Budgeting

What is a Budget? What it is: What it takes: A plan for spending and saving What it takes: CHOOSE a budgeting time period ESTIMATE expenses and income BALANCE expenses and income

Purpose for a Budget What a budget does for you: Puts you in control Helps you prevent impulse spending Helps you decide what you can and cannot afford Enables you to keep track of how you spend your money Helps you create a savings plan Helps you set aside money for holiday gifts, vacations, and emergencies.

Have Clear Goals Be realistic Be specific Have a time frame A student working part-time is not likely to be able to afford a new car. Be specific “I plan to save $1,000 for my college textbooks for next year.” Have a time frame “I plan to save $1,000 for my college textbooks for next year, within the next 6 months.” State the action to be taken “I plan to save $1,000 for my college textbooks for next year, within the next 6 months, by starting an automatic deposit to my savings account with monthly withdrawals from my checking account.”

What are fixed vs. variable expenses? Fixed regular monthly expenses Occur each month and are fixed payments which means they stay the same. Payments on a house or car Fixed variable monthly expenses Spending that occurs monthly, but changes in cost. Food, water, utilities, gas and electric, phone Variable monthly expenses Purchases/spending on items that you do not need but want. Cell phone, clothing, entertainment

How do I create a budget? Step 1: Set personal and financial goals. Step 2: Make a list of all your earnings; calculate to see your total monthly income. Step 3: Organize your spending into categories, and find the total for each category. For one month keep a record of everything you spend money on, from car payments to candy bars. Now calculate your total monthly spending. Step 4: Create a budget for fixed and variable expenses based on your monthly income. Step 5: Compare your budget to what you have actually spent.