1. Why create a budget?  A budget helps you understand where your money goes.  It helps you live within your means and meet your goals.  It helps you find uses for your money that will increase your wealth.  It puts you in control of your money.

2. Working Out Your Budget

3. Focus Questions 1. What is the difference between a fixed expense and a variable expense? 2. What income should you include in a budget? 3. Do unexpected gifts of money, say from a birthday present, go in your budget? 4. How can you come up with estimates for both income and expenses? 5. How can you protect yourself from large, unexpected expenses?

4. Estimating Income and Expenses cash flow the amount of money you take in (income) and spend (expenses) Estimating your expenses involves figuring out what you will be using your money to pay for Which expenses come up on a regular basis?

5. Preparing a Cash Flow Statement  A cash flow statement (income and expense) is a summary of your receipts and payments for a given period of time  Includes fixed and variable expenses, savings and sharing

6. Figuring Your Income  Include wages or salary, allowance, interest on investments and savings  Do not include birthday cash, bonuses, earnings on eBay

7. Figuring Your Expenses  Fixed Expenses expenses that stay the same from month to month  May include rent or mortgage payment, car payment, auto insurance, student loan, health insurance  Also bills that do not fluctuate too much such as electricity, gas, cable TV, Internet, cell, food

8. Variable Expenses  Variable expenses are those that change from month to month  May include auto repair, clothes, out of pocket medical and dental

9. Unexpected Expenses  Set aside extra money each month to prepare for these unexpected events  May include plumbing disaster, car accident

10. Emergency Fund  Money set aside for unexpected expenses  A good rule of thumb is to set aside 5 percent of your monthly income

11. Sharing and Savings  Don’t forget to budget for sharing and savings  Think about what causes are important to you

12. Focus Questions 1. What features does a good budget have? 2. What is likely to happen if you do not stay on track with your budget? 3. What should you do if your budget does not seem to work?

13. Using Your Budget Budget surplus a situation in which money is left over after all expenses have been paid Budget deficit a situation in which there is not enough money to cover expenses

14. Setting Up Your Own Budget Look back on your spending habits, and consider the goals you have set for your financial future 1. What are your spending priorities? 2. How much do you plan to save? 3. What are you saving for? 4. With which causes do you want to share your money?

15. How much to put away each month for variable expenses? Example auto costs, entertainment, clothing etc. How much to set aside for savings, emergency fund, and sharing?

16. Qualities of a Good Budget  It is based on your values  It is geared towards your goals (short, medium, and long term)  It is practical  It is flexible (circumstances change)  It is accessible and easy to use (keep it on a computer where you can easily modify it if need to)

17. Assessing and Revising the Plan  Major life changes (Starting a family)  Owning a car instead of using public transportation  New Job