1. Chapter 2 Managing Spending

2. Planning Your Budget
Budget – a written plan to help you make the most of the money you have.
It helps you do the following:
Control where your money goes
Work toward short-range and long range goals
Keep from overspending
Reduce wasteful spending

3. Budget Five major steps to develop a budget
Establishing Financial Goals
Long Term
Short Term
Estimate and Total your Income and Expenses
Usually Monthly
Analyze your Income, Expenses and Spending
Prepare a Budget
Evaluate your Budget

4. Setting Financial Goals
Short-Term Goals
Buying an iPhone, Camera, New Clothes
Long-Term Goals
College Tuition
Car
Home
Once Goals are Established:
Determine:
How much it will Cost
When you want to achieve it

5. Estimate and Total your Income and Expenses (Monthly Basis)
Net Pay
Part-Time Earnings
(Only list what you are sure of)
Expenses
Fixed Expenses
Flexible Expenses

6. Expenses Fixed Expenses Flexible Expenses These must be paid regularly
Rent
Car Payments
Car Insurance
Flexible Expenses
All other expenses which you pay varying amounts
Food
Clothes
Utilities

7. Analyze your Income, Expenses and Spending
Keep a record of all Income you receive
Accuracy is key!
Prepare a list of Expenses
Prepare a list of Spending

8. Your Budget MUST Be Balanced!
Subtract your Total Expenses and Spending From your Total Income
Total Income (Expenses Spending)
What do you have left over???
Income MUST exceed your expenses 8

9. Evaluate the Budget Answer the following questions…
1) do you have enough income to cover your expenses?
Is the budget flexible enough to handle unexpected expenses and emergencies?
Is your money doing what you want it to do?
Is your budget helping you reach important goals on a schedule?