FINANCIAL SERVICES LITERACY PROGRAM “BUDGETING & SAVING” Schell Stubbs, MBA, LLM 21 th March, 2019
Budgeting “If you fail to plan, you are planning to fail.” – Benjamin Franklin www.cfasociety.org/bahamas
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. www.cfasociety.org/bahamas
The 50/30/20 Rule § Rent/Mortgage § Groceries § Utilities § Transportation § Car Insurance § Health Insurance § Home Insurance § Emergency § Min Credit Card Fund Payment § Debt Repayment § Down payment § Retirement § Vacation § Entertainment § Shopping § Pampering § Gym Membership www.cfasociety.org/bahamas
Simple & Useful Budgeting Tips § 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. www.cfasociety.org/bahamas
The Budget •Step 1: Know Your Income. Simple Budget Template Monthly income for the month of: ____________ •Step 2: Document your expenses. Item Amount Salary Spouse's salary Dividends Interest •Step 3:.Analyze Your Spending Habits Investments Reimbursements Other Total •Step 4: Set goals Monthly expenses for the month of: ___________ Item Amount Giving Groceries Mortgage Credit cards Gas Personal care Entertainment Car loan Utilities Clothing Daycare/school fees Medical/Dental Insurances Household repairs Property taxes Other savings, pension plans Savings Other Total www.cfasociety.org/bahamas
State of the Nation 1 2 3 4 www.cfasociety.org/bahamas
Saving “Saving money should never feel like a downer….You should enjoy it.” – Suze Orman www.cfasociety.org/bahamas
Simple & Useful Saving Tips § 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. www.cfasociety.org/bahamas
Simple & Useful Saving Tips § Start saving early and often to take advantage of compound interest . Example : Age Years to Grow Monthly Savings Interest Rate 18 47 100 2% 25 40 100 2% 30 35 100 2% 40 25 100 2% 40 25 200 2% www.cfasociety.org/bahamas
Compound Interest 100000 $93,025 90000 $77,576 80000 $73,146 70000 $60,540 60000 50000 $38,790 40000 30000 20000 10000 0 18 25 30 40 40 WHEN you start saving outweighs how much you save. www.cfasociety.org/bahamas
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 Money 1. Brand Name Products 2. Grocery Shopping 3. Using Credit/Debit Cards www.cfasociety.org/bahamas
8 Common Ways We Waste Money 4. Gambling 5. Fast Food/Eating Out www.cfasociety.org/bahamas
8 Common Ways We Waste Money 6. Cable 7. Not taking Care of Your Health 8. Disorganization
THANK YOU QUESTIONS? www.cfasociety.org/bahamas
End Notes 1 “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 22 nd , 2016 http://www.centralbankbahamas.com/news.php?cmd=view&id=16225 www.cfasociety.org/bahamas
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