By Mary Coleman
For many people, it isn?t until they move out of their parents? house that they come to understand the expansive world of finances. Few know how to navigate with so many options and burdens.
In a recent seminar hosted by the Student Alumni Association, students and the public were educated on the basics of financial planning.?Show Me the Money,? a financial planning seminar, was held Saturday morning in the Hinckley Alumni Center. The seminar consisted of four speakers who presented on various topics of finances.
Norman Nemrow, a BYU accounting professor, presented the basics of financial planning for individuals and families.
?It always begins with a budget,? he said.
A budget is a statement of cash flow, Nemrow said. It shows cash inflows and outflows, with each outflow prioritized.
?Part of a budget and good financial planning is knowing how you spend your money,? he said.
Nemrow said he uses his credit card more like a debit card, never spending more than he can afford. He uses it as a documentation of how much he spends.
He discussed each outflow possibility including food, car, house and insurance.
For a food budget, he suggested using last month?s food bills as a basis.
In discussing whether or not someone should buy or lease a car, Nemrow gave only two reasons why a person should lease: if there is little or no money for a down payment, or if it is for a car that isn?t affordable.
He gave the ?Nemrow Strategy,? which is ?buy a used car?and drive it until it rots.?
Insurance is another aspect of finances that people should carefully select.
?I never buy insurance to cover a risk of loss I can afford,? he said. ?I always buy insurance for risk of loss I can?t afford.?
Jason Payne, a financial planner of 14 years, discussed the three circles of wealth. These circles ? the bank, investments and insurance ? are areas that people should place their money.
The bank is the most important facet in financial planning, Payne said. People should have three to six months of savings in the bank, he said.
?The key to make sure you save is [to make sure] it?s a habit,? he said.
Payne said that in times of uncertainty, one should focus on saving rather than investing. A person should find a set dollar amount to save each month, he said.
Investments and insurance are also important in financing money.
?The whole reason to have insurance and pay for it is to insure [your investments],? Payne said.
These circles and the money in them should stay separate to create stability.
?Insurance is never ever your best investment and investment is never ever your best insurance,? he said.
Nathan Billeter, a financial planner, and Steve Rasmussen of the Marriott School of Management also presented lectures. Billeter presented on the topic of the psychology of wealth and Rasmussen on insurance.
Jen and Tim Keller, from Provo and recent graduates of BYU, were grateful for the seminar and the guidance given.
?This has been a great way for us to learn together,? Jen Keller said.
