Participants: Cordell Thomas
Series Code: TITTB
Program Code: TITTB000003
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00:01 On Take It To The Bank,
00:02 you will find ways to get out of debt, 00:09 solve your credit card problems, 00:14 how to make and stick with a budget, 00:19 simple ways to save, 00:24 buying or selling a home 00:26 and many more financial matters, 00:29 on Take It To The Bank. 00:31 Hi. 00:33 My name is Cordell Thomas 00:34 and welcome to this program called Take it to the bank. 00:37 We have an exciting program for you today 00:39 because this is the core of understanding 00:42 what financial literacy is all about. 00:45 We are going to talk about budgeting, 00:48 setting up a budget, the art of setting up a budget. 00:51 And many people have different approaches 00:53 to setting up their budgets. 00:54 But basically, a budget is your revenue, your income, 00:58 your paycheck, and your expenses, 01:01 where your money goes on a monthly basis, 01:03 to take care of those things that you have to pay for. 01:07 Many people get caught up in the budgeting process. 01:11 And those that really enjoy it 01:12 begin to make budgets very complex. 01:15 My budget has six different, 01:18 eleven different segments of expenses. 01:20 I have broken it down to areas such as home, 01:22 daily living, health costs, groceries, 01:24 I have broken financial areas 01:26 and then, of course miscellaneous expenses. 01:28 You're gonna see a graphic of a budget that I have set up 01:32 and I'll give you a context of how you can approach it. 01:34 It doesn't have to be that complex. 01:36 I'm getting into it because I can begin to see trends 01:40 in how I spend things, and what I do. 01:42 I'm gonna tell you a few stories 01:44 of things that came up in my life 01:47 that caused specific concern. 01:50 It's good to have a partner in this thing called budgeting. 01:53 It's good to have someone that holds you accountable 01:56 in sticking with the budget. 01:57 You stick with a budget 01:58 which is a comprehensive financial 02:00 look at what you are doing on a monthly and annual basis. 02:04 And give you a context of 02:06 how to continue to cut spending, 02:09 increase savings and make the best use 02:13 of your paycheck and or your revenues. 02:17 So I'm going to start with this, this little story. 02:20 It was interesting from my standpoint. 02:22 I had to go on a short trip and I took, 02:27 I had a nice car at the time 02:29 and some friends had need of transportation. 02:34 So I went on the trip but I said, 02:35 "Hey, here's my keys to the car. 02:36 Take care of the car and use it appropriately 02:39 but, you know, I am entrusting in your care." 02:42 It's not the wisest move I ever made 02:44 because there's a couple of issues involved here. 02:47 I'm paying for a car. 02:48 I have a vested interest in that car. 02:51 There's a value that that car has to me 02:55 because I'm taking care of that specific expense. 02:58 For those friends of mine, it was quite interesting 03:01 because there is no vested interest in the car, 03:04 they aren't paying for the car, 03:05 there wasn't really any need 03:07 for them to really take care of. 03:08 And you could tell because when I got back from my trip, 03:10 there were scratches on the car. 03:12 The wheel had a major gash across 03:14 because they ran over a curb. 03:16 There's a couple of things that happened to my car 03:18 that upset me. 03:20 And we had a conversation with those friends 03:22 and we got most of that those problems taken care of 03:25 but what is my point in telling that story? 03:28 When you pay for something, 03:31 and you have a vested interest in something, 03:33 you take care of it better. 03:37 There's a concern with credit in our communities. 03:39 We're in debt. 03:41 And we're using other people's money 03:42 to pay for certain items. 03:44 We shouldn't be. 03:45 If you don't have the money to spend for something, 03:47 if you don't have a vested interest in saving 03:50 and then paying for something, 03:52 then it doesn't mean as much to you as an item. 03:57 And as I talk about those things, 04:00 we have to consider 04:02 specific issues as it applies to our budgets. 04:05 So as we talk about budget, 04:07 I'm gonna give you a little humor here. 04:09 We have a lot to cover today. 04:11 So I need to budget my time wisely. 04:13 Why? 04:14 If I don't budget my time wisely, 04:16 I'm going to run out of time. 04:18 And thus, you won't see all of the commercials 04:20 and then the different interviews that we had 04:23 and that supports a lot of the things 04:25 we're going to discuss today. 