Creating a Budget Originally Presented by Michele Jersak, Counselor and GPS LifePlan Program and Randy LaFoy, GPS LifePlan/eFolio Adapted from presentation by Kim Woodbury, Underrepresented Student Program - Century College

Budgets have a bad name Having a budget doesn't mean cutting out all the fun A sensible budget leaves room for “fun” spending but allows you to control your money better Interactive budget tools are available in the budget page of the Finance are of the GPS LifePlan Having a budget doesn't mean cutting out all the fun A sensible budget leaves room for “fun” spending but allows you to control your money better Interactive budget tools are available in the budget page of the Finance are of the GPS LifePlan

Where Does Your Money Go? For at least one month track all income & expenses Get a small spiral notebook or worksheet Keep all receipts Allows you to see where your money goes Little things add up Pick a money day Balance checkbook Look at your budget and see if you are on track For at least one month track all expenses Get a small spiral notebook or worksheet Keep all receipts Allows you to see where your money goes Little things add up Pick a money day Balance checkbook Look at your budget and see if you are on track

Sample “Money In” and “Money Out” Form Here is an example of a very simple form to track your income and expenses. Notice they call it “Money In” and “Money Out” which is a good way to think of your budget. Your goal is to have more money “in” than “out.” This form only has two categories – school and food. This form is in the GPS LifePlan FinancePlan.

Sample Detailed Household Budget Worksheet You will fill out this form after you track their spending and income (the previous slide).  The tracking form tracks actual behavior where the budget reflects adjusted behavior for an ideal situation within a persons circumstances.  Be sure and keep your expense form up-to-date because some expenses are seasonal, or will coincide with major events at school – like buying books. Don’t forget to reflect and make adjustments when needed. This form is in the GPS LifePlan FinancePlan.

Income Pay check from regular job Take home, not your gross check Student Loans Child support Investments: Interest or stock dividends Pay check from regular job Take home, not your gross check Student Loans Child support You might now have any, but don’t forget to include your Investments: Interest or stock dividends

Expenses List your expenses - all your bills Be sure and include your incidentals, like: Gas Food Entertainment List your expenses - all your bills Be sure and include your incidentals, like: Gas Food Entertainment

Balance Income minus expenses Don’t be discouraged Many people are spending more than they make, with a budget you can better control where your money goes Income minus expenses Don’t be discouraged Many people are spending more than they make, with a budget you can better control where your money goes

Priorities After you have kept track of your expenses for a month, organize! Organize everything in an Excel spread sheet, or find a resource off the Internet, or even your local bank. The goal here is to keep track and organize! Determine what you really need Espresso everyday? Do you spend 5 extra dollars every time you go in to pay for gas? After you have kept track of your expenses for a month, organize! Organize everything in an Excel spread sheet, or find a resource off the Internet, or even your local bank. The goal here is to keep track and organize! Determine what you really need Espresso everyday? Do you spend 5 extra dollars every time you go in to pay for gas?

Pay Yourself First No matter how small, always have an amount set aside for savings Experts recommend 2-3 months of salary It’s ok if you don’t have it now- make it one of your goals! No matter how small, always have an amount set aside for savings Experts recommend 2-3 months of salary It’s ok if you don’t have it now- make it one of your goals!

Determine Your Goals Studies have proven goals that are written down have a better chance of success than those just talked or thought about Pay off credit card, save for vacation, pay off car loan, start an investment fund… Have a one year financial goal Have a five year financial goal Studies have proven goals that are written down have a better chance of success than those just talked or thought about Pay off credit card, save for vacation pay off car loan, start an investment fund… Have a one year financial goal Have a five year financial goal

Sample Financial Goal Form Four Step Planning Process We suggest you stop the presentation and look at this form a little more carefully because it can assist you in setting your goals. There form has four steps: First, assess your needs. Two - set goals: These goals needs to be Specific, Measurable, Attainable, Relevant and Time-related. Step three – make a plan with action steps, resources needed, possible roadblocks and possible solutions to those roadblocks. Finally, step 4 – take action.

Write down your goals! If you write down your goals you increase your chances of reaching those goals. This is important, after you’ve written those goals down, tell someone about your goals. This increases AGAIN, your chances of attaining those goals. Tell someone about your goals – this increases your chances reaching those goals.

References http://add.about.com/od/adultadd/a/budget.htm http://www.lifescript.com/channels/healthy_living/Life_Tips/a_sensible_budget_for_people_who_hardly_have_any_money.asp?page=5&trans=1 http://www.ag.state.mn.us/Brochures/pubCreditHandbook.pdf http://www.thebeehive.org/money/spend-it/understand-your-credit/what-your-credit-score http://urbanext.illinois.edu/ww1/04-01.html