by Shelley Swenson | Dec 9, 2014
©Feverpitched
Recently, UF/IFAS published Five Steps to Seasonal Savings, http://edis.ifas.ufl.edu/pdffiles/FY/FY140500.pdf, an EDIS brochure which reminds us of the stress that can result from holiday spending. I would encourage each of you to print or review the brochure and ponder its message TODAY. We are nearing the hustle and bustle of preparing for the season and it is timely information.
The five steps are:
- Recognize Your Seasonal Stressors
- Develop a Holiday Spending Plan – Make a Budget
- Develop a Holiday Spending Plan – Create a List
- Find Alternatives to Pricey Presents
- Fine-Tune Your Financials
It is already early December, the Thanksgiving shopping sale and Cyber Monday have passed but planning is still possible before the 2014 holiday rush if you will take some time to do so.
The section of this brochure that really spoke to me is the Fine-Tune Your Financials. As I do every day, I try to use cash and/or debit cards when possible. I need to see the money leave my account so the holidays don’t haunt me into the new year. There is too big of an allure for me to overspend when I buy gifts with credit. There is not as much reality with credit card spending. Paying interest on the credit debt is even more troubling, as the holiday spirit is long gone before the item is paid for.
Holidays are about spending time with family and friends. It does not need to center on gift giving. Consider your spending plan in the next few weeks for a more financially comfortable 2015.
by Kristin Jackson | Feb 28, 2014
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Are you “liquid asset poor?” If a household experiences an unexpected financial strain, such as a job loss, illness, or other large expense, and does not have enough liquid assets to cover basic expenses for three months, they are considered liquid asset poor. Liquid assets consist of money held in checking or savings accounts. According to recent research conducted by the Corporation for Enterprise Development, approximately 49% of Floridians are considered liquid asset poor.
Emergency funds focus on increasing liquid assets though savings. An emergency fund can allow households to adapt when unexpected financial strains occur. In the past, three to six months of income was considered to be a good emergency fund. In more recent times, the economy and unemployment have caused households to need much larger emergency funds. University of Florida professor, Dr. Michael Gutter, in “Money and Marriage: Saving for Future Use,” encourages families to consider the following factors:
- How much protection is provided by insurance
- Number of household incomes
- Household needs and fixed obligations
- Family financial support
- Retirement proximity
- Age of children
- Available credit
You can get an estimate of your household’s liquidity by completing the following steps:
1) Calculate the total amount of cash you have on hand and in your checking/savings accounts.
2) Develop a spending plan to allow you to estimate your monthly expenses.
(For help with developing a spending plan, check out Building a Spending Plan)
3) Enter your total cash and monthly expenses into the household liquidity formula:
Total Cash ÷ Monthly Expenses= Household Basic Liquidity
If the household basic liquidity is equal to or less than 1, this would be interpreted as having enough liquid resources to sustain your household’s current spending for only a month or less. If the household basic liquidity ratio is greater than one, that number is the number of months you would be able to live on your liquid assets based on your current spending. If you are not at your desired or expected number, take the pledge to start saving today at America Save$!
References:
Corporation for Enterprise Development. (2014). “Liquid Asset Poverty Rate”
Gutter, M. (2011). “Money and Marriage: Saving for Future Use”
Turner, J. (2001). “Show Me The Money: Lesson 5: Savings and Investments”
