$ Managing your Money $ Aka Budgeting Office of Frank M. Pees, Chapter 13 Trustee Worthington, OH 43085

Benefits of Budgeting Budgeting allows you to see what you earn and what you spend. -----It is your cash flow in action.------ Budgeting makes you proactive instead of reactive. Budgeting creates a non-confrontational way to talk about money. All successful businesses work from a budget. Budgeting is the first step in personal financial planning.

Basics of Budgeting Understanding cash flow is the basis of all budgeting. Cash flow is INCOME vs. EXPENSES: money coming in vs. money going out Financial conditions improve when you take better control of your monty.

Components of a Budget Earning money Tracking money Categorizing expenses Subtracting expenses from income Analyzing and trimming expenses Saving money

Know Your Monthly Income Gross income – what you actually earn Net income – what’s left over after deductions for taxes, insurance, Chapter 13 payment, child support, etc. (what you actually get to spend)

Net Monthly Income Page 2-2

Types of Expenses Types of Expenses Examples Fixed Mortgage, Rent, Chapter 13 Payments, Support Variable/ Clothing, Food, Gas for Flexible auto, Utilities Periodic Insurance (house, car) Property/Income Taxes

GETTING STARTED Activity #2 How much do you think you spend?

Track your spending Write down everything you spend every day for one month Every adult in the household with a paycheck needs to track their spending.

Where does your money go? Tracking leads to actual numbers which will result in a more realistic budget. Tracking enables you to detect “leaks” and patterns of spending. Start today – track your expenses for, at least, the next 30 days: “Small leaks sink great ships.” -Ben Franklin 7/29/2018

Write down every time money is spent, even on the smallest things.

Weekly Tracking Track weekly expenses Do this for 4 weeks

Monthly Totals Total weekly expenses to get monthly totals

Create a personal spending plan The first step is to see where you are so you can begin to make plans to get where you want to be.

Analyze and Trim Expenses Fixed Expenses – Harder to change in the short term but analyze to see if they can be reduced in any way. Flexible Expenses – This is where you have the most control and can begin to make adjustments. Reduce expenses where possible. Some flexible expenses can become more predictable such as using the budget plan with utility companies.

Analyze and Trim Expenses Periodic Expenses – Calculate to determine how much should be saved each paycheck to cover these expenses when due.

Set Financial Goals Set short-term, mid-range, and long-term goals. Focus on creating a maintenance fund to cover periodic expenses. Begin to build an emergency fund for unexpected expenses. 7/29/2018

Pitfalls to Successful Money Management Unrealistic Goals Emotional uses of Money Lack of Planning – Impulse buying Lack of Follow-through of a Plan Different Approaches conflict Lack of Communication 7/29/2018

Cost Savings Tips Pack lunch for work or school Cancel extra cable services Use the public library for DVDs & magazines Food banks Dollar stores, secondhand clothing shops Use coupons and look for specials Plan meals weekly or monthly & build menus from what’s on special

Savings Tips $25.00 weekly becomes $1,300.00 in 52 weeks. Save bonus income, overtime pay, extra paychecks in the 3 paycheck months. Save loose change and every $5.00 or $10.00 bill. Have a “NOTHING” week when you do not spend any extra money, just buy essentials. Read The Millionaire Next Door by Thomas J. Stanley, William D. Danko.

Saving Your Money As soon as you receive your payment termination letter at the end of your case, start saving 5% - 10% of each & every paycheck from each & every wage-earner. The habit of savings is more important at the beginning than the amount you save. Pay yourself first. Use direct deposit if possible.

Money can’t buy happiness. As the country music singer says: Children spell LOVE: T-I-M-E It’s the time we spend with family & friends that matters most.

“It’s good to have money and the things that money can buy, but it’s good too, to make sure you haven’t lost the things that money can’t buy.” George Horace Lorimer Editor, Saturday Evening Post 1899-1937