March 27, 2008
Money Smart Week in Illinois
Finances! Do you ever feel like there's too much to learn and no place to start? I work in financial management education and I often feel like it's overwhelming. What's the answer?
Just pick something specific, go to an event or read an article, and add a little bit to your knowledge over time. This is my strategy and I do think it makes a difference. I know more now than I did five years ago – and plan to keep learning.
So, where to start? In Illinois, we have a great opportunity coming up in April. Hundreds of free classes and events that help consumers learn to manage their personal finances will be offered throughout the state during Money Smart Week®.
The Federal Reserve Bank of Chicago (which serves most of Illinois) and hundreds of partner organizations dedicated to financial literacy coordinate the week. University of Illinois Extension is an important partner in this event. Money Smart Week is designed to educate consumers about money management and generate awareness of financial education available on a wide range of topics such as saving, investing and using credit wisely.
As "Ben Franklin" said during an interview about Money Smart Week on WCIA Channel 3, "we all need to be more informed about money. ... how to spend it wisely AND keep it in our family."
The activities are free and held in communities throughout the state, including Champaign/Urbana, Bloomington/Normal, Peoria and Rockford, April 6- 12. Chicago's Money Smart week will take place April 20 – 26. To see the online calendar of events go to www.moneysmartweek.org.
No matter where you live, you can take advantage of some of these free classes. For example, The Road to Retire Well is offered by telephone. Because this program is by telephone, you can call in from your home or work or wherever you are comfortable! The Road to Retire Well discusses the tax benefits of retirement plans (such as 401(k)s and IRAs) and how to gain the most from your retirement plan. For more information and to pre-register, go to the University of Illinois Exension Countryside Center at http://web.extension.uiuc.edu/countrysidecenter/.
Choose one workshop to attend or one article to read, and begin to add to your financial knowledge. Over time you'll be surprised how much you know!
Comments? Email us at RetireWell@uiuc.edu. Your replies will be posted :)
Posted by Kathy Sweedler at 12:10 AM | Permalink |
March 19, 2008
How to Tell If You Need a Budget
My feet are killing me. Today, I stood on them for nearly 8 hours while I led a train-the-trainer class for staff from several different Chicago-area social service agencies.
What was so important that these agencies are sending their staff for two full days for training? Financial literacy. They want to help their clientele become better money managers and consumers. I was teaching them to use a U of I Extension curriculum called All My Money.
Most of us are trying to squeeze just a little more out of every dollar right now, with gasoline and other prices climbing. Perhaps you can use some of the ideas that were shared during the class today.
Do you need a budget? Should you be tracking your expenses? If you have debt that never seems to shrink, the answer is "Yes." I also believe you should track your expenses for at least a few months any time you go through a major life change. If you have
- gotten married or divorced
- had a baby
- retired
- changed jobs
- filed bankruptcy
- moved to a new place or bought a home
- started a new job
your expenses are going to change, but by how much? Before you find yourself in financial quicksand, track your expenses to see how it's going. Carry a little notebook with you and jot down every expense. Or, if you use a debit card for everything, collect a receipt from each and every purchase. Write down the information if the merchant doesn't give you a receipt. Or, if you use cash, you can try envelope budgeting.
Make an estimate of how much you spend in a month, by category. Categories might include
- food
- transportation
- rent or mortgage
- debt payments
- entertainment and hobbies
- utilities
- child care
- gifts
- and so on.
Record your expenses or collect receipts for a week. At the end of the week, total the expenses for each category and compare it with your budget to see how you're doing. Checking after just one week will help you catch spending problems while they are still small.
Here's what you might discover. Did you expect to spend $300 on food this month, but you've already spend $150 just this week? Maybe you didn't put "eating out" or "gifts" in your budget, but now you realize that you're spending $25 or more each week going out for lunch at work. And you had to buy a birthday gift. Look at your budget and revise it based on this new information. Can you get by with just $150 for groceries for the rest of the month, or will you have to reduce expenses in another catogory? Will you continue to each out for lunch, or will you decide to pack lunch because other expenses are more important?
Tracking your expenses puts you in control. You can spot problems before they get out of hand, and you can make adjustments right away to get things back on track.
