Personal Finance Quiz

Beginners plan for buying a car:

- Borrow on an installment loan to buy a good used car - Make monthly payments (that fit in your budget) - After last payment, start putting the monthly payment into a car savings account for 2 years - Calculate your car payment - does it fit your plan?

Cost of purchasing a home: Benefits of owning your home (if you have a good income and plan to be there several years)

- Fixed rate mortgage payment stays the same for twenty years (while your income is increasing.) -Your home value may increase (be patient to find a good buy) -The amount you pay as principal is an investment (rent is lost) -Real estate taxes and interest are tax deductible if you itemize (rent is not deductible.) -Quiet, safe location

Life insurance=

- Insurance to provide income for family if the wage earner dies - It is wise to have life insurance

Disability insurance=

- Insurance to provide income if wage earner is disabled - 30% likelihood that a person will become disabled

Auto insurance=

- Lender is depending on your ability to repay the loan - You and others in the accident may be hurt and have high medical costs - States require auto insurance - It is wise to have auto insurance

Health insurance=

- Medical costs are the top reason individuals go bankrupt - Federal government requires health insurance

Home Insurance=

- Mortgage lender is depending on you to repay mortgage and will require insurance , Cost to replace would be overwhelming - It is wise to be insured against fire, wind damage, theft

(Giving) Is tithing for today?

- Not required of Christians - Nothing wrong with giving a tenth if done cheerfully. - A matter of conscience - Why limit giving to 10% -The window in Mark 12:41-44 gave what she had

(Insurance coverage info) Disability

- Often paid by employer; ask HR about what % of salary is covered - 60 - 65% is normal - 2% of people surveyed thought they might become disabled, 30% of people will become disabled

(Insurance coverage info) PPO Preferred Provider Organization-

- This type of plan allows you to use a network of doctors - Co-pay plan or plan with deductible - Co-pay may require a little higher premium, but it is most likely the better choice

(Insurance coverage info) Life Insurance

- When you have children in your home, you should purchase term life insurance for a term of 20 years - How much life insurance? - consider family needs for support or to pay mortgage - Term life insurance is less expensive than whole life insurance

How to keep a good credit reputation:

-Always pay on time. -Get a copy of your credit bureau report every year (it's free). -A good credit score will help you get a better interest rate on a home mortgage. -Never co-sign a loan for anyone. -If you have a credit card, you must use it occasionally. (If the card expires because of inactivity, it will hurt your score.)

(Giving) How to give: (4)

-As a top priority - prayerfully decide what your monthly gift will be and give it first from your income - not what's leftover -Give cheerfully - not expecting anything in return -Give generously -Give wisely

(Giving) We should consider giving (4):

-From the 'first-fruits' (from the 'gross') -A 'tithe' (tenth) is a good place to start -To the church primarily -When we give, we can give both to the Lord and others (poor, needy)

(Giving) Benefits of a regular giving plan:

-Giving and saving first provide a boundary for your spending plan -Giving is a way of showing your gratitude -Giving directs my focus from myself to the needs of my church, missions and other people -Giving means that I have less for me, but it reminds me that I can trust God to meet all my needs

(Giving) Why give?

-Giving means that I have less for me, but it reminds me that I can trust God to meet all my needs -Gifts can be meaningful to the person receiving the gift to encourage them -and...charitable gifts are tax-deductible!

(Giving) Giving is an antidote to greed

-It is difficult to be greedy and giving at the same time -Greed says: "I want it all for me." -Giving says: "I want to share with others." -Giving reminds me that God has first priority in my life

Cost of purchasing a home: Analyze the interest rate-

-Talk to different lenders - find the best "fixed" rate -Avoid an ARM - Adjustable Rate Mortgage -Be skeptical of anyone trying to convince you that an adjustable rate is a wise choice -Consider 20-year instead of 30-year loan if possible -Avoid home equity loans - your home is the collateral

(Giving) Reasons to give:

-as an act of Worship - in obedience to the Lord -to invest in the Kingdom of God -to support those among us who live by the Gospel -out of compassion for the needy -Gifts can be meaningful to the person receiving the gift to encourage them

(Budgeting your (God's) Resources) 6 step budget planning process:

1. Analyze your current state 2. Set Financial goals 3. Identify possible scenarios 4. Evaluate scenarios 5. Develop a plan 6. Implement plan

3 points from the Bible on the topic of debt:

1. Borrowing money is not a sin, but it is not financially wise 2. The Bible warns against debt WARNING! Proverbs 22:7 "The borrower is slave to the lender" Debt is not freedom. 3. When you borrow, you must repay. Psalm 37:21 "The wicked borrow and do not repay but the righteous give generously."

