1. CREATING AND BALANCING A BUDGET

2. What is a Budget and Why Have One? What?Why?

3. A Balanced Budget  A balanced budget is…  Allocating and spending only money that you have  Essential to financial stability  Essential to financial responsibility  The best way to stay out of unnecessary / unexpected debt

4. Debt  Debt is a deficit that a person acquires when they have spent more money than what they have and they owe that spent money to a person or financial institution

5. Good Debt vs. Bad Debt  Something that you NEED but can’t afford without tapping out your resources  A loan for something that meets the criteria above where you can afford the monthly payments  House  Education (Usually)  Borrowing for something you don’t necessarily need and can’t afford right now  A loan for something you need but can’t afford the monthly payments  Credit Card debt is defined as the worst debt

6. The Art of Building a Budget  Step 1:  Identify your monthly income to assess how much you’re working with and establish a bottom line

7. The Art of Building a Budget  Step 2:  Make a list of essentials in your life that you need to keep track of in regards to your spending  Rent, car payments, insurance, food, cell phone, credit card, student loans, leisure, SAVINGS In 1 Month I Will Spend or Save…In 12 Months I Will Spend or Save… Rent/Mortgage College/Training Payments Car Payment Car Insurance Gas For Car Heat/Electric Cell Phone Internet/Cable Water Grocery Shopping Personal Care (Clothes, Shoes, Haircuts, Cosmetics) Entertainment (Restaurants, movies, sports, concerts, weekends) Miscellaneous (Just In Case Fund) Savings (required at least 10% of TMI) Total

8. The Art of Building a Budget  Step 3:  Budgets should consist of percentages when figuring out what exactly you can afford in those defined areas  Ex. Housing at or <50% Car at or <20%  Be careful not to max out in all areas of your budget  If you’re spending at the 50% for your housing you probably shouldn’t be a 20% for you car  Once you’ve defined the %s, see if what you’re spending is actually exceeding what you should be spending

9. Total Monthly Income = $2000 Highest % Actual $$ Amount Rent/Mortgage College/Training Payments Car Payment Car Insurance Gas For Car Heat/Electric Cell Phone Internet/Cable Water Grocery Shopping Personal Care (Clothes, Shoes, Haircuts, Cosmetics) Entertainment (Restaurants, movies, sports, concerts, weekends) Miscellaneous (Just In Case Fund) Savings Total

10. The Art of Building a Budget  Step 4:  Identify where your $$ has to go first and how much  Payments towards debt you owe need to have priority over shopping / weekend funds as those line items cannot be played with

11. The Art of Building a Budget  Step 5:  Allocate your remaining funds where you’d be most happy with  Keep in mind… The best payment you can make is a payment to yourself. Be sure you add to your savings account When you think a financial road block can’t happen it will… be prepared!

12. A Balanced Budget Is One Where…  All of your money is accounted for down to the penny  Your total expenses, which includes savings, totals the exact amount of money you’re receiving over the course of the month  You’re not counting on income that is not guaranteed like bonuses, tips, tax returns