MONEY MANAGEMENT CHAPTER EIGHT NOTES BUDGETING BASICS What is a Budget? ______________________________________________________ “A budget takes the fun out of money” Mason Cooley Budgeting: A Perspective (GREAT QUOTE) “Budgeting has a bad rap. Too many people who give budget advice are detail people and/or control freaks. They make you think that if you don’t record every taco and pair of pantyhose, you’re on the road to financial ruin. You don’t have to track every penny to have an effective financial plan. The secret is setting priorities. _________________________________ _________________ ___________________________________________________________” Ann Coleman from “MotelyFool.com” Why Do Budgets Get a Bad Rap? Does the mere mention of the word “budget” conjure up images of drudgery & deprivation? You’re not alone. Most people think budgets are: _________________________ Why Budgets Really Do Make Sense: A good budget should help you set priorities and achieve _________________ _______________________. Not what’s important to your banker, your best friend, or your relatives. A good budget should be: _________________________: It should change as your needs change. _________________________: It’s not a one-time event. _________________________: 12 page spreadsheets are out! Budgets: Where to Start Be clear on _____________________________________________________. Anticipate ______________________________________________________. Income: The Amount of Money Earned Gross Income: _________________________________________________. Net Income: ___________________________________________________. Taxes can range from ___________________________________________. The Amazing Disappearing Paycheck Example: Salary of $30,000 at a tax rate of .25% = $______________ in taxes. So your net salary would only be $_____________. Quite a difference! Savings: Pay Yourself First Savings is ______________________________________________________. Types of Savings: Emergency:______________________________________________. Long-Term: ______________________________________________. Retirement: ______________________________________________. Short-Term: _____________________________________________.

MONEY MANAGEMENT CHAPTER EIGHT NOTES BUDGETING BASICS The Power of Saving Early: SAVE EARLY AND REGULARLY! If you started at 21 with $1000 and added $50 a month to it you’ll end up with $________________. You only put in $ ______________. That means the other $_______________ was interest! NOT BAD! What if you invested even more per month? How quickly could you become a millionaire? http://www.free-financial-advice.net/make-million-dollars.html Expenses: Expenses are ________________________________________________. There are a few different types of expenses. Fixed Expenses: ______________________________________________. Examples include: _____________________________________________. Variable Expenses: ____________________________________________. Examples include: _____________________________________________. Discretionary Expenses: ________________________________________. Safe Percentages: (Based on Income After Taxes!): The percentages shown below represent guidelines for safe amounts for major budget items. These are guidelines. You may choose to adjust these, but remember, if you spend 80% of your income on housing, you’ll be eating lots of Top Ramen during the month! Savings ___________ Housing ___________ Food ___________ Transportation ___________ Clothes ___________ Health ___________ Credit Payments ___________ Miscellaneous ___________ Budget Basics Summary: ______________________. What do you want to accomplish with your money? Establish a budget with the following: ________________ End up with a ____________________________ and you’re a success! End up with a _________________ … back to the drawing board!