04:27 So if I don't budget, I run out of time. 04:31 If you don't budget for your finances, 04:35 as well as all of us, you run out of money. 04:39 The context is, understanding your financial situation 04:43 is key and a budget is a start of understanding 04:48 what it is your finances can do for you. 04:51 It's a good way of tracking. 04:52 I want to start though, with a quote from a newspaper. 04:55 And it tells us where we are as individuals 04:58 in the United States. 05:00 It tells us we're all in the same boat. 05:02 There's no one any different and no one any better. 05:05 But the quote is this. 05:07 "The financial crisis of the last few years 05:11 and the accompanying housing market meltdown exposes 05:14 how many Americans are ill equipped to master 05:17 the financial ABCs." 05:20 Understanding how finance work, understanding how money works, 05:24 understanding cash flow can be dealt with 05:28 by understanding a budget and the art of budgeting. 05:33 So as we start this, I want to begin to ask you 05:37 some questions. 05:39 Why do we set goals? 05:41 When I was a young person, 05:42 I wanted always to go into business, 05:43 I want to develop my own business. 05:45 I wanted to do something. 05:46 So back when I was a child, 05:48 I set the goal of possibly going to school, 05:50 going to college, getting a master's 05:53 and going and working for some corporate entity, 05:55 which started but it all of a sudden changed. 05:57 God had a different plan but I set that goal, 06:01 meaning, if I wanted to get where I wanted to be, 06:04 I had to plan for a future of going to a specific school. 06:09 So it's essential that if you have a goal 06:11 of, number one, paying off your debt. 06:15 Set a goal, set a time frame which is the next issue 06:18 that I'd like to talk about is your goal ranges. 06:21 So the first thing I want you to do 06:22 is, take out a piece of paper. 06:24 I'll give you second. Second's up. 06:26 Take the piece of paper 06:27 and write down some of your goals. 06:31 What that would be. 06:32 List them. Just list them out. 06:34 I want to be out of debt. I want to buy a car. 06:37 I want to get a new into a new home. 06:39 I want to pay for educational expenses. 06:41 I want to plan for retirement, what are those specific goals. 06:46 Okay. 06:47 Once you've dealt with those goals, 06:50 I'm going to ask you to do something different. 06:54 The second step I'd like you to take 06:57 is to prioritize those goals, 07:01 what is most important, what is least important. 07:06 And then when you prioritize those goals, 07:08 take a look at the ones that are most important. 07:10 And take a look 07:12 at whether or not they are short term goals. 07:16 Short term is typically one for weeks, a month, 07:20 maybe three months, one to three months. 07:23 Mid term goals, I would suggest a mid term goal 07:25 is between three months and a year what that would be. 07:29 If it's paying off your debt 07:31 you want to target into getting clear 07:32 of your credit card debt in one year, 07:34 that's possible objective that you can reach. 07:38 Make it reasonable. 07:40 And long term goals 07:41 could be planning for retirement, 07:44 planning for, planning for kids going to school. 07:49 A variety of those type of things. 07:51 Prioritize and then pick out whether or not 07:55 they are short term, mid term and long term goals. 07:59 And I gave you examples of each. 08:02 Once you've done that, begin to think about 08:06 how you can get to accomplishing those goals, 08:11 how you can get to accomplishing those goals. 08:16 It's essential that we educate our young people. 08:19 If you have kids, 08:21 ask them what their goals are. 08:23 I've asked my son what his goal is and he says. 08:25 "I want to buy a new bike, Dad." 08:27 He has a bike that we had for him 08:28 and he's learned how to ride that bike 08:30 and now as a seven year old he says, 08:31 "There's this other bike that's out there 08:33 that I really would like to get. 08:34 Okay. 08:36 How do you plan to get 08:37 to the goal of acquiring the bike? 08:39 "Well, I don't know. 08:41 I can do jobs, I can fold clothes, 08:43 I can help mom clean up the house, 08:45 I can do these different items." 08:47 How much is the bike? 08:49 "Well, the bike is about $75, Dad. 08:52 And I-- I know it's really expensive 08:55 but I think I can get there. 08:56 And so every day I can see him putting his quarters 08:59 and his dollar bills into a little bank 09:01 that he has at home. 09:03 And he has this plan of attaining that goal 09:05 over the next six months. 09:07 I think he'll get there a lot earlier. 