Dennise WilliamsStaff ReporterLAST WEEK, we looked at recommendations from Jamaica oney Market Brokers Ltd. (JMMB). This week, National Commercial Bank (NCB) Insurance Company will give their outlook on the
situation.
Dear Stretch Your Dollar:
I am a 36-year-old administrative assistant and a single mother with two children 15 and 10 years old. All of us, including my mother and brother, live in a rented house.
I have two savings accounts and between them I do not have $1,000 at any one time. My salary goes to one account.
My mother pays for light and water, while my brother contributes one-third towards the rent.
Child support is when the father feels like and that is $4,000 for both children.
My monthly basic pay is $63,190.66 (inclusive of a rent cheque of $15,000, which is not taxed). Breakdown is as follows:
Health Insurance $2,281.30
Pension $2,125.00
VMBS (savings) $300.00
Churches CU $1,400.00
COK CU (savings & FIP) $1,000.00
Insurance (10-y-o & me) $ 2,527.00
JMMB (children) $500.00
Staff bus transport fee $520.00
Income tax $9,244.59
NIS $1,041.67
NHT $1,003.62
Education tax $940.29
Total deductions $22,883.47
MY PERSONAL BUDGET
Tithe $5,700.00
Rent $10,000.00 (2/3 share)
Supermarket $4,000.00
Loan $3,125.00
Lunch money (girls) $6,500.00
Lunch money (me) $2,000.00
(subsidised by company)
Telephone $2,500.00
Cable $1,000.00
Partner $7,500.00
Internet $1,000.00
I do not own a car and am desirous of purchasing one and pursuing further studies in September. I would also like to start a savings plan for the 15-year-old's university education. The items marked withare oftentimes in arrears and, food, in the long run, costs me more than what I budget for.
I sell products for an international cosmetics company, but earnings do not materialise in real terms.
I recently received an international credit card for the purpose of paying for the goods and do not want to use it for personal things because I fear I may not have the cash to pay the bill when it is due.
I own shares in two companies. Entertainment and emergency money is unheard of. I NEED some advice, as I would like to see a positive turnaround for 2005.
Recommendations from NCB Insurance Company Limited
First, you need to carefully examine your income and expenses to try to generate savings, which can then be invested to work for you
GENERATING SAVINGS
Spend less than you earn:
There are two simple steps to achieving this either cutting back on your expenses or increasing your income. You may feel that in your present financial situation it is almost impossible to cut back anymore as you are probably living from a hand-to-mouth existence. But, first, take a hard look at your monthly expenses. Options you could consider are packing lunch for your children and reducing the number of cellular calls and telephone calls made.
PAY YOURSELF FIRST
A good guide is to save between five per cent and 10 per cent of your gross income each month. Then pay down your highest interest debt first and move on to the next loan balance. With the reduced monthly debt costs, that can go into your savings account.
You could consider deferring the purchase of the motor
vehicle until your earnings have improved to facilitate the monthly payments.
Look at ways of increasing your income. Another side business could bring in more funds for your savings account.
INVESTING SAVINGS
Consolidate your savings accounts:
This could enable you to improve your earnings. The more money saved, the more interest is usually earned.
Assess your financial goals for the short term, medium term and long term and decide on how much you need to invest for each of these time frames, usually longer-term investments earn higher rates of interest, but are sometimes more risky.
RUN THE NUMBERS
You could consider adjusting some of your expenses as follows:
Lunch money
for the girls -$1,500
Telephone -$500
Partner -$7,500
Total savings generated $9,500
Note: This is a highly personal exercise which is often difficult but is necessary in order to create savings and should not be ignored.
One possible suggestion for a monthly savings mix with the savings generated is as follows:
Long-term (OMNI
Educator for the children) -$4,000
Short-term investments
(savings accounts) -$4,500
Contingencies (to take
care of any unexpected
expenses) -$1,000
Total savings invested $9,500
These shorter-term monies may be converted to medium-term savings when the balance is sufficiently built up. You could invest in products such as OMNI or fixed deposits.
This would usually be held on your savings account.
Kirk Palmer, Valerie Reid Tomlinson, Colleen Brown-Palmer - NCB Insurance Company Limited.
