Financial Tip of the Week

Friday, January 9, 2009

Blatantly Self Serving

For the academic world, the time has come for another semester. For those of us that work in personal finance curriculums, this moment in time is challenging, as well as important, to teach individuals what they need to know to achieve financial success. People are seeking financial education in increasing numbers and, since we’re in the business of education, I want to be blatantly self-serving and inform our readership of the opportunities that exist at the University of Missouri to empower citizens for spring 2009. For those of you that live outside of Missouri, please continue reading and think about how you can implement similar ideas or provide feedback on how we can improve our programming.

I. Resident Courses

a. Personal Financial Planning 1183: Financial Survival (1 credit), Tuesdays 2:00-2:50, 18 Tucker Hall. Examines financial management issues needed to survive the critical college years. Specifically designed for freshmen and sophomores, the course focuses on topics such as credit use/abuse, credit cards, budgeting/planning, financial aid, educational loans, common financial mistakes of students, setting financial goals, and effective use of financial resources. Graded on pass/fail basis only.

b. Personal Financial Planning 2183: Personal and Family Finance (3 credits, math reasoning proficiency approved), Monday, Wednesdays, and Fridays at either 10:00 or 11:00 a.m. in Engineering Building West. Individual and family finance, with particular emphasis on financial planning issues, time-value of money applications, savings, insurance, investments, taxes, use of credit, and financial aspects of housing. This course provides the best overview of the issues related to personal financial planning. Prerequisites: MATH 1100/1120 (College Algebra) with grade of C or above, and sophomore or above standing. Math Reasoning Proficiency Course.

c. Personal Financial Planning 4483: Financial Success (1 credit), Thursdays 2:00-2:50, 18 Tucker. Examines financial management issues needed to survive the critical post-college years - managing educational debt; after-school budgeting; auto, health, and other forms of insurance; purchasing a home, employee benefits, retirement planning and other investment issues; setting financial goals; effective use of financial resources. Graded on pass/fail basis only.

II. MoTax

a. MoTax is a personal tax preparation service, provided through the cooperation of the Office for Financial Success, the Personal Financial Planning Department, and Missouri Extension. Beginning on February 3, PFP students, certified by the IRS, will begin to provide free Voluntary Income Tax Assistance to households with incomes under $45,000 and without complicated tax issues (e.g., sale of livestock). The service is offered most evenings, as well as Saturday mornings, in the Office for Financial Success (62 Stanley Hall). If you are in other parts of Missouri, several sites are provided by Missouri Extension. Please go to http://extension.missouri.edu/hes/taxed/vitasites.htm for more information. For those of you that are not in Missouri, call 1-800-829-1040 to determine the location of VITA services in your area. Last year, our cooperative service resulted in tax preparation savings of around $350,000 for Missouri residents, as well as $2,900,000 in tax refunds.

III. Office for Financial Success programming

a. Financial Counseling – The Office for Financial Success provides FREE financial counseling for MU students. Non-MU students must pay a fee of $50 per hour. Appointments made at http://pfp.missouri.edu/financial/schedule.htm .

b. Financial Education Workshops – Through the Office for Financial Success, Personal Financial Planning engages in providing educational workshops for the campus and the larger Columbia community. Workshop inquiries should be made at http://pfp.missouri.edu/financial/workshop.htm .

c. Teacher Support – Through our new association with the Missouri Council on Economic Education and our support of the National Endowment for Financial Education, we work closely with Missouri teachers. The goal is to help our teachers provide the best education to our Missouri youth, through the now high school graduation, required personal finance course. Our plan is to conduct workshops for regional teachers, as well as to send advisors to schools to work directly with teachers. Importantly, we wish to engage our students in working with students in Missouri high schools, as youth tend to listen to youth a little differently than the listen to us with color-challenged hair.

Well, that is about as self-serving as I can be. Our doors are open to each of you with respect to our teaching and service on behalf of Missourians. We do our best to take the money we receive from both the state of Missouri and Missouri students and to multiply that money through our efforts in economic development for Missouri, through financial education. We have a passionate focus on personal financial management; for we know that it can lead to financial success.

- Robert O. Weagley, Ph.D., CFP(r)

Chair, Personal Financial Planning

University of Missouri

Columbia, MO 65211

Saturday, January 3, 2009

Financial Resolutions for 2009

Several resolutions were sent to me by our readership over the past week. The list follows and it contains some good ideas for positive financial change. The ability to change exists in everyone. (I will admit to doing some editorial work. My comments are in parentheses.)

1) Increase my efforts at work to enable me to keep my job.

2) Invest in myself. Get the most from my past investments in myself or use this time when the economy is sluggish to add to my human capital, either through furthering my education or exercise.

3) Cut credit card debt and track my spending to make sure that what I buy supports my goals. (Update your net-worth statement to see if you are making progress. Making investment gains during 2008, with traditional investments, has been difficult for everyone.)

4) Write down my goals, as a starting point for financial success. (Try to write down dollar amounts and the point in time you wish to achieve each goal. Then, monitor your progress.)

5) Use things I have instead of replacing them - just because I want something different. Eat more leftovers.

6) Saving through my checkbook. The plan is to round up the cost of things I purchase to the nearest five dollars. At the end of the year, the total sum saved will be a gift to myself. For example, if I purchase an item for $3.36, I will record it in my checkbook as $5.00. If I spend $42.15, I round it up to $45.00. Then, on December 1, 2009, I plan to take all of the money that I have saved throughout the year in my checkbook, and do something nice for myself. (Editor’s suggestion: make sure these savings are working for you and not just sitting there without earning interest, while you wait for your “Being Nice to Me” Day.)

7) Begin to make small, semi-monthly payments to index mutual funds throughout the year. I plan a long-term strategy of investing in the stock market, by having $100 a month go into a diversified set of mutual funds. (Try to put your maximum deposit into your retirement account, as well as establish an emergency fund.)

8) Check the expense ratios of my mutual funds to make sure I’m not paying too much for too little.

9) Look hard at major expenses and, if I can defer them to a later date, defer them. Keep driving my old car, while I save for a newer model.

10) Find things in my budget that I can live without. Examples might be: reduce the number of times I dine out, reduce the level of my cable television subscription to those channels I really watch, and/or purchase lattes only on special occasions. (Mondays through Fridays are not typically “special occasions”.

11) Take a hard look at my risk tolerance. Has the past year changed my tolerance for risk? If so, make changes in my lifestyle and investments in order to reflect my true values.

12) Reduce my use of my parents’ money for things that I want and try to limit my expenditures to things that I need. (Sent by a student.)

While far from exhaustive, this is a pretty good list of actions we can consider, as we begin 2009. I found this quote by Epicurus (BC 341-270), “Do not spoil what you have by desiring what you have not, remember that what you now have was once among the things you only hoped for.” Sounds like a good guide for living a life of financial success, regardless of who has the most toys!

HAPPY NEW YEAR!