Dryden Students Write...
June 1, 2021
Personal Finance
Seniors in Practical Math explored the world of Personal Finance this semester.
As a culminating assignment, they explored financial apps, blogs, and podcasts,
bank accounts and credit cards, or financial definitions and myths.
After completing research, they created a written reflection of their results.
The Financial Gym
Jana Dieckmann
The Financial Gym is a personal financial services company that takes a fitness-inspired approach to their clients’ finances. The founder of the Financial Gym is Shannon McLay.
The clients pay a monthly membership fee. This fee includes a dedicated financial trainer who works one-on-one with the client to help them set financial goals, create a plan for accomplishing them, and support the client along the way to achieving these goals. Goals that are covered by the Certified Financial Trainer, are budgeting & saving, budget building for traveling, debt repayment, credit cards, investment education, and secure retirement.
I think the Financial Gym is a good idea for people who need help with managing their finances. On the other hand, they have to pay a monthly membership fee that would get them more in debt if they already are in debt. For people who are in debt and really do not know how to pay it back, the Financial Gym would be a good opportunity to learn about how to pay the debt back and how to stay out of it.
Budgeting
Caitlin Belleville
Learning how to budget your money is very important for success in the real world. From doing the budget challenge, I realized it's not hard to budget your money. I learned you just have to prioritize what category or bill needs to come first. From experience, I believe I have a good understanding of what budgeting is and how to successfully go through with it.
When trying to budget your money it is fairly simple. That is, if you do it correctly. I recently came across a saying called the 50-30-20 Rule and I think it could be very helpful. So to start off a budget you want to first write down your net income that you made for the amount of time you want to have your budget based on. Then you can use this 50-30-20 rule to categorize how much money you want to spend on your needs, wants, and savings. Once you have all your needs, wants and savings add it up. You should then figure out if you actually need every single thing on your list. You want to set aside a certain amount of money for each category and if you exceed the set aside amount, you should reevaluate your list to make it fit. Then you should do it each month so it starts to become a habit and you can keep better track of your money.
I learned that the mint app is a really good budget tool for an all-around budget. However, if you are looking for a cash-centered budget app I would suggest using Goodbudget Budget Planner.
The year of no spending
Lauren Weeder
The year of no spending is like a pledge or a goal to use what you already own and try to cut your spending for that entire year. During the length of the year you will only buy the bare necessities, so items like your groceries, personal hygiene products. However, personal products like mascara or other things that you don't need are not allowed. The goal of this challenge is to cut your spending and save money. I think this challenge could work, and you would save a lot of money. The only thing is you would really have to cut down on things you like to do. You would not be able to go out and have fun as often because your goal is to save money. In the end, it is not a bad challenge and could work. You would just need to be okay with not sending a lot on entertainment.
Gross income vs. Net income
When you get paid, it is important to understand the difference between gross income and net income. Gross income is the amount of money before taxes and other deductions are taken out. You do not get to keep all of this money because a percentage is taken out by the government. When receiving a paycheck, the amount of money you see on the paper is your net income. Net income is the amount of money after taxes and other deductions are taken out. This is the money that you get to take home with you. From your gross income, employers withhold medicare taxes, social security taxes, along with state and federal income taxes. Depending on other factors, such as a 401K, it may also affect how much money is taken from one's gross income. Depending on how much money you earn in the pay period, depends on how much money is deducted.
The Four ypes of Expenses
Josh Schornak
Fixed Expense: Fixed expenses are the kind of expenses most people think of when they’re drafting a budget. They are standard expenses that happen every month, on a certain day, and for a certain amount. Your mortgage, cell phone bill, car payment, gym membership, utilities, and Netflix are all fixed expenses. Think of fixed expenses like your bills. Weekly expenses like a daycare payment, dog walking services, or house cleaners, while not a monthly bill, are fixed expenses too. They occur on a regular date and for a standard amount, even if that withdrawal happens multiple times during a month.
Recurring Expense: We sometimes refer to recurring expenses as day-to-day expenses. They are the types of expenses or purchases that happen throughout the month. They are not as predictable as fixed expenses in terms of their dates or amounts, but they reliably happen. Some recurring expenses you probably have are groceries, gasoline, eating out, and shopping at the mall.
Non-Recurring Expense: Non-recurring expenses are the ones that trip people up all the time when they decide to get on a budget. These expenses may only happen once or a couple of times a year. But when they hit, they might hit big, so forgetting to account for them can be a costly mistake. Common examples of non-recurring expenses include a water bill, car registration fees, or your Amazon Prime membership. But non-recurring expenses aren’t just bills. They’re annual or semi-annual purchases you make and need to make, like for example, clothes, shoes, and other apparel. If you live in a state where seasons change (hi, Michigan friends!), chances are you’re making at least a few strategic wardrobe updates a year. Or for our clients in warmer climates, budgeting for semi-annual pool maintenance might be a non-recurring expense.
Whammy Expense: Whammies are the most frustrating kind of expenses. These are for the most part unpredictable. You don’t know when they hit or what they’ll cost you, but you will most definitely feel it when they do. Think of some worst-case scenarios: Your car gets totaled. Your roof starts leaking, and you find out you need to reshingle the whole thing. The federal taxes you owe are thousands more than you thought they’d be. These are emergency type expenses. If you’re a believer in Murphy’s law, then you know it’s not a matter of if, but when. The whammies will get you at some point.
