U.S. ARMY FINANCIAL MANAGEMENT SCHOOL Personal Financial Management Training (PFMT)

Transcription

1 U.S. ARMY FINANCIAL MANAGEMENT SCHOOL Personal Financial Management Training (PFMT) Advance Sheet for Personal Finance Management Training Lesson Author: Training Development Directorate, USASSI Date Prepared: July SCOPE. This 8 hour lesson consists of nine (9) learning activities designed to equip AIT and One Station Unit Training Soldiers (OSUT) with essential information and practical knowledge necessary to successfully manage their financial future. The expected outcome of this lesson is to reinforce and expand the student s current knowledge base while building a greater understanding of personal and command team responsibilities. This lesson assists in preparing students to be confident personal financial managers who are able to effectively apply current Army policies and sound judgment while assessing, analyzing, and accomplishing unit-level tasks and functions. Students are expected to actively participate in facilitated group discussions and share their personal experiences to illustrate and strengthen the concepts presented. 2. LEARNING OBJECTIVE. TLO: Perform Personal Financial Management Training (PFMT) Action: Perform Personal Financial Management Training (PFMT) Condition: In a classroom environment using facilitated group discussions, shared personal experiences, applicable Army administrative publications and forms, and access to internet resources. Standard: Demonstrate basic knowledge and comprehension for the following learning activities: 1. Financial Ethics 2. Leave and Earning Statement/myPay 3. Spending Plan 4. Managing a Checking Account 5. The Essentials of Credit 6. Consumer Awareness 7. Car Buying 8. Meeting Your Insurance Needs 9. Investments/Savings Learning Domain: Cognitive Level of Learning: Knowledge 3. ISSUE MATERIAL NONE 4. ASSESMENT PLAN. You will be assessed based on CLASS PARTICIPATION. You must demonstrate your knowledge, skills, and ability through the quality and focus of discussion, comments and questions, ability to reason critically and to think creatively, and contributions to group work. Class Participation criteria include: Demonstrated understandings of readings and instructor presented material Demonstrate ability to correlate personal experiences and lesson topics Contribute relevant comments that demonstrate thoughts and reflection Apply principles and standards of critical reasoning Engage in discussions and challenge peers with logical, clear, relevant, and thought provoking questions Demonstrate collaborative behavior that promotes a positive classroom environment and contributes to group work 1

2 Date Name Pay Grade Spouse s Name Age Yrs. in Svc Age Spouse s Place of Employment STATEMENT OF NET WORTH ASSETS (What you OWN) LIABILITIES (What you OWE) CASH/SAVINGS $ SHORT-TERM DEBT Cash on Hand $ Credit Card Balances $ Checking Account $ Consumer Loans $ Savings Account $ Personal Loans $ Certificates of Deposit $ Auto Loans $ Other (friends, relatives, etc.) $ LIFE INSURANCE LONG-TERM DEBT (balance due) Cash Value Only $ Home Mortgage $ Other $ INVESTMENTS (rental property, student loans, etc.) U.S. Savings Bond $ Stocks $ Bonds $ TOTAL LIABILITIES $ Mutual Funds $ IRA $ IRA (Spouse) $ 401 (k) (Spouse) $ Investment Real Estate $ Other $ PERSONAL PROPERTY (fair market value) Home $ Vacation Home $ Automobiles $ Other $ (Furniture, jewelry, etc.) YOUR NET WORTH TOTAL ASSETS $ (minus) TOTAL LIABILITIES $ NET WORTH $ TOTAL ASSETS $ 3 2

