MoneyWise Presentation Materials - Personal Finance

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MoneyWise Presentation MaterialsFinancial Principles and Financial FreedomDay 1: Modules 1 & 2PurposeThe purpose of these presentations on personal finance is to help you understand thatpersonal finance is not separate from, but simply part of, the gospel of Jesus Christ. Wehave been commanded to be wise stewards over the things we have been blessed with.These presentations will help you in that stewardship.Topics and AssignmentsModule 1: Understanding Financial Principles: Setting PrioritiesRecommended Readings (on the website at http://personalfinance.byu.edu): Online Reading: Chapter 1. Understanding Financial Principles: Setting Priorities Reading 1.1. Richard B. Miller, For Newlyweds and Their Parents, Ensign, Jan. 2006,pp. 26-31. MoneyWise/Young Married Manual:Chapter 1. Another Perspective on WealthChapter 2. Setting Personal GoalsTools: Exhibit 1.1 Eight Financial Priorities and Goal Setting Worksheet Exhibit 1.2 Key Questions on Money and FamilyModule 2: Financial Freedom: Living Beneath Your MeansRecommended Readings (on the website at http://personalfinance.byu.edu): Online Reading: Chapter 2. Financial Freedom: Living Beneath Your Means Reading 2.1 Marvin J. Ashton, “One for the Money: Guide to Family Finance,”Church of Jesus Christ of Latter-day Saints, 2006 Reading 2.2 Gordon B. Hinckley, “To the Boys and to the Men,” Ensign, Nov. 1998,51. MoneyWise/Young Married Manual:Chapter 8. Debt and Debt ReductionChapter 7. Consumer and Mortgage LoansTools: Exhibit 2.1 The "Eliminate Your Debt" Schedule Exhibit 2.2 Debt Elimination Spreadsheet with Accelerator (works on PC only) Exhibit 2.3 Debt Amortization and PrepaymentThe MoneyWise Reference Material Manual and learning outcomes, chapter readings, slidepresentations, videos, assignments, and recommended readings are freely available at the BYUMarriott School of Management’s Personal Finance website at http://personalfinance.byu.edu(Intermediate Lessons and MoneyWise Financial Workshops). Please feel free to share this freeresource with others.

MoneyWise Notes from Day 1Date:

MoneyWise Module 1Understanding Financial Principles: Setting PrioritiesThe Provident Living Advocates Network(sponsored by the BYU Marriott School)III MoneyWise Workshop Unpaid Credentialed Professionals (PhDs, CFPs,CPAs, CFAs, and others) Nothing for sale—it is all free! Our mission is to help you become financiallyself-reliant so you (and your spouses) canaccomplish your divine missions and help andserve others!Understanding Financial Principles:Setting PrioritiesModule 1“To help others become financially independent so they can serve.”2All We Ask of You:MoneyWise Workshop TopicsBe Here and Share Give us your next 5 Wednesday nights Wednesday Presentation Schedule: Try not to miss a single night Watch the last lesson on video1. Understanding Financial Principles: Setting Priorities2. Financial Freedom: Living Beneath your Means3. Saving and Investing: The Road to FinancialIndependence4. Tax and Long-term Planning: Key Issues5. Making Major Purchases: the Home and Auto Decision6. Having Adequate Insurance: Protecting you and yourLoved Ones (watch on video at http://personalfinancedev.byu.edu, Intermediate Lessons, and MoneyWiseFinancial Workshops Lesson 6. Attend each night and ask questions Student mentors are available each night Fill out the “8 Financial Priorities sheet They help you set goals in key areas Share what you learn with others Encourage others to attend Provide us with suggestions for improvement34Tonight’s Discussion Topics1. Understand Perspective: The Why1. Understand Perspective2. Set Goals3. Communicate Clearly4. Budget Well Understand and love the doctrine of Christ. Doctrine refersto the eternal, unchanging, and simple truths of the gospelof Jesus Christ. Doctrines are never altered. They nevervary. They will always be the same. You can always counton them. Brothers and sisters, doctrine answers the whyquestions of our lives. . . In the times in which we live, onlythe restored gospel of Jesus Christ has the answers to thewhy questions that matter most (David A. Bednar “Teachthem to Understand,” Ricks College campus EducationWeek Devotional, June 4, 1998, Rexburg, Idaho).Perspective Priorities Communication Budgeting5Module 1 – Page 1Perspective Priorities Communication Budgeting6

