Post on 02-Jan-2016
transcript
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?