Library Hosts Budgeting Seminar
Mar 29, 2018 12:22PM
● By Pamela Johnson
Ceertified Financial Planner Steve Taylor
“Awareness” is the key point in budgeting, according to Steve Taylor, CFP, of Colt Financial, LLC. Taylor presented a seminar on the topic on March 12 at the Bellingham Public Library. Sixteen people attended and topics ranged from day-care expenses to retirement planning, or something for everyone.
Taylor asked participants to do a brief exercise by writing down three column headings: Short Term or 1-3 years; Intermediate Term or 4-7 years and Long-Term or 7-10 years+ to get an idea of what our goals might be. He then asked everyone to list under each column the top 3 things they’d like to see financially accomplished by the end of each term.
A variety of goals was offered, and he listed them on a white board. The Short-Term included paying off credit cards, taking a vacation, doing home remodeling; Intermediate-Term included paying off a car loan or buying a new car, saving for a family vacation, starting a college fund; Long-Term goals included paying off the mortgage, creating a retirement savings plan and paying medical bills.
Taylor said that in his experience as a certified financial planner, he has seen that many people spend “just because” instead of looking at why they spend. Asking ourselves this question would bring awareness to all the reasons why we spend money.
He talked about how creating a priority list of what essentially needs to be paid is a useful tool for getting on the path to financial fitness.
He asked those in attendance for their input and listed what they said—things like rent, day care, food, utilities, car payment, and credit card debt. He noted that these items usually have a fixed amount to be paid each month.
He then asked, “What are the non-essentials or discretionary items” that people spend money on each month. Dining out, entertainment, trips to the mall, coffee stops, nail salons, phone (do I need all those gigabytes?) and cable bills (how many extra movies did we watch this month?) were mentioned. These amounts vary from month to month and can cause havoc on a budget if not carefully monitored.
Taylor suggested opening at least two accounts: one for essentials or fixed bills and one for discretionary spending. He said that it’s easy to lose track of how and why you’re spending if all your income goes into one account.
He then asked, “How much should people have in an Emergency Fund?” One participant offered, “Rule of thumb is 3 months of expenses.” For example, if it takes $4,000 a month to maintain a budget for your family, then there should be a separate savings of $12,000 for emergencies. Taylor suggested starting a savings for emergencies with a month at a time as a goal.
He discussed stocks and bonds only briefly because that will be the topic for another seminar planned for late spring. He did offer the definition of “investing” as “putting money into something to make it grow.” He explained the differences between stocks and bonds and talked about diversification in the industry.
The final question for the evening was, “How do I allocate extra income?” Taylor suggested applying a time-frame on 3 goals (long-, mid- and short-term) you might have and dividing up the extra income, possibly creating a separate account for each one. For example, you could pay off credit card debt (1 year), start a college fund (18 years), and start a retirement plan (30 years). The choice would be yours as to what percentage should go into each account.
Taylor stayed to answer any questions that had not been covered during the evening.
This seminar, part of the Library’s Financial Fitne$$ for Everyone program, was made possible by a federal Institute of Museum & Library Services grant, through the Library Services & Technology Act, administered by Massachusetts Board of Library Commissioners.