MoneyWise Module 1Understanding Financial Principles: Setting PrioritiesUnderstand PerspectiveUnderstand Perspective: Principles of Finance What are the “whys” of personal finance?1. Ownership: Everything we have is the Lord’s The earth is the Lord’s, and the fullness thereof; theworld, and they that dwell therein (Psalms 24:1). I believe God wants us to learn personal finance to: 1. Learn the lessons that personal finance can teachus to help us come to and become more like ourSavior Jesus Christ—to bring us to Christ 2. To learn the things we need to prepare for andaccomplish our divine missions for which we weresent here on earth 3. Help us return with our families back home to ourSavior and Heavenly Fathers’ presence 4. Become wise stewards over the things God hasblessed us withPerspective Priorities Communication Budgeting2. Stewardship: We are stewards what the Lord has given us It is expedient that I, the Lord, should make every manaccountable, as a steward over earthly blessings, whichI have made and prepared. (D&C 104:13).3. Accountability: We are accountable for our choices! Elder Christofferson: We control the disposition of ourmeans and resources, but we account to God for thisstewardship over earthly things (“Come to Zion”, Ensign, November 2008).Perspective Priorities Communication Budgeting782. Set Goals:What do you want out of life?Perspective: Becoming Provident Providershttp://www.youtube.com/watch?v fC7pPAyrSSgPerspective Priorities Communication BudgetingPriorities:Perspective Priorities Communication Budgeting910Priorities: Other Topics to DiscussOur View—Eight Financial Priorities 1. Communicate clearly2. Pay tithes and offeringsStarting a familyCharitable givingOwning a businessRecreation and vacationsChildren’s allowancesHelping children during high school and college(missions, down payments, weddings, etc.) Saving for your own missions! Saving for a big purchase (car, a trip to Germany, etc). Goods and services priorities (cell phones, cable, etc.). Pay the Lord first3. Learn to manage money anduse a budget4. Avoid and pay off debt5. Prepare for emergencies and build a reserve (3-6 months)6. Protect yourself and family through adequate insurance7. Save for long-term goals Save wisely for a home, retirement, education, and missions8. Teach family members these thingsPerspective Priorities Communication Budgeting11Module 1 – Page 2Perspective Priorities Communication Budgeting12

MoneyWise Module 1Understanding Financial Principles: Setting PrioritiesPriorities: What bishops want you to know!3. Communicate Clearly: Startling Statistics Learn how to live on a budget! Don’t expect to have everything right now. Don’t blow through large amounts of cash coming (e.g., grants andscholarships) and going (e.g., tuition and rent). Use government help only when appropriate. Learn to protect your identity. Don’t automatically turn to your parents to “bail you out.” You needto learn the that there are consequences to irresponsible spending. In a recent survey conductedby Worth magazine: Couples admitted to fighting aboutmoney more than anything else Most couples agree “In everymarriage, money eventuallybecomes the most importantconcern”Learn to manage credit cards and insure yourself to avoid debt.Don’t bring lots of debt into a marriage.Don’t take on debt without considering your future earning capacity.Don’t be afraid to work part-time. Most recruiters prefer a working B student to a non-working A student.Perspective Priorities Communication Budgeting Why do you think this is the case?Perspective Priorities Communication Budgeting13Communicate Clearly:Communication:Do money issues affect your marriage?Reasons Money Can Be an Issue In a Marriage Top 3 reasons14 Poor communication Poor communication Poor communication General lack of knowledge Financial personalities and family “baggage” Lack of shared financial goalshttp://www.youtube.com/watch?v 1Vn9OwDjgQPerspective Priorities Communication BudgetingPerspective Priorities Communication Budgeting15Communication: Weekly Stewardship Meeting16Communication:Family Baggage and Financial Personality Types Discuss finances early and often What family rules (implicit or explicit) shapedyour attitudes and beliefs about finances? Set a time to discuss at least weekly Resolve misunderstandings before they escalate Set lifetime financial goals together Implement processes that promote trust andmutual discussion Budgeting and planning together are the best ways tocommunicate regularly about finances!Perspective Priorities Communication Budgeting17Module 1 – Page 3Perspective Priorities Communication Budgeting18

