1. Budget for Financial Goals
Section 3.3

2. Preparing a Practical Budget
Is a plan for using money to meet wants and needs.
7 steps for making a practical budget
Set your financial goals
Depends on your lifestyle, values and your hopes for the future.
Set specific goals
Set a time frame to reach these goals
Separate into short, intermediate, and long term.

3. Step 2 Estimate your Income
Very easy to do in some cases. Difficult in others.
You need to estimate as well as you can either by using a cash flow statement or balance sheet as a guide.

4. Step 3 Budget for Unexpected Expense
There is expenses the pop up unexpectedly.
Car breaks down, Flood, Hospital Bills
Can’t set all of your money aside for just one thing. Need to make sure that there is some money that is set aside to help out unexpected things.

5. Step #4 Budget for Fixed Expenses.
You should figure in each month there are expenses that we will have to pay.
Rent
Electric
Cable

6. Step #5 Budget for Variable Expenses We know that things like:
Gas Prices, increase in utilities, and such.
Consumer Price Index is a measure of the changes tin prieces for commonly purchased goods and services in the US.
You can compare what you spend to the national average to help you set your budget.

7. Step #6 Record what you spend
Write down what you budgeted for each expense.
Then write down what you actually spend.
Then the budget variance is the clue as to what is going on in your budget…

8. Step #7 Review Spending and Saving Patterns
If you can’t afforrd the bills or you have to much money left over at the end of the month you can look at your budget to help you decided what is wrong or right with your budget.
Here is an example of what your budget should look like.