Clue In: Budgeting Basics Curriculum Kit Career Development Software, Inc. Copyright 2007

Budgeting & Goal Setting Budget -- a planned system of spending and saving money. A budget’s purpose is to give you control over financial planning goals. Long term goals: usually involve substantial amounts of money - car, house, college tuition, retirement Short term goals: are more immediate -- rent, groceries, clothing, entertainment, and vacations Clue In: Budgeting Basics Career Development Software, Inc. Copyright 2007

Budgeting & Goal Setting Planning a budget involves balancing income with expenses and prioritizing your goals. Prioritizing goals may involve deferring or eliminating current pleasure for future benefit. Clue In: Budgeting Basics Career Development Software, Inc. Copyright 2007

Fixed or Flexible? Fixed Expenses Flexible Expenses Re-occurring or promised amounts that represent universal needs such as food, basic housing, basic transportation. Flexible Expenses Also referred to as “wants” these are things that can be put off. Wants or flexible expenses include entertainment, eating out, fancy cars, sound systems. Clue In: Budgeting Basics Career Development Software, Inc. Copyright 2007

Fixed or Flexible? Savings - regular saving should be included in each month’s plan Emergency Fund - short term saving for emergencies Should be enough to cover 2-3 months of fixed expenses Long Term Savings This covers the down payment on a home or college tuition or other long term goals Clue In: Budgeting Basics Career Development Software, Inc. Copyright 2007

Wants vs. Needs If your money didn’t go far enough, how can you adjust your budget? Review your goals and see if you are indulging in too many wants rather than needs. Decrease spending - this usually involves reducing your flexible expenses. Track cash - keep your receipts in a common place. Clue In: Budgeting Basics Career Development Software, Inc. Copyright 2007

Wants vs. Needs If your money didn’t go far enough, how can you adjust your budget? Increase Income - look for additional part-time work, ask for a raise in current pay or allowances. Curb Impulse Buying - spontaneous spending gives instant pleasure but is death to budgeting. Decrease Fixed Expenses - this involves a major move like trading in for a cheaper car. Clue In: Budgeting Basics Career Development Software, Inc. Copyright 2007

Wants vs. Needs For budgeting to be successful, accurate information and regular review is necessary. As life changes so will your budget. moving out, college, getting married, having children, retiring all require planning Planning and following a budget will help you achieve your goals. Clue In: Budgeting Basics Career Development Software, Inc. Copyright 2007

Related Expenses When budgeting for a new purchase look for related expenses. These costs are often hidden or passed over because of the excitement of a new purchase. Clue In: Budgeting Basics Career Development Software, Inc. Copyright 2007

Related Expenses Here are some examples: A new or used car related expenses: insurance, fuel, repair, maintenance, licensing A new computer related expenses: upgraded software, faster modem, internet access fees, additional telephone line/access Clue In: Budgeting Basics Career Development Software, Inc. Copyright 2007

Related Expenses Here are some more examples: Renting or buying a house related expenses: furniture, utilities, insurance, telephone, food, rent, cleaning supplies, hookup fees and charges An pet dog/cat or animal related expenses: food, vet maintenance, shots, licensing, boarding, grooming Clue In: Budgeting Basics Career Development Software, Inc. Copyright 2007

Plan A Trial Budget Estimate Income Include regular income such as net paychecks and allowances. If self employed, remember to deduct year end self employment taxes from your income. Underestimate irregular income that you expect to receive. Record income in the monthly period you expect to receive it. Clue In: Budgeting Basics Career Development Software, Inc. Copyright 2007

Plan A Trial Budget How To Estimate Monthly Spending Research past spending habits Look at your spending in the last three months to a year. Group expenses by category and total each category. food, clothing, household expense, entertainment, supplies, transportation Record all spending for at least a month. set up your categories note the expenses in the appropriate group Clue In: Budgeting Basics Career Development Software, Inc. Copyright 2007

Budgeting Tips Track cash income and expenses Keep budgeting material all in one place Cover fixed expenses before spending on wants Choose a regular time to record information and review your budget Anticipate related expenses Clue In: Budgeting Basics Career Development Software, Inc. Copyright 2007

Budgeting Tips Keep the process as simple as possible, round figures to the nearest dollar Plan monthly to save for quarterly, semi-annually or annual expenses Don’t forget long term planning Be specific with categories without over itemizing Be realistic! Clue In: Budgeting Basics Career Development Software, Inc. Copyright 2007