MoneyWise Module 1Understanding Financial Principles: Setting PrioritiesCommunication: Extreme financial personalitiesCommunication: Financial Priority 1 Miser Take two minutes to talk as a group or couple Dad paid cash for everything Mom paid the bills and kept the books We never talked about money What things will you do to help you communicatebetter? Meet at a specific meeting time? (Sundays at 8 p.m. for30 minutes) Write down and share your personal and family goals? Understand how your family did things? Write these on your “Financial Priorities” sheet Spender Somehow things will work out If the shoe fits, buy it in every color! Sleeper “Disasters and crisis only happen to others and you’ll probablyhave advanced warning if they are about to happen to you.” “Paying tithing is like paying a guaranteed income insurancepremium.” “We are good people, so only good things will happen to us.”Perspective Priorities Communication BudgetingBudget Well: Remember Always assume your spouse is doing their very best andthat you and your spouse are equal partnersPerspective Priorities Communication Budgeting1920Budgeting: The Old WayIt’s The Key To Financial Success “Every family should have a budget . Why,we would not think of going one day without abudget in this Church or our business. . . .And one of the successes of the Churchwould have to be that the brethren watchthese things very carefully, and we do notspend that which we do not have .”IncomeTithingExpensesAvailable forSavings—Spencer W. Kimball, April 1975Personal GoalsPerspective Priorities Communication Budgeting21Budgeting: The Better WayIncomePay theLordPayYourself22Budgeting: If everything we have is the Lords, then weshould pay him firstOtherExpensesPay the Lord First Set a goal to make tithes and offerings the firstpart of your budget, not the last partSavings Bring ye all the tithes into the storehouse, that there maybe meat in mine house, and prove me now herewith,saith the Lord of hosts, if I will not open you the windowsof heaven, and pour you out a blessing, that there shallnot be room enough to receive it (Malachi 3:10). “I, the Lord, am bound when you do what I say; butwhen ye do not what I say, ye have no promise” (D&C82:10).Personal Goals23Module 1 – Page 424

MoneyWise Module 1Understanding Financial Principles: Setting PrioritiesPay the Lord First: Financial Priority 2Budgeting: A Team Approach Take two minutes to talk as a group or couple A collaborative process will take time andcommitment (START SLOW)! What goals will you set to help you do better withyour tithes and offerings? Decide who manages what expenses--BE A TEAM Identify current spending (this can take 2-3 months) Always pay a full tithe? Pay a fast offering of per month? Write these on your “Seven Financial Priorities” sheet Draft your first budget together Track spending against your first budget Prepare second budget together Track spending against your second budget Communicate daily at first, then weekly, then monthly(set the dates before you start)Perspective Priorities Communication Budgeting25Budgeting: The Envelope SystemBudgeting: The Twelve Month Budget Label one envelope for each type of expense you have Put receipts (or paper notes) for everything you spend inthe correct envelope for one calendar month Together with your spouse at month-end: This approach will help you plan forthose irregular or annual expenses(charitable giving, Christmas presents,auto and life insurance, saving andinvesting, etc.) Estimate these amounts for a year Empty each envelope and discuss what you spent Prepare another set of envelopes, and this time write the amountyou have decided to spend next month on each envelope26 Set aside enough money each month to cover theseexpenses on an annual basis (in a savings or moneymarket account) Discuss with your spouse when these things come up Next month discuss again your spending and preparenew envelopes and spending goals Repeat this process together for several monthsuntil you can prepare a “Twelve Month” Budget If you both decide 100 for clothes, stop buying clothes once youhit 100 and don’t take any money from your food budgetPerspective Priorities Communication BudgetingPerspective Priorities Communication Budgeting27Budgeting: TipsBudgeting: Tips Don’t drive each other nuts! Software can help Find and concentrate on expenses that need to becontrolled28 Quicken, Mint.com, Mvelopes Other financial software Several websites, such as Mint.com andMvelopes offer FREE ways to keep track of yourBudget electronically Remember you are equal partners Assume you both are doing your best Watch out for ATM leakage Syncs with your bank accounts, helps you keep trackof loans and other payments Keep better records Write more checks Make saving easy Make spending hard Re-evaluate spending needs as life changes Use online banking and debit cards Record credit and debit card transactions in yourcheck register (if necessary)Perspective Priorities Communication Budgeting29Module 1 – Page 5Perspective Priorities Communication Budgeting30

