually done.
-Next-
Module 3: Spend Sensibly (PAGES SS-10 thru 14)

19. Step One: Identify Income
Module 3: Spend Sensibly

20. Step Two: Track Expenses
Module 3: Spend Sensibly

21. Fixed vs. Variable Expenses
Fixed (predictable, consistent, less flexibility)
Mortgage
Loan payments
Child care
Variable (less predictable, flexibility, choice)
Food
Credit card payments
Entertainment
Module 3: Spend Sensibly

22. Step Three: Compare Module 3: Spend Sensibly Adrian Explain:
Now that you have income and expenses, you need to summarize and compare. Enter the totals from each of your income and expense categories listed.
Click
Then compare net take home pay to total expenses to get your cash flow. What’s CASH FLOW?
-Next-
Module 3: Spend Sensibly

23. Jargon Alert: “Cash Flow”
What comes in - Where does it go = Cash Flow
Adrian
Explain:
One thing that makes managing money a challenge is the jargon that is used. Money is a language in itself, so if you’re not working with it every day, it can be confusing. We’ll try to break it down into more real life terms.
Cash flow is a fancy way of ‘what comes in less where it goes’ or is there any money left over after paying all of your bills on a monthly basis? It’s calculated simply by income less expenses. Cash flow is one of the ways that you can measure your financial health.
-Next-
Module 3: Spend Sensibly

24. “Cash Flow” Positive Number ZERO Negative Number
You have $$ for your goals!
You are in balance, but need to redirect $$ for goals.
Time for changes to balance and redirect $$ for goals
Module 3: Spend Sensibly

25. Numbers Don’t Mesh? Recheck: Transfer errors Missing entries
Periodic expenses
Spending leaks
Adrian
Explain:
So what if your ‘numbers’ don’t mesh with what is actually left over in your wallet? First go back to and check to make sure there aren’t any transfer errors from your pay or What Comes In worksheet. If you have fluctuating income due to seasonal work or overtime, that may affect this month’s numbers.Then look at the expenses you tracked. Look for missing entries, special expenses you may have incurred this month, and spending leaks. If it still doesn’t seem right, realize that it may take three months to get a really good idea of your spending. And that’s ok because it will mean you have a better chance at putting together a manageable plan.
Next-
Module 3: Spend Sensibly

26. Side Bar: Spending Leaks
It’s only (a $2.00) cup of coffee…
1 week = $10
1 month = $44
1 year = $520
5 years = $2,600
10 years = $5,200
20 years = $10,400
Module 3: Spend Sensibly

27. What’s important to you? What are you willing to do?
Step Four: Make Choices
What’s important to you?
Why is it important?
What are you willing to do?
Increase Income
Decrease Expenses
Script
In addition to you having value, you in turn have things you value.
Click
TO find out what you value, the first thing to ask yourself is: What’s important to you?
Why is it important to you?
What are you willing to do keep it or achieve it?
Read text in box.
And right now, you’re probably a homeowner that is committed to doing what it takes to get back on track with mortgage payments and more control over your life.
-Next-
Combination
Module 3: Spend Sensibly (PAGE SS-16)

28. Step Four: Make Choices
Script
The most basic of money choices is simple: needs vs wants.
A need is something you have to have to live or means to providing the basic necessities.
A want, well, is everything else; the nice to have’s.
So how do we determine our needs from wants?
Click
Let’s revisit Barry and Anna. It’s a Friday night, they are tired from the work week and would like to order a pizza for delivery to their home.
Is ordering a pizza for delivery a need or want? Barry and Anna both say it’s a need.
Why…well, eating is a need!
It’s going to cost $35 to have the pizza delivered.
The number of hours that Barry has to work in order to pay for this is 3. His equivalent take home pay per hour after taxes is $15.
Is it worth 3 hours of his work time to have this?
If not, what are the alternatives? Eating is a need but ordering out is a want. They could plan to have food at home or cooking their own pizza.
Now, ordering out for pizza is certainly easier than let’s say deciding on buying a house, car, or investments .
Those decisions are much more complicated and may have major and lasting affects on your financial situation.
For these more challenging decisions, a well-thought process will make it easier.
-Next-
Module 3: Spend Sensibly (PAGES SS-17 thru 19)

29. Eenie, meenie, minie, moe…
Choose Sensibly
Script
Now that you know how your money values may influence your spending, ultimately, it’s still your choice to spend or not to spend on any particular thing.
Click
So, how can we make sensible spending decisions?
Eeny, meeny, miny, moe is probably not the best method to make spending choices!
-Next-
Eenie, meenie, minie, moe…
Module 3: Spend Sensibly