On Trajectory
On Trajectory is a financial app used to help people save for big expenditures. Some listed specifically on the On Trajectory home page are about buying/renting a house, index funds/rental properties, selling investments, going part-time at work, how much to spend on college, and retirement. The most common use of this app is for retirement purposes because of its detailed and easy-to-use tools. The founder of On Trajectory is a normal person like you and me, but they found themselves stumped while trying to find a useful, easily navigable app for money saving. All users have to do is answer a few simple questions about their spending habits and lifestyle, take a few financial interviews, and fill out a chart. Once they complete these steps they are shown a chart with all of their information and statistics projected over time. Users can change their goals at any time, for example, if they want to save 90% of their income, the chart will adapt to this setting change and tell you where you should spend your leftover money. This app is very useful and can be manipulated in many ways to fit your financial agenda.
Present Bias
Teagan O’Bryan
Present bias is an important term used in behavioral finance. It is derived from the concept of self-control. Research shows that present bias is associated with undesirable spending, borrowing, and saving behavior.
What is Present Bias?
Present bias is our natural inclination to over-value present benefits and rewards at the expense of benefits further into the future.
We over-value the now at the expense of the future.
We can look at this from the perspective of our current and future selves. When looking at our current self, we are more prone to frivolous and unnecessary spending, as we all fall victim to the “live in the moment” complex. Our future selves are wiser when it comes to money, as we see the reactions of our spending and tend to make more rational choices when it comes to our financial spending.
When making a financial decision, we often are more easily influenced by our current selves, rather than looking at the effects on our long-term well-being. We need to be able to combat this and overcome these tendencies. Budgeting and setting meaningful goals can help, but overall you must recognize the issue and combat it head-on.
Buying A House
Erin Paton
When trying to buy a house, things can get pretty stressful. That is why it is important to know exactly how much money you want to spend, or at least a price range. The best way to figure this out is to use a mortgage calculator app. These apps will usually ask for a bunch of different information to give you a personalized estimate. It will also let you know what your monthly payments would look like. Some examples of the information include type of loan, home description, credit score, property use, ZIP code, when you plan to purchase, the estimated price of the home, and the estimated down payment. I did my own example where I am buying a home for about $150,000 and putting a down payment of $50,000. The app I used was https://www.quickenloans.com but another useful one would be https://rates.bankrate.com.
Robo-Advisor
Gavin Fisher
Robo-advisor. It sounds like something of the future, but it’s actually very real and quite simple. The idea of a Robo-adviser is to be a personal algorithm-based advisor or investing assistant that uses data and learning algorithms to help you make the best call about your money. They can either be automated or meant to give hints on what to do, but they all have one main feature, they’re meant to cut out emotion from your decision-making to make it much faster, clearer, and with less doubt or fear.
There are many different companies using this technology to develop their own such as the automated investing helpers such as “Marcus” made by Goldman Stache, “Merrill” developed by Bank of America. There are also others that help with money-saving and allocation such as “SpeciFi” built by Citizens investment service.
There are many developments in the world of automated and online banking and these Robo-advisers are just the next step.
Wants vs. Needs
Riley Knox
There is a big difference between something you want and something you need. When deciding which is which can be tricky. Wants are expenses that make you live more comfortably. You can live without wants, but they can be enjoyable. While a need is something that is required. For example, food is a need for someone to be able to live. Someone may want more food than needed but then it’s not a need.
Some people may need a car for work but it doesn't have to be a high-end car. The more that you want to put into the car the less it becomes a need. As long as it is reliable and gets you from point A to Point B then it is a need. Needs tend to be things that are essential for surviving. When deciding brands for teenagers there is a gravitational pull to more popular brands. An example of this is when someone is drinking water. Water is a need to survive. Some kids may ask for “Voss water,” which is basically the same thing as normal water. That is when it becomes a want.
Money Doesn’t Buy Happiness
Alexis Schuhrke
Money doesn’t buy happiness is a phrase that tries to send a message. It tries to say that you should follow your dreams and chase your passions even if a monetary reward isn’t necessarily involved. This goes for careers too. You should do what you want to do even if it doesn’t pay you a lot of money. I do believe that you should find a career that you would like to do but I do believe that it needs to pay well too. Money and happiness can be very much related. If you are stuck with no money, there will be so many struggles in this life. You need to be able to pay your bills and save for emergencies, as well as investing in your future. You don’t want to be in a place in life where you can’t even pay for the necessities in life. Money isn’t everything, but it can definitely be correlated with happiness.
Buying a car vs. Leasing a car
Harry Atkinson
Getting a car is pretty straightforward. You need to take a loan out from your bank and make monthly payments. You will pay for interest and for the product of the car. You borrow money from a bank, credit union, or other lending institution and make monthly payments for some number of years. With a lease, you have a certain amount of miles you can’t go over or there will be a charge. Some people now with the pandemic think that they don’t need that many miles but they still have to pay for it. On the surface, leasing can be more appealing than buying. Monthly payments are usually lower because you’re not paying back any principal. Also, it is a brand new car that you have little worries about. In the end, leasing usually costs you more than an equivalent loan, if only because you're always driving a rapidly depreciating asset. In the end, owning something is better than not.
Dryden Junior/Senior High School
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