09:09 But the context is key. 09:11 We teach our young people how to attain their goals. 09:14 And there are many different software methods. 09:16 There are different things you can do online. 09:19 There are places you can go. 09:20 There are different methods you can use to teach your kids 09:23 but it's a matter of talking to them about it. 09:27 I asked one of our area experts on literacy and she asked. 09:33 I asked her the question about, 09:35 is money management emphasized enough in our schools? 09:39 Regina, what are your thoughts? 09:44 In my opinion, schools are not emphasizing money management. 09:49 What they're actually doing is, 09:52 they are showing them how to balance a checkbook. 09:55 The time frame that they're giving the children 09:56 to learn is not enough. 09:58 But the psychology of money, 10:00 they're not getting that at all. 10:01 So they're not getting 10:03 the understanding of how money actually works. 10:05 Investing, tithing, saving, they're not getting that all. 10:09 So it makes it difficult for the children to know 10:11 what to do at a later time. 10:14 Regina helps us teach a financial literacy course 10:17 in the Riverside area 10:18 and she's a fantastic resource as she's also an educator. 10:22 And it's interesting as I talk to her 10:23 about some of the ongoing dilemma 10:24 in our educational systems. 10:26 It's interesting that we teach our kids how to read, 10:30 we teach them about mathematics, 10:31 we teach them about economics. 10:33 And they hear all these stories about the debt ceiling 10:36 and all these kind of things going on around our... 10:38 in our world and around the globe. 10:40 And yet, we don't teach them about finance, about budgeting, 10:47 about planning for your acquisitions 10:49 and the benefits that come from planning 10:51 for an acquisition without using someone else's money. 10:54 And so as we move forward with this context, 10:57 this conversation on budgeting, 10:58 I'd like to talk to you about a couple of things. 11:03 When you begin the process of budgeting, 11:06 the first thing you want to put in a budget 11:09 is where your money comes from. 11:12 If you're single mom, 11:14 take a look at things like alimony, 11:17 take a look at paychecks, take a look at parents, 11:21 take a look at many different aspects. 11:23 And if you have a specific skill 11:25 or talent that God has given you a wealth in, 11:29 such as teaching music, such as mechanics, 11:33 there in could be additional income. 11:36 My wife is a financial, excuse me, a fitness trainer. 11:41 And so there is some additional income 11:43 that can come in when she goes and does some fitness classes 11:47 with some other individuals. 11:49 Those are little things you can put in 11:51 and that can help in defraying other type of expenses. 11:54 So the first thing I want you look at in a budget 11:57 is where the money comes from. 12:01 The second thing I want you to start thinking about now 12:04 is about the feeling of what independence is like. 12:09 I don't have anything on my back. 12:11 I don't have these debts that I have to deal with 12:14 and envision yourself down the road 12:17 having a debt free lifestyle. 12:21 The next thing I would like to talk to you about is, 12:23 where the money goes. 12:25 This part of the budget is the most important part 12:27 because it gives us an opportunity to track 12:30 our spending. 12:33 Where does the money go? Why did I buy this item? 12:36 Was it a necessity? Was it a need versus a want? 12:41 If I needed to purchase a car 12:43 that I think through the process 12:45 and add that in as a long term project 12:50 and goal that I wanted to have. 12:52 So as a part of my full financial picture, 12:55 I now have these expenses that I can use to track 13:01 where I'm at and what I would like to do 13:04 in order that I can accomplish my objectives. 13:07 So if I have a short term objectives of, 13:09 I'd like to begin saving an additional $250 per month, 13:13 I now know what I need to do to get to that $250 mark. 13:18 But unless I budget for it, and take a look at my expenses, 13:21 and know where my expenses are, 13:23 I will never be able to cut in certain areas 13:26 to get to that objectives, 13:28 that specific objective in this case. 13:31 The other thing with budgeting 13:34 and finding out where your expenses are, 13:36 is you can begin to see trends. 13:39 Hey, I'm spending $150 more on my phone expense 13:45 than I did two and a half months ago. 13:47 What happened? 13:48 Hey, my travel expense went up about $600. 