One person in the class today has been using envelope budeting consistently for 25 years. That's a testament to the effectiveness of budgeting and tracking your expenses. Try it! You might find that it works so well, you'll never stop doing it!
Comments? Email us at RetireWell@uiuc.edu
Posted by Karen Chan at 7:48 PM | Permalink |
March 13, 2008
Higher Gas Prices and Staying the Course with Your Investment Plan
Higher prices for gasoline, energy for heating, food and other goods essentially imply the income of consumers will not have as much purchasing power as it did previously. An article today in the Wall Street Journal Online (http://online.wsj.com/article/SB120541096748933255.html) reports on how higher prices and the weakening economic situation, including a high level of new jobless claims and weak asset prices in the housing market and in the stock market, have led to cut-backs by consumers in their retail spending. Drops in consumer spending in the month of February were highest in the building and supply stores (0.7%) and furniture stores (0.5%) and autos (1.9%).
For the average small investor (I am talking about people like me who are making contributions to an IRA or to their 401(k) or 403(b) plan as the major part of their savings and investment plan) what will be the impact of price increases such as these? From empirical research on retirement behaviors, we know that factors such as real income and assets held do influence the level of employee contributions to retirement plans. We would expect some people to reduce their contributions as their monthly budgets become tighter. How will we behave in this instance, with higher prices affecting our budgets? Keeping on course with contributions, through the shocks and bumps in the economic road, is part of asuccessful long-run investment strategy.
Posted by Paul McNamara at 9:30 AM | Permalink |
March 6, 2008
Is Your Financial Adviser One of America's Top Financial Planners? I am!
I'm one of America's Top Financial Planners! The Consumers' Research Council of America of Washington, D.C. says so! I got a notice in the mail, with the return address listed as State License Documentation in Simi Valley, California. SLD Industries is offering me a number of lovely plaques and table top awards priced from $169 to $229 that I may purchase to proclaim my inclusion in this select group. Tucked into the information about these purchases was a blue slip of paper informing me, "Consumers' Research Council of America is pleased to announce your inclusion in 'Guide to America's Top Financial Planners' 2008 Edition."
There's just one problem with all this: I'm not a practicing financial planner. I'm an educator. I also hold the CFP (Certified Financial Planner) designation, but I don't work as a financial planner. So how could I be one of America's Top Financial Planners?
I visited the Consumers' Research Council of America's web site, where I learned that they use a point system to select these planners. Apparently, I earned points based on my experience, training, professional associations, and financial certifications. I began to wonder, who else has received this designation?
I searched for two other educators I know who also have the CFP designation, but do not practice. They both appear in the list. Now my curiosity was really piqued.
Then I went to the website of the Financial Planning Association(FPA) where I knew I would find the names of individuals who work as brokers, insurance agents, accountants, investment managers, and other financial professionals. Members must have the CFP designation to be listed in the FPAs searchable list. I searched for planners within 50 miles of Chicago and received a list of 253 planners. I chose all the planners whose names started with either M or S (53 planners in all), and searched for them in the Consumers' Research Council of America's database of America's Top Financial Planners. Each of those 53 planners is listed as one of America's Top Financial Planners, except one.
Now, that's not to say that these 52 individuals aren't fine, upstanding financial planners. But my notice said I was "among a select few." OK. So just who did you leave out? Oh--my previous property/casualty insurance agent wasn't listed, but then she doesn't hold herself out as a financial planner or hold the CFP designation.
So how can you find a financial planner? You can find a CFP by going to the CFP Board of Standards web site. You can look for a planner on the FPA web site. Or you can narrow your search to just those planners who are fee-only, meaning that they do not sell any product. You pay for their time and expertise, the way you would with an attorney. You can find a fee-only planner through the National Association of Personal Financial Advisers (NAPFA)or the Garrett Planning Network.
If you want to know more about how financial planners are paid, the difference between a broker and a registered investment adviser, and what the various credentials mean, visit our website, Choosing a Financial Professional.
Just please don't patronize the website of a business who is simply regurgitating the name of every planner they could find and trying to sell us "museum quality awards."
Comments? Email me at RetireWell@uiuc.edu.
Posted by Karen Chan at 8:03 AM | Permalink |