(Creating a Budget) How to make your budget work:

1. For a few months, keep a careful record of your actual expenses and compare each month to your budget estimates 2. Use an envelope system 3. Select an Appropriate Recordkeeping Format 4. 5.

(Insurance coverage info) Auto Insurance coverage (4)

1. Liability - covers property damage and medical costs for you and others involved 2. Collision - covers damage to your car 3. Uninsured motorist - pays for you and your passengers if uninsured person causes accident 4. Deductible - if you have a solid emergency fund a high deductible of $1,000 will save on the cost of the premium (but compare cost savings)

(Insurance coverage info) Homeowners' property insurance coverage (3)

1. Usually required by mortgage lender 2. Shop rates - get quotes 3. Save on premium by raising deductible

Three things your savings will do for you:

1. You will be able to stay on your spending plan, 2. Avoid using credit cards, 3. Be less worried and stressed when unexpected expenses arise.

Rule of 72:

72 divided by interest rate = Number of years it will take an amount to double 72 divided by 6 = 12 years to double investment $20,000 will grow to $40,000 in 12 years at 6%

(Budgeting your (God's) Resources) What does a budget do?

A budget holds you Accountable; it helps you make sure you will have enough money every month. Without a budget, you might run out of money before your next paycheck.

(Budgeting your (God's) Resources) What is a budget?

A budget is a Plan you write down to decide how you will spend your money each month.

(Budgeting your (God's) Resources) A spending plan is also known as a...

A spending Plan is also known as a budget or projected cash flow statement.

Savings Goal #2 After debts are paid off...

After debts are paid off, put 3 - 6 months of monthly expenses in your emergency fund

What does it mean to be a good steward?

Biblical Stewardship is the use of God-given gifts and resources (time, talent, treasure, truth, relationships) for the accomplishment of God-given goals and objectives.

(Debt) Two choices when considering a purchase:

Buy now by borrowing -Wait - save - buy later with cash

(Giving) Giving from a truly Biblical perspective, we should give:

Cheerfully and charitably

How much should you save?

Consider 10-10-80 plan. Give 10%, Save 10%, Budget 80% for monthly expenses.

(Implications of Stewardship) We are to be faithful in managing God's resources. God will provide all you need; we are to be...

Content

(Debt) Types of Debt: (annual interest rate)

Credit cards 12 - 24% Installment car loan 7 - 15% Home mortgage 4 - 6% College loan 5 - 12%

(Debt) Credit cards: What are they and 4 important facts

Credit cards are a loan that must be paid monthly -Use only as a convenience to pay an expense that is Already in your spending plan -Use credit cards that do not charge annual fees -Pay off full balance every month -If you pay late, it will hurt your credit score and cost fees

(Debt) Using debit cards: What are they and 4 important facts

Debit cards take money directly out of your checking account -The danger is bank overdraft fees -It is important to write down every transaction -Use envelope system for food, clothing, restaurants -Check your online balance and reconcile monthly

T/F- Buying new cars is the best way to stay out of debt

FALSE!

(Giving) T/F- Tithing is only 10%

False! Tithing was more than 10%, closer to about 23%.

(Budgeting your (God's) Resources) Values=

Fundamental beliefs about what is importants, desirable, and worthwhile.

Savings Goal #4: Investing for...

Future

A clear reading of the Scripture would quickly bring you to the fact that....

God created and owns everything

When does a loan make sense?

Home mortgage - A home usually increases in value so it is possible at any time to sell and pay off the loan - If owning a home fits your spending plan, it can be a good investment

(Budgeting your (God's) Resources) What does a budget show you?

