You and your partner are trying to set up for success after the prison sentence ends. One aspect that all individuals should consider is basic financial literacy. This review should help to set you and your incarcerated loved one up for the future.
Consider the following chart:
|The Power of Saving|
|Save $30 a month at 5% interest each year (or $5 per $100) you could save:|
|If that account earns 8% interest you could save:|
|$30 a month can grow into $104,730 in 40 years|
Don’t worry about the 5% return just yet. If you do some internet research, you will find many options like mutual funds, IRAs, 401k plans, stocks, CDs, etc. Remember to use your research skills for ideas.
Beyond the power of saving example above, you also need to consider what you are doing with the money you currently earn. Ask yourself these crucial questions:
- Are you using more and more of your income to pay your debts?
- Do you make only the minimum payments due on your loans and credit cards each month?
- Are you near, at, or over the credits limit on your credit cards?
- Are you paying your bills with money intended for other things?
- Are you borrowing money or using credit cards to pay for things you used to buy with cash?
- Do you often pay your bills late?
- Are you dipping into your savings to pay current bills?
- Do you out off visits to the doctor or dentist because you can’t afford them?
- Has a collection agency called recently about overdue bills?
- Are you working overtime or a second job to make ends meat?
- If you or your spouse lost your jobs, would you be in financial trouble right away?
- Do you worry about money a lot?
The questions that you have answered yes to are red flags that tell you changes are needed. Consider printing out this excellent list and focus on fixing your red flags.
Ensure you have a clear picture of what you are earning to create a budget that allows you to save monthly and clear up any of your identified problems. Utilize this chart to create a budget:
|After-tax wages (yourself, do not overestimate)||$|
|After-tax wages (others in household)||$|
|Tips or bonuses||$|
|Social Security, Supplemental Security Income||$|
Many individuals don’t work from a place where they know their monthly income or even know what is going out. It makes it harder to save and get ahead.
In many cases, you and your partner will have to start fresh. Your ability to have a financial plan will be a great advantage. This is something that you both can discuss.
Use the tracking tool below to get a good picture of your monthly expenses.
|Savings (pay yourself first)||$|
|Rent or mortgage||$|
|Cable and/or other services||$|
|Transportation (bus fare or car payment)||$|
|Clothing / Uniforms||$|
|Personal (toiletries, allowances, and so on)||$|
|Miscellaneous (gifts, vacation)||$|
|Entertainment (movies, sporting events, etc.)||$|
|Religious / charitable contributions||$|
Once you see what you earn and what you are spending, you can also make some critical decisions. You can look at your expenses that are perhaps not necessary. These can be luxuries that maybe you don’t need. You also can consider what you want to save and even if you are working the right job to make ends meet.
The basics of finance are to not get caught by surprise. This is something you can put into place before your loved one gets home from prison, and you can even help them learn when they do arrive.
Financial literacy is an integral part of serving time together. Feel free to contact us if you have further questions or concerns.