How will you use your money? Budgeting How will you use your money?

Choose Financial Goals A budget is a plan for dividing up your income among spending and saving options. Short-Term Goals are things you hope to achieve within the next year or two. Example – you might want to visit a friend who moved away last summer. Long-Tem Goals are things you hope to achieve in more than a year or two. Example – your career choice.

Prioritizing Your Goals Short term goals lead to long term goals You need a clear understanding of your goals Rank them from most important to least important.

Your Goals Affect Others How can your goals affect your family? How can your goals affect your community?

Questions What is a budget? What is the difference between short-term goals and long-term goals? How can short-term goals lead to achieving long term goals? Why should you prioritize your goals?

Track Income and Expenses Keep Financial Records Track your income Track your expenses Establish a Filing System Effective Record Keeping Receipts Checks

Fixed and Flexible Expenses Fixed expenses are amounts you have already committed to spend. You have no choice Car payment Monthly rent Car insurance Flexible Expenses are amounts that you can choose to spend or not to spend. Clothes Luxury Goods Goods that have a special qualities that make them more expensive than alternative goods.

Questions What is the purpose of keeping financial records? What income records should you keep? What spending records should you keep? Describe how to set up an effective filing system? What is the difference between fixed and flexible expenses?

Your Budget Worksheet A budget worksheet is a planning document on which you record your expected and actual income and spending over a short time, usually one month. Step 1: Create a Worksheet

Create Your Budget Worksheet Step 2: Estimate Your Income Estimate Uneven Income Bonus Month Birthdays Be sure income is real Step 3: Estimate your Savings and Expenses Plan for Uneven Expenses Plan your savings

Create Your Budget Worksheet Step 4: Record Your Actual Income and Expenses Step 5: Calculate the Differences

Budget Pitfalls Some people get too specific, the level of detail becomes too much trouble. Some people don’t predict the correct amount of their flexible expenses. Some people lump too many expenses under miscellaneous. Give up because of Too much time. One hour a week.

Create Your Budget for the Year Evaluate Your Budget Worksheet Adjust Your Spending Make Several Plans Relate Your Goals to Your Budget Adjust to Changing Goals

Family Budget Planning Together Compromising

Questions Why must your budget balance What can you do to adjust your budget if it doesn't balance? Why should you review your budget at least once a year? What are the benefits of planning a family budget?

Questions What is the value of compromising as your plan with your family? How can budget worksheets help you create a budget for the year? How should you decide what uneven income flows to include in your budget?

Questions What is the purpose of a budget? How does preparing a budget worksheet involve trade offs? What are the steps in preparing a budget worksheet? What would you use to prepare a worksheet? What does the over or under column on the worksheet tell us?