Budgeting and Money Management

Topics of Discussion

• Financial Goals

• Establishing a Budget

• Saving

• Spending

•Money Management Tips

Financial Goals

Financial Goals• Short-term goals are

achieved in under one year. • Mid-term goals are

achieved in one to five years. • Long-term goals are

achieved in more than five years.

Information provided by balancepro.net

Financial Goals•Define your goals—What do you

want?• Set an amount—How much money

do you need?• Set a target date—When do you need

to meet your goal?•Develop a plan—Establish a budget

that includes your financial goals. Information provided by smartaboutmoney.org

Budget

A plan to manage your money for a specified period of time.

Budget

Budgeting Components:• Income• Expenses:

• Fixed• Variable• Periodic

Budgeting OutlineStep 1: Determine Income• Salary, Alimony, Child support, Dividends...

Step 2: Determine Expenses• List and categorize each expense (fixed, variable,

periodic)

Step 3: Analyze Budget• Compare Income and Expenses

Step 4: Keep Track of your Budget• Review your finances on a monthly basis and

make changes when necessary.

Sample Budget Income

Paycheck $1600.00

Total Income $1600.00

Fixed Expenses

Mortgage/Rent $650.00

Savings Account $160.00

Auto Loan $240.00

Student Loan $50.00

Variable Expenses

Utilities $240.00

Food $210.00

Periodic Expenses

Car Insurance 50.00

Total Expenses $1600.00

Budgeting Guidelines

25% 15%

15%10%

35%

Debt Housing Savings Transportation Other

Budget

The concept of keeping a budget can be complicated, but it doesn’t have to be!

Budgeting Do’s

• Think of your budget as an ongoing planning device—a way to reach your financial goals.

• Prioritize your financial goals.

• Limit budget projections to a couple of months ahead until you get the hang of it.

Budgeting Don’ts

• Don’t think of your budget as inflexible.

• Don’t get frustrated if you at first don’t reach your targeted budget. Be prepared to modify.

• Don’t give up! With confidence you can make a budget that works best for you!

Saving

Pay Yourself First

• YOU ARE THE MOST IMPORTANT EXPENSE!

• Each time you are paid, set aside a portion of your check to go into a savings account.

• This ensures you are able to pay for things that are important to you and establishes an emergency fund.

How Much Is A Enough?

• Set aside at least 10-15% of your paycheck.

• If you can’t set aside 10-15%, set aside as much as you can.

• Think of saving your money as a bill you have to pay each month.

How Can I Save?

• Financial Institution: • Your financial institution can automatically

transfer a specified amount from your checking account to your savings account every pay period.

• Employer:• If your employer offers Payroll Deduction,

specify an amount from your check to be deposited to your savings account.

Spending

Did You Know?

• The average person spends money 3 times a day.

• Putting aside every coin you touch usually results in saving about $50 a month.

• A $5 sandwich usually has less than $1 worth of ingredients.

What If…

• You purchased a soda every day for 1 year?

• You went out to eat 3 times a week for 1 year?

Results

• If a soda costs $.75, you would spend $273.75. (365 days per year x $.75 = $273.75)

• If it costs $8.00 each time you eat out, you would spend $1,248.00! (3 days x $8.00 = $24.00/week) (52 weeks x $24.00 = $1,248.00)

Fritter Finder

Money Management Tips

Money Management Tips

•Get a realistic view of your spending. For one week, write down everything you spend.

• Identify areas you can cut back.

• Emphasize your needs rather than your wants.

Information provided by smartaboutmoney.org

Money Management Tips

• Limit your money access.

•Avoid areas where you are most tempted to spend money.•Don’t use your card at ATMs that will

charge you a fee (surcharge).

Information provided by smartaboutmoney.org

Money Management Tips

• If available, consider using store lay-away plans, you are required to pay for the entire purchase before you receive it.

• Always carry a shopping list.

• Treat yourself in small ways rather than spending a lot of money on big purchases.

Information provided by smartaboutmoney.org

Money Management Tips

• Set financial goals for debts you want to pay off. Be specific and assign a date by which to achieve these goals.

• Always pay your bills on time. If a bill is going to be late, contact the creditor immediately.

• Build an emergency fund equal to at least 3 months' salary.

Information provided by smartaboutmoney.org

Steps to a Bright Financial Future

1. Organize your financial documents.

2. Track your spending.

3. Be a selective shopper.

4. Evaluate your debt.

Steps to a Bright Financial Future

5. Reduce your debt.

6. Build a strong credit report.

7. Save for your future.

Steps to a Bright Financial Future

8. Set financial goals.

9. Create a budget.

10. Invest money to achieve your goals.

QUESTIONS?