When paying bills with cash, people have nosystematic method of payments. In addition, theymust use receipts as their only record of payment.(A checking account provides a canceled checkas a receipt of payment. Also, checks are availablewith carbon duplicates of the original check.)Working on a cash basis can also createproblems if personnel are on leave or temporaryduty. In such a case, members must make arrange-ments to forward their paychecks. This oftenresults in delays in the receipt of a check.ALLOTMENTS. —Allotments provide agood method for Navy members to handle theirfinancial affairs. The following paragraphsdescribe voluntary and involuntary allotments.Voluntary Allotments. —Voluntary allotmentsare requests by personnel to make a certainamount of their paycheck payable to someone elsefor the following reasons:• Purchase of U.S. savings bonds• Payment of premiums for life insurance• Repayment of loans to the Navy ReliefSociety• Allotments to dependents and relatives• Voluntary liquidation of debts to theUnited States• Payment to a banking institution or asso-ciation for credit to the account of theallottee• Repayment of loans for the purchase ofa home or mobile home used as a residenceby the allottee• Payment of pledges for the CombinedFederal CampaignsInvoluntary Allotments. —Involuntaryallotments from a Navy member’s pay are usuallymade when the person shows financial irrespon-sibility. Involuntary allotments are usually gar-nishments of a member’s pay.BUDGETING. —Preparing and using abudget is the key to successful money manage-ment. A budget is a plan to spend money or a planof money management. Many Navy membershave erroneous images of the meaning of abudget. They often associate budgets with detailedbookkeeping, stacks of papers, ledgers, and soforth. Many young members lack the disciplineto follow a budget and dislike the chore ofbudgeting. If you can convince them to follow abudget, they are the winners. They will have arecord of their income versus expenses, which willhelp them better manage their financial affairs.This provides them with the security of knowingtheir financial status rather than the insecurity ofnot being sure.To give your people the desire to budget theirmoney, put budgeting into simple terms for them.Explain how a budget serves as a simple tool for thebusinesslike management of their finances. Ex-plain that budgeting provides an advance generalplan for organized spending and savings insteadof a record of payment set down afterward.Budgeting involves the spouse as well as thewage earner. For married couples, handlingmoney matters should be a joint effort. With two-income families, money management is a differentball game. The “yours-mine-ours” approachusually arises, requiring definite understandings.Certain inherent expenses become greater whenboth husband and wife earn wages. Couples alsoneed to have an understanding as to what expensesthey will pay from what funds. A written budget,properly prepared and followed, helps coupleswork out these problems.In counseling and advising your people onfinancial management, you may have to help themprepare their budgets. In budget preparation, youdetermine income and expenses; examine spendinghabits; and see what, if anything, you need tocorrect or improve. If personnel have financialproblems, you help them find ways to improvetheir spending habits. To do this, you need tofamiliarize them with the following terms used infinancial management:Gross income. The total amount of salarybefore any deductionsDeductions. The amount of money taken frompay for income tax, social security, and otherreasonsAllotments. Those sums of money deductedfrom gross income to pay debts such asinsurance premiums, debts due the UnitedStates, and family supportNet Income. The total amount paid a memberafter all deductions and allotments are paid,often called take-home payFixed expenses. Expenses that are the sameeach monthFlexible expenses. Expenses that change frommonth to month; sometimes called variableexpenses4-13
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