13:52 What happened, did I account for it, 13:54 was it a part of my budget, 13:56 was it something that was an emergency that came up? 13:59 Hey, I didn't realize that I had so many things 14:02 that were going to be a problem this year 14:05 because I had book expense for school. 14:08 And I also had a travel expense 14:09 and I had a moving expense that came up. 14:11 You can begin to see cycles in your expenditures 14:14 on a yearly basis 14:15 and it can help you plan for those things 14:18 that you never knew would arise. 14:21 What did you need? what did you want? 14:25 Did I plan for it? Is it there in the budget? 14:29 Am I being a good steward, 14:33 a good faithful trusted individual 14:36 that can begin the process of managing 14:40 and doing something with the talent 14:43 that Christ has given me? 14:45 And in this case, it's managing the money, 14:48 decreasing the expenses, and utilizing the profits 14:51 and or your paycheck 14:53 that comes in on a monthly basis 14:55 to do what needs to be done. 15:00 What did you decide to spend money for? 15:04 Where did you decide to spend the money? 15:07 Categorize how your money is spent. 15:11 I spent this amount on clothing. 15:13 I bought a couple of CDs last month. 15:16 I had an unexpected expense because I had to buy ten Bibles 15:21 for a Bible study that we're planning to have 15:23 at a friend's house. 15:25 We were planning to do some things with the kids 15:27 where they would get together, 15:28 have a get together and we had to buy 15:31 $75 worth of pizzas 15:33 to satisfy the cravings of the young people 15:35 at the party. 15:37 All of these things 15:38 can become categorized now as a food expense, 15:41 as may be a clothing expense. 15:44 And we can better have a grasp of those trends in the expenses 15:49 that we have in an ongoing basis. 15:52 Review the concept 15:53 that I have provided with you, for you. 15:55 Begin the process over the next couple of weeks 15:58 of writing down where the money goes. 16:01 Take a look at what your paycheck says. 16:03 Is it net income or is it gross income? 16:07 Taking out the taxes makes it a net income 16:09 and ensures that you know exactly how much money 16:13 is going into your bank account, 16:14 and how much money you can draw from 16:17 to pay those expenses. 16:20 A budget again, is understanding the money, 16:24 understanding where it's coming from, 16:26 understanding where it's going, 16:28 understanding the trends 16:30 and understanding where you can look 16:32 at cutting some expenses 16:34 and putting it more into savings 16:36 into emergency funds and into paying off that debt. 16:41 Debt is real. 16:44 We did a few interviews out there on the street 16:47 and asked people about 16:49 how do you track your monthly expenses. 16:52 And here's what they said. 16:58 That's a very good question. 16:59 I don't know if I necessarily plan for financial emergencies. 17:04 Sometimes if I know 17:06 that I have something come up like a trip 17:08 or something, I go ahead put some moneys away. 17:10 But I got to-- I must be honest, 17:12 that's probably a bad area for me. 17:14 I don't necessarily have the greatest in planning 17:18 for financial emergency. 17:19 So I don't really have all that together. 17:22 I have a savings 17:24 and I take out a certain percent 17:28 every month for the savings for emergencies. 17:35 Depends what the emergency is. 17:37 To be honest, 17:39 my situation right now, I really don't plan. 17:41 That's the problem. 17:46 Interesting. 17:47 Interesting responses how people save what they do, 17:49 how they plan on their budgeting. 17:52 Some don't plan. Some do. 17:54 And the context right now is hammering across the issue 17:57 of budget, budget, budget. 17:59 I'm budgeting time right now 18:00 because I'm going to run out of it. 18:02 There's so many things I want to share with you today 18:03 and the context right now 18:05 is we are constantly going to try to talk today 18:09 about budget, budget, budget. 18:11 Okay, with that said, are you planning 18:15 for what you spend the money on? 18:18 Are you planning to figure out how you can save 18:20 additional money. 18:22 The context is understanding 18:25 that if I can decrease the amount of money 18:27 I'm paying out each month, 18:29 I have now this value of a paycheck 18:31 that comes in each month. 18:32 And that margin the difference between my revenue, 18:36 my paycheck, my profit and my expenses 18:40 gives me the amount of money I can allocate to savings, 18:44 I can allocate to investments more longer term type of thing, 18:48 and then of course, what I can allocate 18:50 to free cash flow that I can use to pay off debt 18:54 and in the case of the rich and wealthy, 18:58 how they deal with money, 19:00 how I can use cash flow in understanding 19:04 where I can actually get and reach my goals. 