Budgeting Basics

There is a reason that businesses use receipts and record books to closely track how much money is coming in and out. Keeping organized will allow you to make future financial decisions on full information. This section will walk you through the steps to creating a plan for your personal finances.

Overview & Goals

1. Basic budgeting skills can be the difference between financial success and unexpected financial distress. This is much more easily said than done. Staying organized can be one of the most difficult steps for anyone trying to keep a balanced budget.

2. The goals of this chapter are:

1. To give you an understanding of how common your situation is.

2. To outline benefits and process for creating a spending plan.

3. To discuss financial priorities and goals and the steps needed to achieve them.

Tips For Saving Money

1. Write it down – make a budget

2. Set priorities/ goals and keep track

3. Talk to your family about your situation – they need to understand how financial choices are made

4. Plan for the unexpected

5. Take action if income drops

6. Don’t rely on credit

Spending Plans

  • Families say that making a spending and savings plan helps them feel as if they’re more in charge of their money. Additionally, they say it helps to:
  • Stretch dollars and get more for limited money.
  • Work toward goals with the amount of income that they have.
  • Become more aware of their spending habits.
  • Set aside a little money each month as savings, or for emergencies.

Tips For Saving Money

Would a spending plan help you?

  • Is your money gone before the next check?

❑ YES ❑ NO

  • Do you often wonder where your money was spent?

❑ YES ❑ NO

  • Do you run out of food or gas for your car before the next check?

❑ YES ❑ NO

  • Do you receive collection notices for bills that are past due?

❑ YES ❑ NO

  • Do you dream about buying something, but think you can never afford it?

❑ YES ❑ NO

  •  Do you regularly pay bills late?

❑ YES ❑ NO

  • Do you borrow money or food from family, friends or agencies to make ends meet each month?

❑ YES ❑ NO

  • Do you worry about finding money in an emergency such as a car repair or illness?

❑ YES ❑ NO

Regular Monthly Expenses

Debts are just one part of where we spend income. It is equally important to understand how much money you spend on the day to day expenses in your life. There are several different types of expenses to be aware of when making a budget:

Over the course of a month, you probably spend money on both fixed and variable expenses. Fixed expenses basically stay the same from month to month (rent, utilities, and car payments). On the other hand, your variable expenses may be higher one month and lower the next. An example would be groceries or gas.

Occasional & Seasonal Expenses

Imagine that you have been going along with your spending plan and you have been able to balance between your income and expenses. Suddenly you realize it’s tax season and you’re going to owe money this year. The only way you can pay your taxes is by choosing to pay one of your other bills late. Now you are behind in your payments and will be charged a late fee for the bill you could not pay.

One thing that can quickly ruin a budget is to forget. to include those expenses that don’t occur each and every month. Some big expenses like property taxes and insurance premiums might only come up once or twice a year. Others are seasonal, such as school clothes in the fall and holiday gifts in December.

Thank You

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