1. MoneyCounts: A Financial Literacy Series
Budgeting Fundamentals
Dr. Daad Rizk
MoneyCounts: A Financial Literacy Series
301 Outreach Building
University Park PA 16802

2. learning objectives Learning Objectives 5 steps to budgeting
Set up SMART goals
Collect financial information
Track money coming in
Track money going out
Review cash flow and set up a budget

3. On Budgeting
On budgeting
Bill Cosby on budgeting

4. what is budgeting? What is Budgeting? What is Budgeting?
Budgeting is the process of creating a plan to spend your money. It is spending less than earning as you plan for your financial goals
How do I allocate my income to pay my expenses?
Where did my money go?
Why am I always broke?
A financial tool to help manage cash flow!
Budgeting is never “ONLY” about money!

5. why is it important? Why is it important?
Budgeting is simply balancing your expenses with your income.
If they don't balance and you spend more than you make, you will have a problem
Many people don't realize that they spend more than they earn and slowly sink deeper into debt

6. when should you budget? When Should you budget?
To meet your financial goals
To achieve financial security
To prevent financial crisis
To get out of financial crisis
Goal is to maintain financial stability in good times and financial sustainability in hard times
An important component of financial success
Adopt a budget prior to financial crisis

7. the budgeting process – step 1
Step 1 – Start by setting smart goals
Short term & long term goals/personal, educational, social, financial and recreational
What are my values, my needs, what is my life situation?
What are my goals, what do I hope to accomplish?
Before you plan, picture the destination

8. S M A R T SMART – GOALS Prioritize goals using the SMART Model
= Specific
= Measurable
= Attainable
= Realistic
= Timely
Goals should be crystal clear in their definition S M A R T

9. The budgeting process – step 2
Step 2 – Get Organized
Collect Financial Information
Pay Stub
Bank Records
Financial Aid Awards Insurance
Tuition and Fees Bills Groceries Receipts
Bookstore Bills Eating Out Receipts
Credit Card Bills Personal
Utility Bills Pets
Electronics Miscellaneous

10. The budgeting process – step 3
Step 3 – Money coming in/ Income & Borrowing
Wages, Salaries
Family Help
Interest Income
Other Income
Grants and Scholarships
Loans
Perkins
Subsidized
Unsubsidized
Other Loans

11. the budgeting process – step 4
Step 4 – Money going out/Saving & Spending
Saving
At least 10% of net income
Pay yourself first
Establish/ keep an emergency fund
Invest and plan for retirement

12. Step 4 continued The Budgeting Process – Step 4
Step 4 – Money going out / Saving & Spending
Spending
Know needs from wants, what are my spending habits? How do I make spending decisions?
List all spending – Tracking process
Fixed & Variable
Tuition, Fees, Books
Housing and Groceries
Car expenses, Electronics, Insurance,
Eating out, Personal, Pets, etc.
Periodic expenses, gifts, entertainment,
Charity, etc.

13. The Budgeting Process – Step 4
Step 4, slide 3

14. step 4, slide 4 The Budgeting Process – Step 4
Step 4 – Money going out / Saving & Spending
Saving is 10% of income – pay yourself first
Spending
Housing should not exceed 30% of your net income
Meals and eating out should not exceed 20% of your
net income
Utilities should not exceed 5% of your net income
Car expense should not exceed 10% of your net income
Electronics, phone, Internet should not exceed
5% of your income
All other expense is 20% of your net income

15. The Budgeting Process – Step 5
Balancing Act
Use Loans only to pay for tuition, fees, & books
Use income to pay for housing, food, electronics, entertainment, insurance, credit cards, car expense, gas, personal, pets & miscellaneous
Do a monthly budget, use accurate figures/amounts
Avoid “PILS” Penalties, Interest, Late fees & Surcharges
Keep a saving account
Shop based on Needs not Wants
Pay Credit Card in full each month
Allow for some fun items, but stick to your budget

16. The Budgeting Process – Step 5
Earning and Borrowing
Net income
Family support
Grants and Scholarships
Loans
Perkins
Subsidized
Unsubsidized
Saving and Spending
Saving, emergency fund
Tuition, fees and books
Housing and utilities
Car expense
Phone, Internet, electronics, videos
Loan origination fees
Insurance, medical, entertainment

17. Budget as a % of net income
Recommended Budget as a percentage of Net Income
Income - Cash In
100.00%
1. Saving
10.00%
2. Housing
30.00%
3. Utilities
5.00%
4. Food
20.00%
5. Transportation
6. Entertainment
7. Debt
8. Other

18. budget as a % of net income, slide 2
Budget as a percentage of Net Income

19. Tracking Expenses
tracking expenses

20. Budget Worksheets

21. MoneyCounts: A Financial Literacy Series
Thank You!
Comments and Questions
Dr. Daad Rizk
MoneyCounts: A Financial Literacy Series
301 Outreach Building
University Park PA 16802