19:07 I asked Mr. Rodney Watson a key question. 19:11 And I think it'll be valuable for you to hear his response. 19:14 The question is, "Rodney, what is key to understanding 19:19 how cash flow works? 19:21 Can you explain? 19:24 I was watching one of nature programs 19:26 that I love to watch. 19:27 And I notice how the young lion, 19:30 lioness brought a little gazelle 19:33 to her cubs. 19:34 And the little cubs was playing with the gazelle. 19:36 But the mother brought this live gazelle to her cubs 19:39 so the cubs could learn how to hunt 19:41 when they get older, 19:43 so one of the principles 19:44 of teaching your children financial literacy 19:46 is to introduce games to them early on 19:49 just like the cheetah and the lion 19:51 and all the other animals do 19:52 so they could learn how to be financially literate 19:55 when they become older. 19:56 There are many games that can accomplish that. 19:58 Monopoly is a good introductory game 20:01 to get you there. 20:03 But there are also 20:04 many video games that they will love. 20:05 SimCity Sea World. 20:08 We have a Shamu type games. 20:10 You have games where you can build schools, 20:12 built malls, built shopping centers. 20:14 My kids love to play these games. 20:16 And with these games 20:18 the kids learn how to hire people, 20:20 how to fire people. 20:21 They learn how much 20:23 the tree costs to put over here, 20:24 the concrete cost to put over there. 20:26 They learn how much that building cost. 20:28 And my daughter, she made a million dollars. 20:30 She put the ATM machine over there, 20:32 bought a arcade machines and make sure there were 20:34 plenty of restrooms and all that. 20:35 So they get to learn 20:37 what it takes to run a business. 20:39 Schools are not in a position to teach your child 20:41 how to run a business. 20:42 They teach your child how to be an employee. 20:44 It's up to you to teach your child 20:46 how to become an employer. 20:49 And employers, of course make more money 20:51 than the employee, right. 20:53 So that's what you want to teach your child. 20:55 The key to doing this is, just remember this. 20:58 Someone once told me 21:00 watch what poor people do and don't do it. 21:03 That's why they're poor. And I always say this also. 21:07 Watch what rich people do and do that. 21:10 That's why they are rich. 21:11 So the key to teach your child 21:13 financial literacy is to introduce it early on 21:16 and introduce it in such a fun way 21:18 that they're learning financial literacy 21:21 and also gaining experience in money matters as well. 21:28 You know, I love swivel chairs 21:30 and its twisting back and forth is great. 21:33 But that was when I was a child. 21:34 I would spin around these chairs, 21:36 and spend time doing those type of things, 21:37 and lose sense of what time really is 21:40 and wouldn't budget my time the best way possible. 21:43 I had fun doing the simple things in life 21:45 and then as I grew up, 21:46 I never really know about the budgeting process, 21:49 and using money, 21:50 and understanding the context of being 21:53 a producer versus a consumer. 21:58 We are driven by the media to buy things. 22:01 We are driven to purchase. 22:03 We hear about Black Friday during the holiday timeframe 22:07 so that all of these 22:10 merchandisers can make up their profits 22:12 for the course of the year. 22:13 We see so many of these things going on 22:15 and we get this mentality that we are the employee, 22:19 we are the consumer 22:21 and we don't get the concept in place 22:23 and don't teach our young people, as Rodney said, 22:26 that kids can learn how to be the employer 22:30 and understand how to use cash flow to get to that goal. 22:35 It's about setting goals. 22:38 It's about teaching our young people 22:41 about what it is all about. 22:43 I have a graphic. I'd like you to look at. 22:46 And this is an example of my personal budget. 22:49 Personal budget actually gives you a context 22:51 of what a budget looks like. 22:52 In this case, what I'd like you to glean from it, 22:54 you can't read it. 22:55 But look at the layout. 22:57 It's month by month for the course of the year. 22:59 This is my annual budget 23:00 and how I track my actual expenses 23:03 as it relates to what I had actually budgeted. 23:06 The context here is to take a look 23:07 at the segments in a budget. 23:10 The top portion is basically my income, 23:14 my revenue, paycheck 23:15 and different forms or places that I make money. 