30. Basic Money Choices Is it worth 3 hours of work? Price: $40
Order out
pizza delivery
Need
Want
Why?
Price: $40
Number of hours you have to work to buy this = 3*
Is it worth 3 hours of work?
*$15/hr take home pay
Options or Alternatives
Module 3: Spend Sensibly (PAGE SS-7)

31. Effective Money Decisions
Steps:
What is the issue?
Look closely: who, what, where, when and why?
What options do you have?
And the decision is….
Follow-up to make sure it’s still right for your situation.
Module 3: Spend Sensibly (PAGE SS-8)

32. Step Five: Plan Your Route
Explain:
Now we need to set the plan. We’ll be working with the Plan column. Use the Current column numbers as a guide and decide if it will stay the same or change in the Plan column.
Since the cash flow equation has two parts, Income and Expenses, you can make changes in both. Increase income, decrease and/or reallocate expenses to put your plan in place.
What’s important to remember in this process is that you want to account for every penny coming into your house and then tell it where it needs to go.
-Next-
Module 3: Spend Sensibly

33. Include Your Financial Goals
Module 3: Spend Sensibly

34. Plan for Periodic Expenses
Car Insurance $870
Car Insurance $870
Glasses $600
Gifts $300
Module 3: Spend Sensibly (PAGE SS-22)

35. Step Six: Follow Your Route
Adrian
Explain:
Now it’s time to follow your map. Keep track of what you’ve actually done over the next month to decide if the plan is manageable. If not, make changes. Keep in mind that you may need to do this for a couple of months before you can settle into a manageable plan.
Remember again that it’s not set in stone. Money maps change as resources, goals, and events change in our lives. The important thing is to keep trying!
-Next-
Module 3: Spend Sensibly

36. Step Six: Follow Your Route
Adrian
Explain:
A money map is just like a road map or these days, a GPS. It helps you identify your financial starting point and the route to get where you want to be. The great thing about it is that you are in control.
Why is it important to use a money map? Well, it’s just like if you wanted to take a trip to someplace you’ve never been. Without a map, route, or guide, you probably wouldn’t get there. Same with a money map. Without it, you may not get to be where you financially want to be.
Click
So how does it work? You first need to know your income and expenses. That is where you are.
Then knowing where you are, you need to make choices to make sure you are pointed in the right direction. Then calculate most manageable plan and simply follow your route to your financial destination.
-Next-
Module 3: Spend Sensibly (PAGE SS-23)

37. Case Study (Pages 14-17) Module 3: Spend Sensibly
BYFH – Spend Sensibly (2016)

38. Anna’s Money Map
Module 3: Spend Sensibly

39. Spending Pyramid 1 2 3 Wants 4 Needs 5 Off The Top
Module 3: Spend Sensibly

40. Anna’s Money Map
Module 3: Spend Sensibly

41. Money Map Tools Monthly “Payment” Calendar Envelope System
Step 1
Step 2
Step 3
Step 4
Money Map Tools
Monthly “Payment” Calendar
Envelope System
Budget Folder
Electronic Tools
Identify Income
Track Expenses
Income - Expenses
Make Choices
Plan Your Route
Follow Your
Map
Module 3: Spend Sensibly (PAGE SS-24)

42. Cash Management Tools Financial Institutions:
Choice of personal banking products and services
Safe
Insured
Convenient
Module 3: Spend Sensibly (PAGE SS-25)

43. FEES Finding the Right Fit Accounts Products Services
Module 3: Spend Sensibly

44. Cash Management Tools Alternatives Money transmitters Check cashers
Step 1
Step 2
Step 3
Step 4
Cash Management Tools
Alternatives
Money transmitters
Check cashers
Money orders
Mattress
Module 3: Spend Sensibly

46. Spend Sensibly We’ve covered: Money values & spending habits
Living within our means by needs vs wants
Money choices and results
Developing and using a money map
Using government insured accounts to manage spending
Next time: Check Taxes
Module 3: Spend Sensibly

47. Take Action – Set A Goal
Module 3: Spend Sensibly (PAGE SS-3)

48. Take Action – Worksheets
Module 3: Spend Sensibly

49. Take Action – Learn More
Module 3: Spend Sensibly (PAGE SS-30)

50. Measure – Track Your Progress
Module 3: Spend Sensibly

51. Please complete the session evaluation form.
(Page SS-31)
Module 3: Spend Sensibly (PAGE SS-31)

52. Building Your Financial House Thank You!