Budgeting Ch. 6

Types of financial goals Budget – plan for dividing your income among spending & savings. Short-term goal – 1-2 years Ex. Purchase a TV, visit a long-distance friend Long-term goal – 2+ years Career, education, home, business, family, retirement Short-term leads to long-term.

Your goals affect others Current family goals Future family goals Community involvement

Tracking income & expenses See where your money goes Income – paycheck, allowance, gifts Spending – receipts, statements, checks Filing system Effective record keeping organized, complete & easy to find

Fixed & Flexible Expenses Fixed – amounts you have committed to spend. Ex. Car payment, rent, power, phone, insurance Flexible – choose to spend. Ex – clothing, shoes, luxury goods – designer vs. non-name brand, entertainment.

Budget Worksheet Budget worksheet – a planning document where you record expected income, actual income & short term spending. Create a worksheet 4 columns 1st sources of income, categories of spending & savings Expected amounts to receive, spend or save. Actual amounts The difference between expected & actual

2) Estimate your income Uneven income – gifts & bonuses Income is real 3. Estimate your Expenses & savings Plan for uneven expenses Plan your savings 4. Record actual income & expenses 5. Calculate the differences