Chapter 2 Managing Spending

Planning Your Budget Budget – a written plan to help you make the most of the money you have. It helps you do the following: Control where your money goes Work toward short-range and long range goals Keep from overspending Reduce wasteful spending

Budget Five major steps to develop a budget Establishing Financial Goals Long Term Short Term Estimate and Total your Income and Expenses Usually Monthly Analyze your Income, Expenses and Spending Prepare a Budget Evaluate your Budget

Setting Financial Goals Short-Term Goals Buying an iPhone, Camera, New Clothes Long-Term Goals College Tuition Car Home Once Goals are Established: Determine: How much it will Cost When you want to achieve it

Estimate and Total your Income and Expenses (Monthly Basis) Net Pay Part-Time Earnings (Only list what you are sure of) Expenses Fixed Expenses Flexible Expenses

Expenses Fixed Expenses Flexible Expenses These must be paid regularly Rent Car Payments Car Insurance Flexible Expenses All other expenses which you pay varying amounts Food Clothes Utilities

Analyze your Income, Expenses and Spending Keep a record of all Income you receive Accuracy is key! Prepare a list of Expenses Prepare a list of Spending

Your Budget MUST Be Balanced! Subtract your Total Expenses and Spending From your Total Income Total Income (Expenses Spending) What do you have left over??? Income MUST exceed your expenses 8

Evaluate the Budget Answer the following questions… 1) do you have enough income to cover your expenses? Is the budget flexible enough to handle unexpected expenses and emergencies? Is your money doing what you want it to do? Is your budget helping you reach important goals on a schedule?