104 budget

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FINANCIAL LITERACY

Personal Financial Discipline

PERSONAL FINANCIAL DISCIPLINE IS . . .

. . . the self imposed systematic modification of the way you think about money and your spending habits, with the goal of becoming a Faithful Financial Steward (and at the same time, live better for less , become debt free and save for the future).

It may require Doing some things you don’t want to do,

and Refraining from some things you want to

REVIEW

The Enemy of Faithful Financial Stewardship is raising your standard of living by accumulating consumer debt.The principle access to consumer debt is the “Credit Card.”Personal Financial Discipline requires taking control of your Credit Card and Shopping habits.

CREDIT CARD HIGHLIGHTS

Consider a debit card or pre-paid card. Pay on time - all the time! Pay-In-Full Monthly - If you can’t pay in

full, always pay more than the minimum payment.

Don’t use credit cards for cash advances.

Don’t routinely carry your credit cards. Use a credit card register to track

spending. Keep a “rainy day” credit card.

SHOPPING

Stop Recreational Shopping. Plan to shop and Stick To The Plan. Avoid temptation.

FINANCIAL RECORDS . . .

Financial Discipline requires gathering and both regularly updating and reviewing personal financial information.

THE STARTING POINT IS BALANCING YOURCHECK BOOK

Most people are not good money managers and can’t even balance their check book.

LISTING DEBTS

Most people don’t know who and how much they owe, which is essential to taking control of your debt issues.

DEBT REPAYMENT SCHEDULE

Developing a plan to repay debt and tracking progress is an important to financial discipline.

ESTIMATED MONTHLY BUDGET

An “Estimated Monthly Budget” is a helpful, if not an essential, means to Financial Disciplined.

A FAMILY BUDGET . . .

. . . is a tool to help monitor a family’s income and expenses by planning for expenses, savings and debt repayment.

A BUDGET DOES NOT . . .

Get you out of debt Make your life better Solve your problems Constitute an end, in-and-of itself

A BUDGET CAN . . .

Offer a clearer picture of where money is going

Help “find money” by revealing waste, un-necessary expenditures and “leaks”

Provide information needed to set priorities and develop plans to reach goals

Reveal opportunities to increase income

WHAT YOU DO WITH THE INFORMATION . . .

. . . IS UP TO YOU!

YOU CAN IGNORE IT . . .

And Stick Your Head In The Sand

YOU CAN COMMIT TO . . .

. . . using the information to discipline your financial life – for the rest of your life!

Take a Stand!

WHO BENEFITS FROM A BUDGET Everyone! Some can get along without a

budget WEALTHY - They Can’t Spend It

All THRIFTY – They Will Not Spend

It All INTUITIVE BUDGETERS

Even these do better on a budget

Most people who don’t budget eventually have financial troubles.

A FAMILY BUDGET IS . . .

. . . A Family’s plan to manage the money that comes into their home.

Your Budget For Your Family ≠ Your Family Budget

A FAMILY BUDGET

It accounts for all spending (including weekly, monthly, quarterly, semi-annual and annual items) so that money is put aside monthly to pay them as they come due.

Frequently expressed as a “monthly budget,” which is a “yearly budget” divided by 12.

ESTIMATED MONTHLY BUDGET

An “Estimated Monthly Budget” is included in handouts.

There are many other good forms.

BUDGET GUIDELINES

ENTERING FINANCIAL INFORMATION

Looking For 1/12th Annual Totals

Weekly Sums X 4.33 = Monthly Equivalent

Annual Sums ÷ 12 = Monthly Equivalent

Quarterly Sums ÷ 4 = Monthly Equivalent

THREE MAIN PARTS OF BUDGET

Net Spendable Income

(Total Living Expenses)

Surplus or Deficit

AS YOU RECORD EXPENSES . . .

Find A Place To Record Everything Only Record Things Once Look for opportunities to

Eliminate Expense Items Entirely Reduce Those You Can’t Eliminate

Make a List of those areas where you can eliminate or reduce expenses

GROSS INCOME

Salary Interest Dividends Alimony/Child

Support Social Security &

Public Benefits

Pension Benefits

Other Income Giving Taxes (Income

Related)

LIVING EXPENSES (HOUSING 25% - 38%)

Mortgage or Rent Second Mortgage Home Insurance Property Taxes Electricity Gas Water & Sewer Garbage & Trash

Collection

Telephone Maintenance Cleaning &

Supplies Association or

Condo Fees & Assessments

LIVING EXPENSES (FOOD) Food (10% - 15%)

Eating Out Transportation (10% -

15%) Loan or Lease

Payments Gas & Oil Insurance Maintenance, Repair &

Replacement Other

LIVING EXPENSES (ENTERTAINMENT)

Entertainment & Recreation (4% - 7%) Baby Sitters Vacations Pets Other

Clothing (4% - 6%) Savings & Investments (5% -

LIVING EXPENSES (INSURANCE)

Insurance (3% - 7%) Life Insurance Medical Insurance Disability Insurance Other

Debts Except Auto (0% - 10%)

LIVING EXPENSES (MEDICAL) Medical & Dental (4% - 8%)

Doctor Prescriptions Other

School & Child Care (5% - 10%) Tuition Day Care Student Loans Other

MISC. LIVING EXPENSES (4% - 8%)

Alimony & Child Support Toiletries & Cosmetics Laundry & Cleaning Children’s Allowances Subscriptions Birthdays &

Anniversaries Weddings & Showers Christmas Presents

Postage Accounting

/Legal Fees Education Other

RECONCILIATION

Total Living Expenses

Deficit

IF YOU HAVE A DEFICIT

Identify Areas Where You Can Cut BackIf You Can’t Pay All - Prioritize Obligations

Secured Debt: Home Mortgage

Auto LoansUnsecured: Small Balance

High Interest“Rainy Day” Credit

CardGet creative

BECOME CREATIVE

“We just sat in the hot car for 6 hours and bickered. It was like taking a vacation, but we saved $1,000.

RECONCILIATION

Total Living Expenses

Surplus

SUGGESTIONS FOR USE OF A SURPLUS:

Create A Cash ReservePrioritize & Pay Off DebtsLow Balance AccountsHigh Interest DebtSecured DebtsBankruptcy

Invest & Save

Why bother to budget?

So we can worrybefore we spend money rather thanafter we spend it!

BEING DEBT FREE & IN CONTROL IS SWEET

Confused?

Later Can Be Too Late!

RESOURCES

Faith Fellowship(239) 278-3638

Christian Financial Counselinghttp://www.cfcswf.org/

(239) 337-2122