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The Mistakes Even Smart People Make With Their Money
Dian N. Rowe
Extension Educator
Baltimore County
“It is the policy of the University of Maryland, Agriculture Experiment Station and Maryland Cooperative Extension, that no person shall be subjected to discrimination on the grounds of race, color, gender, religion, national origin, sexual
orientation, age, marital or parental status, or disability.”
“The real measure of your Wealth is how much you would have if you lost all
your money.”
Anonymous
# 1
They fail to acknowledge and take care of their own needs!
Statistics
Married working women with children carry the heaviest workload of any group – about 77 hrs. per week.
Six out of every ten mothers of children under the age of 3 were in the work force (March 2000).
Nine percent of women care for a sick or disabled family member.
2.4 million grandparents (high percentage of grandmothers) care for grandchildren.
Care-giving begins with caring for self…
emotionally, socially, physically, intellectually and financially.
# 2
They under estimate
their ability to
manage money!!
Balancing Income and Expenses
If expenses exceed income, earn more or spend less.
# 3 They fail to make a financial plan.
Financial Goals
Life Cycle Planning
Opportunity Costs
# 4 They fail to budget.
Spending plan vs. budget
Current vs. future consumption
Flexible vs. fixed expenses
Periodic expenses
Include Savings
Prepare a balance sheet annually.
Same date each yearExample. December 31
Net worth = assets - liabilities
# 5 They fail to raise financially responsible children.
Family meetings
Allowances
Entrepreneurs
Gifts
Girls vs. Boys
Understanding your money profile
Fending off fights
Saving starts early
# 6 They fail to appropriately manage risk.
Disability insurance
Life insurance
Property and Casualty Insurance
Health Insurance
How to Save On Insurance
Drive Safely
Use deductibles
Take advantage of discounts
Pay premiums annually
Consider insurance costs
Reduce or eliminate coverage
Do not duplicate coverage
# 7
They commit tomorrow’s
dollars to today’s treasures.
Credit is really debt.
Opportunity costs
Costs of credit
The magic of cards
Secured vs. non-secured credit
Credit counseling
Credit repair clinics
What to do if…
You need to know what your credit report says ?
You need to correct your credit report ?
You can’t pay your bills ?
Creditors call you at home or work ?
You can’t get a credit card ?
You think you need to go bankrupt ?
Signs of Credit Abuse
Paying only the minimum on credit cards
Failing to pay bills by the due date
Over 20 % of your take-home pay committed to paying off credit
Borrowing to make monthly payments
Not opening bills
Using savings to meet monthly bills
Planning on tax refunds to catch up on late bills
Hiding financial facts from your family
Being turned down for credit
# 8
They fail to save for retirement.
Women have a lower income in retirement than men, thus higher poverty.
Women face greater economic challenges in retirement…live longer…lower lifetime earnings.
Divorced women have higher poverty in retirement.
Women are less likely to have pension coverage at work than men.
AARP recommends having 75 % of your pre-retirement income available as retirement income.
Many are postponing or delaying retirement to accumulate more savings.
Health care costs are frightening to many retirees.
Work is adding a fourth leg to the Retirement three legged stool…Social Security, Pension and Savings.
# 9
They fail to make a will.
A will enables you to select who receives your property.
A will allows you to manage your estate.
A will allows you to name a personal representative.
A will allows you to name a guardian for minors.
Letter of last instruction
Living Will
Other tools for transferring property
# 10
They don’t realize that the time to begin improving their financial stability and
security is now.
Financial Security in Later Life
http://www.reeusda.gov/financialsecurity/
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