Article submitted by volunteer, Susan D’Alessandro

As a 25 year veteran in the financial planning industry, I have seen many sad financial situations mainly due to lack of knowledge on how to manage the family budget.  Once I became aware of the existence of Financial Beginnings, I was very excited to come aboard and be a volunteer. I am pleased to say that after teaching 20 classes, I enjoy teaching the Budget Game the most. This class gets the students engaged quickly and keeps them engaged.

Here are a few tips I use to keep the class moving.  First I pair up the students or put them in a group of three depending on class size.  I also give each pair a job and salary using the options provided in our workbooks. Instead of posting the monthly expenses sheets around the room, I hold up the expenses one by one and have the pair/groups choose one from each selection for their budgets. This helps me control the timing and keeps the students focused.  It also allows me to walk around the room and see if any group is having a problem understanding the exercise. Once the main expenses are chosen, I have them sum up the expenses and see how much is left in their wallets. They usually feel pretty good about this point.  Then I continue to add expenses for utilities, entertainment, vacation, cell phone, health insurance and misc. repairs. Usually by the end there is no money left even for the pairs with the higher salaries paid using a paystubs creator software.

It is at this point that the lights come on in their minds that running a family budget is no easy thing. They begin to make comments about how their parents must have to work really hard to give them what they have. They also see that life is expensive and they get to make choices on how they spend their money.  I know that by volunteering with Financial Beginnings I am the one that has helped turn this light on for them and have helped them start down the path of making smart decision with their money.

For those of you who may not be aware, recently there was a record-breaking lottery jackpot that caused frenzy across the country. People all across America were rushing to their local convenient stores buying handfuls of lottery tickets, with the dream of becoming an overnight multi-millionaire.  However, the fleeing dreams of many millions of people were quickly smashed as the numbers were read.

Speaking with people during the week of lottery-mania, I realized how many people saw this event not as a one time fun event, but a weekly occurrence. I never realized how many people played the lottery weekly, spending anywhere from $2 up to $100, or even more, a week. I thought this was foolish. I admit I indulge in the gamble of the lottery on occasion, but I never play weekly, and I certainly never spend $100 I learned that many people view the lottery not as a game but as a fanciful retirement account. Some people feel they have more control over their money by spending it how they want rather than allowing it to sit in some retirement account managed by a stranger. In reality you may be more in control of your dollars, but the likelihood of that control transforming into any type of return is extremely unlikely.

Instead of playing the lottery and hoping I would be able to retire early, I started my retirement savings early. I began working part time at a local electronics retailer while going to college, and was surprised to learn they offered a 401K with a generous match. I quickly enrolled, knowing I would have less in my paycheck but also knowing the small amount being removed would not make or break my monthly income. I worked at that job for 3 years and watched my 401K grow along the way. After a while you do not even remember it is being taken from your check, but the nice thing is whether you remember or not it still happens. Saving is hard for some people, so having an automatic deduction is the perfect option. I continue to add to my retirement savings and have opened multiple Individual Retirement Accounts (IRA) that I add to monthly through an automatic deduction from my checking account.

I still play and check my numbers on occasion, but I always know even if my numbers don’t match, I will still be ok when I retire.