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FINANCIAL SERVICES LITERACY PROGRAM
“BUDGETING & SAVING”
Schell Stubbs, MBA, LLM21th March, 2019
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“If you fail to plan, you are planning to fail.” – Benjamin Franklin
Budgeting
Why is Budgeting Important?
§ Prioritizes your money.
§ Controls and tracks spending.
§ Helps you to save.
§ Helps you meet goals.
§ Keeps you out of debt.
§ Reduces stress.
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The 50/30/20 Rule
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§ Rent/Mortgage§ Groceries§ Utilities§ Transportation§ Car Insurance§ Health Insurance§ Home Insurance§ Min Credit Card
Payment
§ Vacation§ Entertainment§ Shopping§ Pampering§ Gym Membership
§ Emergency Fund
§ Debt Repayment§ Down payment§ Retirement
Simple & Useful Budgeting Tips
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§ Track every expense.
§ Budget before you get paid.
§ Stick to 50/30/20 rule.
§ Use Cash instead of debit/credit cards.
§ Budget for large purchases.
§ Budget for annual/semi-annual expenses.
§ Update budget regularly.
The Budget
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•Step 1: Know Your Income.
•Step 2: Document your expenses.
•Step 3:.Analyze Your Spending Habits
•Step 4: Set goals
Simple Budget Template
Monthly income for the month of: ____________
Item AmountSalarySpouse's salaryDividendsInterestInvestmentsReimbursementsOtherTotal
Monthly expenses for the month of: ___________
Item AmountGiving
GroceriesMortgageCredit cardsGasPersonal careEntertainmentCar loan
UtilitiesClothingDaycare/school feesMedical/Dental InsurancesHousehold repairsProperty taxesOther savings, pension plansSavingsOtherTotal
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State of the Nation
1
2
3
4
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“Saving money should never feel like a downer….You should enjoy it.”
– Suze Orman
Saving
Simple & Useful Saving Tips
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§ 8-12 months living expenses for emergencies.
§ Pay yourself first.
§ Save with a purpose or goal in mind.
§ Be disciplined.
§ Avoid credit cards and unnecessary loans.
§ Shop around. Haggle. Negotiate.
§ Join company pension plan. Make max contribution.
Simple & Useful Saving Tips
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§ Start saving early and often to take advantage
of compound interest.
Example:Age Years to Grow Monthly Savings Interest Rate18 47 100 2%25 40 100 2%30 35 100 2%40 25 100 2%40 25 200 2%
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Compound Interest
WHEN you start saving outweighs how much you save.
$93,025
$73,146
$60,540
$38,790
$77,576
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
100000
18 25 30 40 40
How to Save in this Environment § Credit Unions § Brokerage Accounts§ Term Deposits§ Annuities§ Money Market Funds§ Your Company’s or a Personal Retirement Plan§ Repay Debt Early§ Invest in Yourself
8 Common Ways We Waste Money1. Brand Name Products
2. Grocery Shopping
3. Using Credit/Debit Cardswww.cfasociety.org/bahamas
8 Common Ways We Waste Money4. Gambling
5. Fast Food/Eating Out
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8 Common Ways We Waste Money6. Cable7. Not taking Care of Your Health
8. Disorganization
THANK YOU
QUESTIONS?
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End Notes1 “PM: Bahamians need to increase savings.” The Nassau Guardian. June 15, 2017. https://thenassauguardian.com/2017/06/15/pm-bahamians-need-to-increase-savings/2 “Economist: Address personal debt as ‘national priority’. “The Nassau Guardian. April 4, 2016. https://thenassauguardian.com/2016/04/04/economist-address-personal-debt-as-national-priority/3. Xian Smith. “Rolle: 90 percent of Bahamians have poor savings.” The Nassau Guardian. Sept 2, 2017 https://thenassauguardian.com/2017/09/02/rolle%e2%80%8890-percent-of-bahamians-have-poor-savings/4 Xian Smith. “Central bank: Non-performing loans up to $731 million.” The Nassau Guardian. September 11, 2017. https://thenassauguardian.com/2017/09/11/central-bank-non-performing-loans-up-to-731-million/5 “Central Bank: Reduction in the Discount Rate by 50 basis points to 4.00%” December 22nd, 2016 http://www.centralbankbahamas.com/news.php?cmd=view&id=16225
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