3 Preparing a Monthly Spending Plan PREPARING A M ONT HLY SPENDING PLAN Ex pe nse s Budge te d Actua l Am ount for W e e k A ctual Am ount W e e k 1 W e e k 2 W e e k 3 W e e k 4 A m ount Spent GROS S INCOME NET I NCOME $ $ $ $ $ EXPENSES Car Car Insurance Cell Phone P re-s ervic e Debt School Loan SGLI Other Pay day 1 Pay day 2 Va ria bl e Ex pe nse s S nac k Foods Civilian c lot hing Laundry/ Drycleaning Uniform Maintenance Other TOTAL EXP ENS ES $ $ $ $ $ $ S AV I NGS Monthl y Actua l Am ount Sa ve d duri ng W e e k Am ount Goa l Sa ve d TS P ( %) Res erve Fund (1%) E mergenc y Svgs.(1%) Goal Gett er Fund (1%) Other TOTAL SAVINGS $ $ $ $ $ $ TOTAL EXPENSES AND SAVI NGS Total Expenses and Total Savings $ $ $ $ $ $ RESOURCES mypay TSP Credit NOTES Budgeting Car Buying wwwwww.transunion.com

4 DEBT-TO-INCOME RATIO EXERCISE Pvt Dough has created his personal spending plan and would like to know where he stands financially. Calculate his Net Income, Installment Credit, and Debt-to-Income Ratio. Is his financial position looking good? INCOME Gross Pay (All pays and allowances) $ Minus (All deductions, allotments, and taxes) $ TOTAL NET INCOME 1. $ INSTALLMENT CREDIT Creditor Credit Card $ Cell Phone $ TOTAL CREDIT 2. $ MONTHLY PAYMENT To compute your Debt to Income Ratio: Divide line 2 by line 1 and multiply by x 100 = % Percent STATUS Less than 15% Additional credit may be used with caution 15% - 20% Fully extended* 21% - 30% Overextended Greater than 30% Seriously overextended. Seek help! *Large families may have a difficult time with 16% or more. 4

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6 BONUS PAY CURRENT ID NAME (LAST, FIRST, MI.) SOC. SEC NO. GRADE SIMPSON, THOMAS C E-3 TYPE AMOUNT A BASIC PAY B BAS C BAH D E F G H I J K L M N O TOTAL LEAVE FICA TAXES BF BAL 17.5 ERND 17.5 WAGE PERIOD USED 5 DEFENSE FINANCE AND ACCOUNTING SERVICE MILITARY LEAVE AND EARNINGS STATEMENT CR BAL 30 ETS BAL 30 LV LOST.0 PAY DATE LV PAID.0 MED WAGE YTD YRS SVC 01 USE/LOSE.0 ETS XX0227 BRANCH ARMY ENTITLEMENTS DEDUCTIONS ALLOTMENTS TYPE AMOUNT TYPE FED TAXES CFC ALLOT FICA-SOC SEC BOND # FICA-MEDICARE STATE TAXES SGLI FOR 400,000 SOC WAGE YTD AFRH MID-MONTH PAY TSP SOC TAX YTD FED TAXES MED TAX YTD 89 STATE TAXES WAGE PERIOD ST SC AMOUNT WAGE YTD ADSN/DSSN 2836 WAGE PERIOD M/S S WAGE YTD AMT FWD + TOT ENT DIEMS EX 01 M/S S PERIOD COVERED 1-30 APR XX SUMMARY ADDL TAX EX TOT DED TOT ALMT 203 -NET AMT CR FWD - EOM PAY RET PLAN CHOICE TAX YTD TAX YTD PAY DATA BAQ TYPE PARTIAL BASE PAY RATE BAQ DEPN BASE PAY CURRENT BAQ DEPN VHA ZIP RENT AMT SHARE STAT JFTR DEPNS SPEC PAY RATE SPEC PAY CURRENT 0 INC PAY RATE 2D JFTR BAS TYPE CHARITY YTD 12 INC PAY CURRENT BONUS PAY RATE TPC PACIDN EPD1DB41 THRIFT SAVINGS PLAN (TSP) TSP YTD DEDUCTIONS DEFERRED EXEMPT 0 REMARKS YTD ENTITLE YTD DEDUCT

