A little now can go a long way

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Presentation transcript:

A little now can go a long way Budgeting A little now can go a long way

The Process Step 1: Assess your personal and financial situation (needs, values, life situation). Step 2: Set personal and financial goals. Step 3: Create a budget for fixed and variable expenses based on projected income. Step 4: Monitor current spending (saving, investing) patterns. Step 5: Compare your budget to what you have actually spent. Step 6: Review financial progress and revise budgeted amounts.

The Situation (Step 1) What do you have? Income Assets Savings Wage Income, Schedule C income Other Income: rent, investments, retirement fund(s) Assets Home (is this really an asset?) Rental Property, other Real Estate Savings Collections: art, antiques, bottle caps Investment Portfolio (long term savings, retirement) Vehicles: Auto, Boat, Motorcycle,

The Situation (Step 1) What do you owe? Mortgage/Rent Car Payment(s) Credit Card Debt Other Debt Tuition/School Loans Boat Loan Home Equity Loan

Cash flow  What is your burn rate? The Situation (Step 1) Cash flow  What is your burn rate? Above water Treading water Sinking

Set Goals (Step 2) Well-written personal and financial goals SHOULD: Be realistic A student working part-time is not likely to be able to afford a new car every few years. Be stated in specifics “I plan/want to save $5,000 for a down payment to buy a house.” Have a time frame “I plan/want to pay off my credit card within the next 18 months.” State the action to be taken “I plan/want to start an automatic deposit savings account with monthly withdrawals from my checking account.”

Create a Budget (Step 3) Pop Quiz

A few useful pieces of information: Create a Budget (Step 3) A few useful pieces of information: Get a baseline of what the job you want pays. http://cew.georgetown.edu/whatsitworth/ http://salaries-job-industry.findthedata.org/ http://www.careerbuilder.com/ - PA State Income Tax = 3.07% Federal Tax Calculator - http://www.moneychimp.com/features/tax_brackets.htm For the sake of this exercise, Taxable Income = Total Income – (Retirement Savings + Health Insurance Premiums + Property Tax + Mortgage Interest Payments)