TUTORIAL 1 - UNDERSTANDING PERSONAL FINANCE 1. List and explain briefly FIVE (5) employee benefits. 2. Explain FIVE (5) Family Planning with relevant examples. 3. What is the Future Direction of the Economy?

ANSWER

1.

Benefits are any perks offered to employees in addition to salary. The most common benefits are medical, disability, and life insurance; retirement benefits; paid time off; and fringe benefits.

Medical Insurance

Medical insurance covers the costs of physician and surgeon fees, hospital rooms, and prescription drugs. Dental and optical care might be offered as part of an overall benefits package. It may be offered as separate pieces or not covered at all. Coverage can sometimes include the employee's family (dependents).

Disability Insurance

Disability insurance replaces all or part of the income that is lost when a worker is unable to perform their job because of illness or injury.

Life Insurance

Life insurance protects your family in case you die. Benefits are paid all at once to the beneficiaries of the policy — usually a spouse or children.

Retirement Benefits

Retirement benefits are funds set aside to provide people with an income or pension when they end their careers

Domestic Partner Benefits

Some employers offer benefits to unmarried domestic partners, while others do not. Check this list of Minnesota employers offering domestic partner benefits.

2.

5 family financial planning method

Devise a budget

A budget is essential to living within your means and saving enough to meet your long-term goals. The 50/30/20 budgeting method offers a great framework. It breaks down like this:

• 50% of your take-home pay or net income (after taxes, that is) goes toward living essentials, such as rent, utilities, groceries, and transport
• 30% is allocated to lifestyle expenses, such as dining out and shopping for clothes
• 20% goes towards the future—paying down debt and saving both for retirement and for emergencies

2. Create an emergency fund

It’s important to “pay yourself first” to ensure money is set aside for unexpected expenses such as medical bills, a big car repair, rent if you get laid off, and more.

Between three and six months' worth of living expenses is the ideal safety net. Financial experts generally recommend putting away 20% of each paycheck every month (which of course, you’ve already budgeted for!). Once you’ve filled up your “rainy day” fund (for emergencies or sudden unemployment), don’t stop. Continue funneling the monthly 20% toward other financial goals such as a retirement fund.

3. Limit debt

It sounds simple enough: To keep debt from getting out of hand, don’t spend more than you earn. Of course, most people do have to borrow from time to time—and sometimes going into debt can be advantageous, if it leads to acquiring an asset. Taking out a mortgage to buy a house is one good example. But leasing can sometimes be more economical than buying outright, whether you’re renting a property, leasing a car, or even getting a subscription to computer software.

4. Use credit cards wisely

Credit cards can be major debt traps. But it's unrealistic not to own any in the contemporary world, and they have applications other than as a tool to buy things. Not only are they crucial to establishing your credit rating, but they’re also a great way to track spending, which can be a big budgeting aid.

Credit just needs to be managed correctly, which means the balance should ideally be paid off every month, or at least be kept at a credit utilization rate minimum (that is, keep your account balances below 30% of your total available credit). Given the extraordinary rewards incentives on offer these days (such as cash back), it makes sense to charge as many purchases as possible. Still, avoid maxing out credit cards at all costs, and always pay bills on time. One of the fastest ways to ruin your credit score is to constantly pay bills late—or even worse, miss payments.

5. Monitor your credit score

Credit cards are the main vehicle through which your credit score is built and maintained, so watching credit spending goes hand in hand with monitoring your credit score. If you ever want to obtain a lease, mortgage, or any other type of financing, you’ll need a solid credit history behind you. Factors that determine your score include how long you've had credit, your payment history, and your debt-to-credit ratio.

3.

Risks to income are the most significant. The migrants struggling to get home have lost their livelihood. It is unclear if they will find work in their villages; it is unknown if there are better times ahead when they will comfortably travel back to cities for jobs. Millions of livelihoods have been wiped out by one pandemic. Our gross insensitivity to the shame of displacing millions without work, food and water, and letting them walk thousands of miles, is a black mark we cannot erase from our collective conscience.

The next rung of wage earners who have made the cities their home are still around, but do not have jobs. Many employers who funded the first month of pay are now reluctant to extend the benevolence. Without economic activity, there is no work and no pay; nor do these households have enough savings to keep going without income. They are surviving on hand loans and pledging the few things they have accumulated.

How prepared is the household finance for that possibility? Use the experiences of the last 60 days to evaluate how your financial life will pan out. Make a list of questions and take stock for the next 12 months. Is there money in the bank to cover basic costs for that period? What happens if one or both wage earners of the household lose their jobs? How much of a pay cut can be taken? What is the source of liquidity if the job is lost? How can one raise loans?

Between the mindless excesses of unbridled consumption, growth, and expansion and the rigid frugality of minimalistic existence, lies a mean that we may not be able to choose or pursue. The next 12 months is about that exploration that might define the new character and culture of the household.