How much money you make and spend

(Budgeting your (God's) Resources) Projected cash flow=

Income-Expenses Should be positive (more income than expenses)

(Insurance) Why is insurance important?

Insurance protects against financial losses that could overwhelm you and hurt those who depend on you.

(Budgeting your (God's) Resources) How do I make a spending plan?

List your income, List your expenses, Co pare your income to your expenses, List your resources and set your priorities.

(Insurance coverage info) Health insurance (2)

Medical costs are #1 reason for personal bankruptcy Talk with HR to fully understand your employers insurance plan

(Giving) Practical guidelines for giving:

Not under legalism in Christ, nevertheless tithing is a good starting point or target to aim for. Let's stop giving God the small change! -Seek the Lord as to His leading as to how much you give and then obey Him (Clear conscience in our giving)

(Budgeting your (God's) Resources) Personal financial goals:

Objectives to be attained through financial planning and management efforts.

(Budgeting your (God's) Resources) Financial Strategies Guide: Prestablished...

Plans of action to be implemented in specific situations

Savings goal #1 Put $1000...

Put $1,000 in an emergency fund (immediately)

The #1 Key to success in making your spending plan work is...

Savings are the key to budget success

Savings Goal #3: Set up...

Set up special savings funds

(Budgeting your (God's) Resources) What makes a SMART Financial Goal?

Specific: dollar amount ($) Measurable: fic timeframe/ goal date Achievable Realistic Time Bound

4 step strategy for getting out of credit card debt:

Step 1 - List all your debts. Step 2 - Pay the minimum balance on each credit card each month. Step 3 - After you set up your $1,000 emergency fund, use all available cash pay off smallest debt first, Step 4 - Work through your list until all are paid off.

(Creating a Budget) Outgo=

Taxes, giving, current needs, future needs

(Budgeting your (God's) Resources) What is a budget plan?

The budget is often the only time that a family will actually order and structure their lives through a spending plan. In fact, it may be the only planning that they ever do.

#1 Tool=

The spending plan!

(Budgeting your (God's) Resources) Why do I want a budget? (2)

To be accountable To know your financial condition

Financial Debt goal:

To be debt free

(Creating a Budget) How to make your budget work: T/F- You may have to readjust your budget estimates

True It will give you a better understanding of where your money goes (and where your leaks are.)

(Insurance) Biblical principle for insurance:

Using wisdom in financial decisions to manage God's resources entrusted to you and to care for others.

(Budgeting your (God's) Resources) Financial Strategies Guide: Value- Goal- Strategy-

Value: Pay cash for large items Goal: Save $5000 over next 3 years to purchase a car Strategy: Include in Budget $150 monthly deposit to savings account

(Creating a Budget) Income=

Wages, Interest/invest. Income, Inheritance/gifts

God is the owner, so what is our part?

We are called to be faithful stewards

What is the proper perspective that we are supposed to have?

We need to recognize that God gives to us out of His abundance and we need to be good stewards of those resources remembering where they came from.

Should you still save if you owe on credit cards?

Yes!

(Insurance coverage info) Renter's property insurance (2)

Your landlord cannot insure your furniture because the landlord does not own those things Renter's insurance is not expensive

(Creating a Budget) Ledger-

a sheet of paper, form, booklet, or computer file for maintaining income and expenditure records.

(Implications of Stewardship) The desire for wealth can be...

a trap. Be content with what you have...because God is with you.

(Implications of Stewardship) It is God's message It is our charge to be faithful We are truly giving back to God Since we are stewards, we need to ____ and ______ ____ _____. We are steward of...

listen and obey the owner. We are steward of eternal matters. Stewardship requires action.

Rule of thumb with a home mortgage:

mortgage payment including taxes and insurance should not be more than 25% of spendable income

Budget guideline for housing cost

no more than 25% of your spendable income 1. Consider the cost to rent 2. Renting cost 3. Costs of owning a home

(Giving) Generosity=

the willingness to give your time, talents, and material wealth to benefit others and impact eternity." - Faith-Based Family Finances

Life financial goal=

to become wise financial managers of God's resources entrusted to you.

(Budgeting your (God's) Resources) What does a budget plan help me do?

• Spend your resources wisely and • To not over spend your scarce resources