Wednesday, January 14, 2009

Notes from Money Matters first session below:

Hope you had a good Christmas. We did. Why is it though that at some Christmases we get something that we didn’t want? We have all been there - socks, hankies, talc etc... This Christmas we got something we didn’t want - Chicken Pox! But, this Christmas all of us got something we didn’t want or ask for - less money in our bank, less money in our pockets, and for some lack of a job. produced some figures which suggest that one in 10 adults - the equivalent of 4.4 million - had still not paid off their store and credit card bills from a year ago. But we all know that what we are potentially heading for will put us all under the same sort of pressure.

Over the next three weeks we will discover ways of managing our money so that it does not end up managing or controlling us.

Talk: Why have you come tonight? What do you hope to gain from the next 3 weeks?


There is a story told about some of the Vikings when they were converting to Christianity in the 7th or 8th centuries. As they were converted to their new faith, they were taken and baptised in Britain’s cold rivers, many felt a dilemma. Whilst they were profoundly taken with their new faith they recognised that as occupiers of a foreign territory they might need to engage in battle. As they went under the water, some kept their sword arm raised above the surface. In effect they were saying ‘God, you can have all of me, but not my sword arm, I might need that.’

Many of us might be feeling ourselves to be under the cold water of debt right now. We might be feeling as though we are drowning beneath credit card bills, mortgage repayments and yet, even though we might be submerged beneath all of this - we can still believe that if we hold our wallet high out of the water our credit card companies, our banks, our mortgage providers wont spot it and somehow if we hold high enough or safe enough we’ll ride out the storm of late payments and red letters.

Friends, the only way we will address our financial issues is by looking inside our wallets and purses at our cards, looking at our shopping receipts, and looking at our bank statements at our incomings and outgoings. At the end of the day, debt is not something we end up in - we don’t just stumble into it like those icy rivers - but it is something we choose by the way that we behave with our wallets and purses and their contents

Part 1

Society tells us that we will be better, happier people if we own - a new car, the latest electronic gadget etc. In the uncertainty of economic downturn I will certainly become more aware - not less - of what I own.

And yet, what I own is only mine because I have been given it or have bought it. Even the money we have earned to buy goods comes from someone or somewhere else. One of the things that the recent economic down turn has reminded us is that how money is used widely affects others - whether that’s the subprime mortgage market, or the high street store. Our spending and saving affects the welfare of others both directly and indirectly.

One of the things the next three weeks will help us to think about is how wisely spend what financial resources we have because of that fact. We need to rediscover a sense of our money not just being ours individually but ours corporately. We need to be good stewards of our money and make it work for us.

Talk: Whilst many of us here today may consider ourselves reasonably secure, to make sure that we weather the financial storms, we need to try to work out what we are dealing with. ‘What you own, What you owe sheet’



Part 2

One of the keys to avoiding ending up drowning in the cold river of debt involves financial planning or budgeting. Whilst it might not appeal to us, often those people who plan and budget are the ones who feel that they are in control of their money and can exercise choice in how their money is used.

In good financial times, we tend to find as our income rises, so does our level of spending. As many people get wealthier throughout their lives, so their desires increase in proportion. We want the more expensive car, the larger house, branded clothes etc. Our view of what constitutes a luxury changes as we have

more disposable income. Often we don’t make these decisions consciously, but because of this tendency it is all the more important that we budget.

One of the challenges we face is balancing our long-term priorities with short term choice. In other words how do I make my available resources stretch to saving for my retirement or my children’s university education on the one hand, with the weekly shop and paying our taxes.

Talk: How do you feel about budgetting? Is it something you do/have done?

There are 4 steps to setting a budget:
Identify how much money you have coming in
Evaluate where the money is spent
Review current spending patterns and identify changes we wish to make
Track this over time to ensure that you are achieving those changes.

Step 1 Identifying our income.
This stage is really important because here we may discover that we actually have more income than we first thought. To make the most of this section tonight, I suggest that you dig out bank statements etc. and so on when you get home. But for the sake of tonight, let’s just look at the sheet together.

When you are completing the table, and I encourage you to do so, you should include all regular income, even if it requires dividing regular annual income by 12. But exclude all one off income (legacies, windfalls etc...) Many bills are paid monthly, so the tool is based on monthly income and expediture. However if you have weekly income or bills you should multiply them up to express them as monthly equivalents.

Talk: Look at sheet and see what’s needed and questions

Step 2 Evaluating where the money is spent

For this step, enter all of your monthly outgoings into the sheet.

In reviewing your spending, you will need to calculate an average month, adding up bills for a year and dividing by 12. If your review shows that a large amount of spending is in cash, you might need to make a note of where you spend this money for a week or two to guage where the money is actually going.

Talk: What does the exercise reveal to you about your financial priorities?

Next week and Wesley story...

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