23:18 The bottom portion is more so with where money goes out. 23:22 And examples of those expenses on my sheet it include, 23:26 areas that include the home expense, 23:28 daily living expense, transportation 23:31 and entertainment. 23:32 If you look at daily living, you can see different areas. 23:35 Groceries, $350, childcare, we don't spend on childcare. 23:39 Dry-cleaning, dining out, 23:41 those type of things that go into a daily living 23:45 portion of my budget. 23:47 And you do the same and you can be as detailed 23:51 as you would like to be on your budget. 23:53 You don't have to be as detailed as me. 23:56 You can provide just a synopsis 23:58 where it can be your income and expenses, 24:00 it can be as easy as just your income, 24:02 your fixed and your variable expenses. 24:05 And you can actually download free budget forms from online, 24:08 if you like to do that 24:09 and if you're a little bit more savvy in computer use, 24:12 you can actually develop one through Excel. 24:16 Okay. 24:17 So as we look at different elements of a budget, 24:23 I want you to consider four things 24:26 in reference to what we talked about today. 24:28 Simple things. One, become a good consumer. 24:32 Learn how to get the most of your money. 24:34 For example, 24:35 many of us may have health insurance 24:37 and when we need to go get, 24:39 maybe, some type of antibiotic we have to pay a co-pay, 24:41 a $15 co-pay, for example, 24:43 and then we have to go in 24:45 and then purchase the actual drug 24:47 at a discounted price. 24:48 All right. 24:50 Did you know that their pharmacists 24:52 have a support by law in different states 24:55 that they can offer generic forms of that drug? 24:59 The context is to understand 25:00 that you may not have to use your co-pay 25:03 and spend $22 for a specific drug that you might need 25:06 when there are there are manufacturers 25:09 and or retail establishments 25:10 that offer those same type of generic drugs 25:14 for a simple $4 price. 25:17 There are different ways that you can become 25:20 a very good consumer 25:22 and that's the first thing is just become a good consumer, 25:24 look at the best way 25:26 you can get the most of your money. 25:27 Second, exercise will power and self-control. 25:30 The essence of what I'm talking about here is, 25:32 have a partner that can hold you accountable. 25:34 And when you have that budget set up, 25:36 abide by it. 25:38 Stick with it. 25:39 Don't deviate from it 25:41 because your goal is to pay off debt, to save, 25:44 become a producer 25:45 instead of just a basic consumer. 25:48 And then of course, three, 25:49 develop a good record keeping situation. 25:53 Don't go through and have unnecessary expenses. 25:58 The context that you really want 26:00 in this case is to keep the budget working. 26:05 Record where those expenses are and keep that budget updated. 26:09 Four, evaluate your budget on a regular basis. 26:15 I can't say anything more about that. 26:17 Look at it on an ongoing basis. Look at it daily. 26:20 Every time you spend money, make sure it's updated, 26:23 make sure it is as accurate as possible. 26:27 There are many things that we can talk about 26:30 in reference to the budget. 26:31 And the context of what it's all about. 26:35 But my primary concern for you is this, 26:40 financial goals that you have set for yourself, 26:45 whether or not they'd be long term, mid term 26:49 or short term. 26:50 And they must include these three elements. 26:54 Financial goals should be realistic. 26:58 Don't think you're going to be able to save 27:00 a million dollars over the next year. 27:02 It's not realistic. The bottom line is start. 27:06 Start this journey with us. 27:07 Let's do it together 27:09 and begin the process of getting to the place 27:11 that you can save. 27:13 And that you can possibly invest. 27:14 And that you can possibly become a more 27:17 proactive individual 27:18 using the talents that God has given you 27:20 to help in His ministry. 27:23 Remember that as they are realistic goals 27:29 that they should also be specific 27:31 and they should also be in a specific time frame. 27:35 These are the things that you should think about 27:38 when you consider a budget, 27:40 the budget that helps you become a consumer, 27:44 a producer, a saver and someone they can pay off their debts. 27:48 Remember what Luke 12: 13 and 14 said. 27:52 "Man's Life does not consist 27:53 of the abundance of their possessions." 27:56 Key. 27:57 Remember, Take It To The Bank and save. 28:00 God bless. |
Revised 2016-02-18