Budgeting

FIRST STEP HOW MUCH CAN YOU AFFORD? How can you do this?

CONSTRUCT A BUDGET!

Budget If you don’t set up a budget, you might get into a house or other large expense you can’t afford. –How could you get into a house or buy a car you can’t afford, if the bank said you could?

Banks Look At… 1) How much monthly income you have 2) How much debt you have –Car payment, loan, etc… 3) Credit score

Banks Don’t Look At… 1) How you spend your free time 2) Hobbies 3) If your car might break down because it’s trash on wheels Etc…

How to Construct a GREAT Budget Budget: Tells you how much money you have coming in and going out every month. How many of you want something expensive? Think about how much it’ll cost you and how you plan to save for that. Follow these tips, and make it easier on yourself.

Creating a budget Can be hard and frustrating What does a budget have to do with housing? This will help you later in life, when you have to decide how much house you can afford. This is the LARGEST investment in your life!!!

Tips for a GREAT budget 1) Stay focused on Savings Determine the amount you can save each month. What is the easiest way to save? Direct Deposit: Money put into your savings/checking account, without you having to do it. –P.Y.F

TIP 2 2) Use Cash In what ways could you use cash to help save money? Take out enough cash to last you one week at a time. Be strict with this How might this help?

TIP 3 3) Cut Bad Habits Alcohol, tobacco…any other bad habits. If you use much of either, you know how expensive these can get. Smoker’s don’t just pay for cigarettes when they smoke. –They also pay about 25% more for life insurance. This = $20/month

Tip 3 Cont… Figure out YOUR bad habit Decide how much per week you spend on that habit. Multiply that number by 52 Multiply that number by 32 (assuming the World won’t end and you all turn 50 years old)

Tip 4 4) Share the Responsibility Make sure you’re not the only one in your household following the budget Sit down with whomever you live with and construct the budget with them

Tip 5 5) Pay Down Debt If you have credit card debt, you may feel like it will be forever until you pay it off. If you have more than one credit card, how do you decide which one to pay off first? Pay off the one with the highest interest.

TIP 6 6) Keep Your Receipts After a couple weeks, your budget will get harder to follow. You start to crave spending You are not totally comfortable saving so much Keep receipts so you know you’re not cheating on your budget.

Tip 7 7) Balance Your Checkbook This is a good habit to start With a tighter budget now, you must know the exact amount in your account. This way you can avoid over-drafting and insufficient funds in your account. –These fees are a waste of hard earned money

8) Analyze Your Spending Can you find an expense that can be cut in your budget? Spend less on clothes Bring lunch to school/work instead of going out Set up a carpool to school/work with a friend.

Tip 9 9) Special Accounts If you find you’re always digging through your savings, try opening a CD What’s a CD Certificate of Deposit Set limit of money Earns more interest Time limit

Tip 10 10) Be Flexible Life is unpredictable How many of you have HAD to spend money when you least suspected that you would? When you make this budget, try to find a little extra money to put aside for random expenses.