7 Your Name 2048 Address City, State Telephone Pay to the Order of $ Dollars OLD POINT NATIONAL BANK P.O. BOX 100 YOUR TOWN, USA Memo Signature II: : II: : II: 2048 Your Name 2049 Address City, State Telephone Pay to the Order of $ Dollars OLD POINT NATIONAL BANK P.O. BOX 100 YOUR TOWN, USA Memo Signature II: : II: : II: 2049 Your Name 2050 Address City, State Telephone Pay to the Order of $ Dollars OLD POINT NATIONAL BANK P.O. BOX 100 YOUR TOWN, USA Memo Signature II: : II: : II:

8 RECORD ALL CHARGES OR CREDITS THAT AFFECT YOUR ACCOUNT CHECK NUMBER DATE DESCRIPTION OF TRANSACTION PAYMENT/DEBT (-) CODE* DEPOSIT/CREDIT (+) $BALANCE REMEMBER TO RECORD AUTOMATIC PAYMENTS/DEPOSITS ON DATE AUTHORIZED 8

9 OLD POINT NATIONAL BANK P.O. BOX 100 YOUR TOWN, USA BANK STATEMENT Statement as of: April 30, 20XX Total # of Debits: 5 SUMMARY Total # of Credits: 3 Beginning Balance: $ Total Deposits: Interest Earned: 5.25 Total Withdrawals: Ending Balance: $ DEPOSIT DESCRIPTION Date Transaction Amount 4/2 ATM Debit Card Deposit 25 4/15 Payroll Deposit /30 Payroll Deposit /30 Interest 5.25 WITHDRAWAL DESCRIPTION Date Transaction Amount 4/4 ATM Debit Card Withdrawal 50 4/14 ATM Debit Card Withdrawal 25 4/14 ATM Service Charge 1.50 Date Check # Amount 4/ /

10 DETERMINING LIFE INSURANCE NEEDS 1. What annual income does your beneficiary need (in current dollars)? 2. Minus other sources of income Surviving spouse s salary Investment income DIG (Dependency/Indemnity Compensation) Social Security Pensions (SBP, etc.) Other (rental income, etc.) TOTAL INCOME 3. Additional Income Required (#1 minus #2) 4. Expected annual rate of return on insurance proceeds minus the long-term rate of inflation, written as a decimal (use.04 or less) 5. Amount of death benefit needed to achieve income in #3 (#3 divided by #4) 6. Expenses Funeral Medical Estate probate costs Federal estate taxes State estate taxes Mortgage balance* Car loan balance* Other loan balances* Education fund Emergency funds TOTAL EXPENSES 7. Preliminary insurance needs (total #5 & #6) Insurance Handout 8. Existing assets Other insurance policies Cash and savings Securities Lump-sum pensions payable at death Other cash death benefits IRA/Keough/401 (k) plans TOTAL ASSETS 9. Total life insurance needed (#7 minus #8) *Include only if you want them paid off at death. Insurance Handout 10

11 Pre-Assessment for the Personal Financial Management Course NAME: UNIT: _DATE: Q1. I must use my Basic Allowance for Housing (BAH) w/ dependents to support my dependents. Q2. The Service Members Civil Relief Act exempts service members from local real estate taxes. Q3. All of my leave and earning information will be sent to me via . Q4. Three elements are critical to personal financial success. a. Taxes, Credit Cards, and Utility Bills b. Net Worth Statement, Goals, and Spending Plan c. Checking Account, Debit Cards, Savings Bonds Q5. I may be separated from the Army for a dishonored check. Q6. Three components are used to determine my creditworthiness character, capacity, and collateral. Q7: A Pay Day Loan is the best option for a short term loan. Q8: Auto dealerships always provide better financing than banks and credit unions. Q9: Term life insurance is more expensive and lasts longer than permanent insurance. Q10: Retirement income depends on what source(s): a. Social security benefits b. Retirement benefits/pension income c. Investment income d. All of the above