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February 16, 2007

Purdue financial management program is money in the bank

WEST LAFAYETTE, Ind. - Many American families are giving 110 percent when it comes to their finances, but they ought to be giving a lot less, said a Purdue University Extension educator.

"About 40 percent of families are living on 110 percent of their income," said Annetta Jones, Purdue Extension Porter County. "They are probably drawing that additional 10 percent from savings or credit. They're running up debt and won't be able to put money into savings."

A team of Purdue Extension family resource management educators hopes to help cash-strapped families find ways to cut spending and increase savings through a program they've developed. "Where Does Your Money Go?" uses hands-on activities and group discussion to teach sound money management practices.

After a two-year pilot program, "Where Does Your Money Go?" is ready to go statewide on Feb. 25 - the start of America Saves Week. This fall the development team will present the program to National Extension Association of Family and Consumer Sciences members for possible rollout across the country.

Statistics show money management skills are sorely lacking among young and old alike.

The national savings rate has dropped below 3 percent, according to the Jump$tart Coalition for Personal Financial Literacy, a national association of organizations dedicated to improving the financial literacy of students. Just 47 percent of Americans are confident they will have enough money saved for retirement, while the median value of all household retirement savings was only $40,000 in 2003.

"Where Does Your Money Go?" addresses both short-term and long-term financial issues, Jones said.

"The program helps consumers track their spending and create spending plans so that they are more able to meet their future financial goals," she said.

"County Extension educators who are trained in the program lead the sessions, which can last up to three hours, depending on how in-depth participants want to go."

One activity shows participants how small regular purchases can sink a spending plan.

"Take soda pop, for instance," Jones said. "If you spend 50 cents every day on a soda, that adds up to $182.50 over the course of a year. We ask participants if there are other less expensive alternatives. Water can be free.

"In another activity we use 'needs' and 'wants' cards. On the cards you might find such things as new shoes, an oil change or food for your pet. We then discuss which of these items is a need and which is a want so that they think in those terms."

The registration fee for a "Where Does Your Money Go?" program is nominal and varies by location. More than 200 people completed the program during the pilot period.

"They were surprised to find that they were spending so much money on little expenses and planned to make changes that would save them money," Jones said.

For information about the nearest "Where Does Your Money Go?" program, contact any county office of Purdue Extension or call the toll-free Purdue Extension hotline at 1-888-398-4636 (EXT INFO).

In addition to Jones, other members of the program development team included Vickie Hadley, educator, Purdue Extension Allen County; Elizabeth Kiss, Purdue Extension family resource management specialist; Mary Ann Lienhart-Cross, educator, Purdue Extension Elkhart County; and Edie Sutton, educator, Purdue Extension St. Joseph County.

Writer: Steve Leer, (765) 494-8415, sleer@purdue.edu

Source: Annetta Jones, (219) 465-3555, ajones1@purdue.edu

Ag Communications: (765) 494-2722;
Beth Forbes, forbes@purdue.edu
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