MoneyWise Module 1Understanding Financial Principles: Setting PrioritiesBudgeting: Financial Priority 3Summary Take two minutes to talk as a group or couple1. Financial Principles The things we have are not ours We are stewards over the things we have and are We will be held accountable for what we do What goals will you set to help you do better with yourbudget? Will you/we live on a budget?Will we write down all expenses each day?Will we/you use a budgeting program?Write your goals on your “Seven Financial Priorities” sheet2. Set Priorities Pay tithes and offerings Communicate Avoid debt Use a budget and build a reserve Teach family members Prepare for emergencies and save for long-term goals Remember Always assume your spouse is doing their best Always remember you are equal partners Always talk with love when addressing these issues31SummaryFHE Suggestions3. Communicate Clearly Work together to develop individual and familygoals Money is an issue in marriage Communication is critical Understand your financial personality types Write them down and review them often Discuss ideas on how you can improve yourbudget Decide what your immediate financial priority willbe (e.g., emergency fund, debt elimination, downpayment, 401(k) or Roth IRA) Discuss how much money you would like to saveeach month after school4. Budget Well 32It’s a team approachStart with the envelope systemIncorporate 12 months of spendingRevisit your Plan as life changes3334Resources***All Resources are Online at http://marriottschool.byu.edu/plan/ andhttp://personalfinance.byu.edu (Tools and Resources, MoneyWise Workshops)III MoneyWise WorkshopReadings Reading 1.1. Richard B. Miller, For Newlyweds and Their Parents,Ensign, Jan. 2006, pp. 26-31. MoneyWise Reference Manual 2012-2013, 5th Edition (online)Understanding Financial Principles:Setting Priorities Chapter 1: Another Perspective on Wealth Chapter 2: Creating Your Personal Financial Plan and Setting Goals Chapter 3: Budgeting and Measuring Your Financial HealthModule 1Tools Exhibit 1.1 Seven Financial Priorities and Goal Setting Worksheet Exhibit 1.2 Key Questions on Money and FamilyWebsites BYU Personal Finance Website: http://personalfinance.byu.edu Videos: Lessons 1-3 (Tools and Resources, Videos)35Module 1 – Page 6

MoneyWise Module 2:Financial Freedom: Living Beneath Your MeansDiscussion Topics1. Financial Perspectives2. Maximize Income3. Reduce Spending4. Start Saving5. Eliminate Inappropriate Debt6. Bank Wisely III MoneyWise WorkshopFinancial Freedom:Living Beneath Your MeansModule 2Perspective Income Spending Saving Debt Banking21. Financial Perspective“I’m in Debt”Lending Tree Video In most cases, financial problems arebehavioral problems, not money problems We know what we should do: live on a budget,spend less than we earn, not go into debt, etc. How do we motivate ourselves and others tomake better financial choices?“True doctrine, understood, changes attitudes andbehavior. The study of the doctrines of the gospelwill improve behavior quicker than a study ofbehavior will improve behavior.”http://www.youtube.com/watch?v hn5EP9StlVA(Boyd K. Packer, “Little Children,” Ensign, Nov. 1986, 16.)Perspective Income Spending Saving Debt Banking3Perspective Income Spending Saving Debt Banking2. Income: Maximize your incomeIncome: Increasing Your Earning PowerWhy waste time working at alow-paying job? Money today is worth morethan money tomorrow Be good at what you do4 To increase wages, increase yourcontribution Education is the key Be a problem solver Understand what drives yourbusiness Have mentors in your field Network Earned money is harder tospend than borrowed moneyWorking 15 hours/week at 8/hour for 4 years could:save 24,960 in student loansORgive you 29,390 in Roth IRA or other investments (assumes 8% return)Perspective Income Spending Saving Debt Banking5Perspective Income Spending Saving Debt BankingModule 2 – Page 16

MoneyWise Module 2:Financial Freedom: Living Beneath Your Means3. Reduce Spending:Spending: See Through the Marketing HypeYou cannot spend your way to financial freedom! “Come in and save big! You can’tafford to miss this once-in-a-lifetimeevent. And this weekend only getfree delivery on qualifyingpurchases!” Roadblocks include: Lack of specific savings goals Poor record keeping Easy credit Stress Entertainment spending Excessive debt The monthly payment distraction The elusive “regular price”Source: Belsky and Gilovich, Why Smart People Make Big Money MistakesPerspective Income Spending Saving Debt Banking7Spending: The Real Cost of Consumer Credit8Spending: Other Financial Traps What’s in an asterisk? Payday loans “Free” Rent to own Leasing cars*Annual percentage rate: Fixed at 21%Only 120 payments (10 years), sales tax (6.6%),and 14 per monthWhat is the real cost?StereoSales taxInterestTotalPerspective Income Spending Saving Debt Banking Cost comparisonsignore older used cars 699.9946.201,044.05 1,790.24Graphic courtesy of Grant McQueen The tax refund bonanza Extended warranties, extrasPerspective Income Spending Saving Debt Banking9Spending:Perspective Income Spending Saving Debt Banking10Spending: Ownership Is StewardshipDon’t Buy Stuff You Can’t Afford! Don’t be anxious to own “stuff” Look beyond the acquisition cost Maintenance Insurance Repair Storage Opportunity costs Depreciation Time!!!http://www.youtube.com/watch?v VL3KuaFvOSc t-live-dont-buy-stuff (2:28)Perspective Income Spending

What are the “whys” of personal finance? I believe God wants us to learn personal finance to: 1. Learn the lessons that personal finance can teach us to help us come to and become more like our Savior Jesus Christ—to bring us to Christ 2. To learn the things we need to prepare for and accomplish our divine missions for which we were