Budgeting: How Not to Live Paycheck to Paycheck Lauren Kmetz, CPA Thanks for having me!
About Me I’m a CPA, which stands for Certified Public Accountant. I work at a small tax firm near Denver, Colorado. I prepare tax returns for individuals and businesses, with the goal of saving people money on their taxes. Other jobs accountants do including bookkeeping and financial reporting, which means they track what income and expenses companies have. Work with numbers, algebra based, not difficult math. Choice of college & field of study I graduated from college 2 years ago with 2 degrees in accounting. I took out $50,000 in student loans so I could attend college. As of last month, I paid off those student loans in full. Travel, snowboard, hike
Why is Budgeting Important? Avoiding debt, which makes problems worse Affording things that matter to you: College Vacations House Retire young Donate Security, power, and freedom! Why is living paycheck to paycheck bad? Constant stress, not sure if you can pay for food, shelter, bills next month Emergency? End up in debt Net worth
How to Budget Simple math: Fixed vs. Variable Expenses Income – expenses = savings Income = take home pay (base pay – taxes) Fixed vs. Variable Expenses Fixed means the same every month. It does not mean you don’t have control over that expense.
Recommended Budget Tools Know where your money is going Mint.com (free online to track expenses) Only spend on things that matter to you Save 50% or more of every paycheck Specific purchase: work towards the goal Check on your status once a month Avoiding status quo No prescribed amounts for line items Big purchase: work backwards from cost of item, how much do you need to save each month. Are you staying on track?
How to Save Housing Transportation Entertainment Meals Clothes Live with family, get roommates Transportation Bike, walk, buses, only used cars Entertainment Netflix, public library, search for free events online Meals Learn to cook, pack lunch, have friends over Clothes Consignment shops, swap with friends
Where to Save Savings account 529 Plan for college Roth IRA for retirement Investments, the power of compound interest
Want More? Books: Mr. Money Mustache Blog “I Will Teach You to Be Rich” by Ramit Sethi “Simple Path to Wealth” by JL Collins “The Millionaire Next Door” by Thomas J. Stanley Guy retired at 30 years old
Questions? Thanks for listening!