The Mistakes Even Smart People Make With Their Money

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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.
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• The real measure of your Wealth is how much you
  would have if you lost all your money.
• Anonymous

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1

• They fail to acknowledge and take care of their
  own needs!

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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.

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• Care-giving begins with caring for self
• emotionally, socially, physically, intellectually
  and financially.

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2

• They under estimate
• their ability to
• manage money!!

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Balancing Income and Expenses

• If expenses exceed income, earn more or spend
  less.

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3 They fail to make a financial plan.

• Financial Goals
• Life Cycle Planning
• Opportunity Costs

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4 They fail to budget.

• Spending plan vs. budget
• Current vs. future consumption
• Flexible vs. fixed expenses
• Periodic expenses
• Include Savings

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Prepare a balance sheet annually.

• Same date each year
• Example. December 31
• Net worth assets - liabilities

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5 They fail to raise financially responsible
children.

• Family meetings
• Allowances
• Entrepreneurs
• Gifts

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• Girls vs. Boys
• Understanding your money profile
• Fending off fights
• Saving starts early

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6 They fail to appropriately manage risk.

• Disability insurance
• Life insurance
• Property and Casualty Insurance
• Health Insurance

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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

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7

• They commit tomorrows
• dollars to todays treasures.

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Credit is really debt.

• Opportunity costs
• Costs of credit
• The magic of cards
• Secured vs. non-secured credit
• Credit counseling
• Credit repair clinics

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What to do if

• You need to know what your credit report says ?
• You need to correct your credit report ?
• You cant pay your bills ?
• Creditors call you at home or work ?
• You cant get a credit card ?
• You think you need to go bankrupt ?

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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

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8

• They fail to save for retirement.

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• Women have a lower income in retirement than men,
  thus higher poverty.
• Women face greater economic challenges in
  retirementlive longerlower lifetime earnings.
• Divorced women have higher poverty in retirement.
• Women are less likely to have pension coverage at
  work than men.

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• 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 stoolSocial Security, Pension and
  Savings.

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9

• They fail to make a will.

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• 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.

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• Letter of last instruction
• Living Will
• Other tools for transferring property

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10

• They dont realize that the time to begin
  improving their financial stability and security
  is now.

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Financial Security in Later Life

• http//www.reeusda.gov/financialsecurity/