1. Budgeting Techniques 16-2
Goals:
-Identify purpose of a budget
Describe steps for preparing a budget
Describe characters of successful budgeting

2. The main purpose of a budget:
Budget activities
Budget allows you to meet your personal goals with a system of saving and wise spending.
The main purpose of a budget:
Live within your income
Achieve your financial goals
Buy wisely
Avoid credit problems
Plan for financial emergencies
Develop good money management skills

3. The process of creating and using a budget Involves four main steps:
The Budget Process
The process of creating and using a budget Involves four main steps:
Set financial goals
Plan budget categories
Maintain financial records
Evaluate your budget
-Fixed expenses are costs that occur on regular basis and for the same amount each time.
-Variable expenses involve living costs that differ each time and may not be an easy estimate.

4. The Budgeting Process cont…
Allowance is the amount of money you plan to use for certain budget category
8 main catagories used while budgeting:
Saving
Food
Clothing
Household
Transportation
Health and personal care
Recreation and education
Gifts and contributions
-Any difference between these amounts is a budget variance

5. Characteristics of an effective budget:
Successful Budgeting
Characteristics of an effective budget:
Must be realistic
Should be flexible
Should be evaluated regularly
Must be well planned and clearly communicated
Should have a simple format

6. Assessment 16-2
true/false. Retirement planning is usually considered a short term goal.
A major purpose of a budget is to
Assist with comparison shopping
Achieve financial goals.
Reduce a persons enjoyment of life
Gather data for using credit cards
3. The most uncertain aspect of the budgeting process involves
estimating Variable expenses
Determining net worth
Estimating fixed expenses
Setting finical goals