1. MoneyCounts: A Financial Literacy Series
Budgeting
11-A Grange Building
University Park, PA 16802
financialliteracy.psu.edu

2. Budgeting is the fundamental step in achieving financial literacy
Budgeting is the process of creating a plan to spend and invest your hard earned money wisely to meet your personal and financial goals in life
Budgeting is not a mathematical exercise that individuals think they have to endure. Rather, it is the result of self-assessment of our relationship with money. It is a necessary road map to steer us toward a higher standard and quality of living
Description

3. Learning Outcomes Understand the concept of budgeting
Identify the making of a budget
Create a personal budget
Forecast a future budget

4. What is Budgeting?
Income
Expenses

5. SMART Goals
Specific
Measurable
Attainable
Realistic
Timely S M A R T

6. How to set SMART Goals? General goal
ex) “Be Free of Credit Card Debt.”

7. SMART goal steps: S M A R T Specific Measurable Attainable Realistic
Timely S M A R T
Identify the credit cards
Verify the amount owed
Decide how much extra payment to send each month to meet your goal
Calculate how much you can spare from your budget to pay off debt
State when you want to reach your goal

8. SMART goal I have 2 credit cards Visa and a Mastercard.
I owe $2,400 on them combined.
I would need to pay $200 each month, which I can afford in my budget, to pay off the debt in one year time.
Once I am free of this debt, I will charge only things that I need and able to afford to pay back in full and on time by the due date of these credit cards.

9. Collecting information
Pay stub
Bank records
Financial aids awards
Tuition and fees bills
Bookstore bills
Credit card bills
Utility bills
Electronics
Insurance
Groceries Receipts
Eating out receipts
Personal 
Pets
Miscellaneous

10. Life cycle of receipts Paper receipts Purpose and life cycle
Electronic purchases
Debit transactions
Credit transactions

11. Organizing information

12. Tracking money coming in
Wages, salaries, self-employment
Family help
Interest income
Investment income
Child support income
Alimony
Public assistance
Other income
Grant and scholarships
Loans
Perkins
Subsidized
Unsubsidized
Other loans

13. Income versus loans/debt
Earning
Employment
Investment income
Borrowing
Loans
Credit cards

14. Financial assessment Am I saving any money for my future goals?
Do I have an emergency fund?
Am I accumulating unnecessary debt?
Do I need that many credit cards?
What have I borrowed in student loans so far?
Do I have enough financial resources available to graduate college on time?

15. Tracking money going out
Tuition, fees, books
Housing and utilities
Groceries
Clothes and personal items
Car expenses, electronics, insurance, eating out, pets, etc.
Periodic expenses, gifts, entertainment, charity, etc.

16. What gives?

17. Identifying expenses What are my fixed and variable expenses?
What are my needs (non-negotiable)?
What are my wants (negotiable or desirable to have)?

18. Spending leaks Identifying spending leaks Correcting spending leaks
Focus on goals
Set priorities

19. Balancing the budget Monthly Expenditures of NEEDS and WANTS
Net Monthly Income (no debts)
Saving
Monthly Expenditures of NEEDS and WANTS

20. MoneyCounts: A Financial Literacy Series
Comments and questions
11A Grange Building
University Park, PA 16802
financialliteracy.psu.edu