3.1 A VERAGE M ONTHLY E XPENDITURES Recordkeeping is a way for you to manage your money. Record your monthly expenditures. Can help you find out how you spent your money. (Examine your spending habits.) Can help you find out how much money you need for living expenses. Can help you find items that you can cut back on if necessary. Record your expenses on a budget sheet. Use a note pad to record your daily expenses. (You can also use receipts, but remember you don’t always get one.) Each day, record what you spent. At the end of the month group and total them. Groups: Living expenses: food, utility bills, pocket money, etc. Fixed expenses: payments that don’t vary from month to month. e.g. car payments, rent or mortgage. Annual Expenses: payments that occur once a year. e.g. insurance premiums, real estate tax. We will be doing more with this as we work with creating a budget.

How much you spend depends on many factors. Weather Freedom for activity Season (food) You may only want to find the amount you spend each month on average. (Average Monthly Expenditures) Calculations: Avg. Monthly Exp. = Sum of Monthly Expenditures Number of Months

E XPENDITURES Food/Grocery Electric Heating fuel Phone Water Garbage/Sewer Gas/oil Tolls Parking Commuting Clothing Credit cards Newspapers/gifts/etc. Pocket money Movie/Theater/Concert Sporting Events Recreation Dining Out Rent/Mortgage Car Appliances Furniture Savings Emergency fund Life Insurance Home Insurance Car Insurance Real Estate Tax Car Registration Pledges/Charitable Contributions

3.2 P REPARING A B UDGET S HEET In order to create a budget you must first track your spending for a year. Your budget sheet will outline your total monthly expenses. Calculations: Total Monthly Monthly Monthly Share Monthly = Living + Fixed + of Annual Expenses Expenses Expenses Expenses Find the total monthly expenses. Living: $670; fixed: $800; share of annual: $350 Pg. 150 Budget Sheet: What is the total of their monthly expenses?

Budget Sheet Date: Monthly Living ExpensesMonthly Fixed Expenses Food/Grocery Bill$Rent/Mortgage Payment$ Household Expenses Car Payment$ Electricity$Other Installments Heating$ Appliances$ Telephone$ Furniture$ Cell$Regular Savings$ Water$Emergency Fund$ Garbage/Sewer Fee$ $ Other:$ $ $ $ $ Total$ Transportation Gasoline/Oil$ Annual Expenses Parking$Life Insurance$ Tolls$Home Insurance$ Commuting$Car Insurance$ Other:$Real Estate Taxes$ $Car Registration$ $Pledged/Contributions$ Other$ Personal Spending $ Clothing$ $ Credit Payments$ $ Newspaper, Gifts, etc.$ Pocket Money$Total$ $Monthly Share (Divide by 12)$ $ Entertainment Monthly Balance Sheet Movie/Theater$Net Income (Total Budget)$ Sporting Events$ Recreation$ Living Expenses$ Dining Out$ Fixed Expenses$ $ Annual Expenses$ $Total Monthly Expenses$ Total$ Balance $

3.3 U SING A B UDGET When you have a budget sheet outlining our past expenditures, it can now be used to plan for future spending. Expense Summary: compares the amounts that you spend to the amounts that you have budgeted. Emergency Fund: extra money set aside to be used for unpredictable expenses. Should be included in your budget. (Medical bills, vehicle repairs, etc.) Calculations: Compare the amount spent to the amount budgeted for. Is the amount spent more or less than the budgeted amount?