Budgeting and Savings Plans

Designing, creating and maintaining a budget plan in 2012

ObjectivesObjectives

• Learn the importance of setting financial goals to make budget and savings plans more successful

• Create budget and savings plans for the new year

• Maintain successful money management throughout 2012

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What are Goals?What are Goals?

• The end result of specific actions we take

• Personal or professional opportunities for growth

• A task that we can achieve and be better off for it

• Aspirations and desires we have for/of ourselves

Goals are the final piece of the puzzle to achieving financial success.

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Benefits of Goal SettingBenefits of Goal Setting

• To channel time and efforts

• To build confidence and self-esteem

• To plan ahead and be prepared for opportunities

• To enhance accomplishments once achieved

Ten Goal Setting TipsTen Goal Setting Tips

1. Do it for yourself

2. Be your own measure of success

3. Write down goals specifically

4. Remain optimistic

5. Identify people to help you achieve goals and how

6. Analyze costs and benefits of goals

7. Identify obstacles and develop strategies to overcome them

8. Be willing to change the method of achieving your goal

9. Keep an eye on your progress

10. Determine if you are committed to achieving your goals

The S.M.A.R.T ApproachThe S.M.A.R.T ApproachWhat is the goal? How will you achieve it? Why is this important to you?

Can you determine whether each step/task ‘is’ or ‘is not’ completed? If you can’t measure it, you can’t manage it!

Given the available resources, is this goal (and POA) realistic? Are you up to the mental, financial and physical demands required to achieve this goal?

What are the benefits of achieving this goal? How will you reward yourself as you make progress?

When do you begin? When do you plan to accomplish this goal?

SSpecific:

MMeasurable:

AAttainable:

RRewarding:

TTimed:

Goal ActivityGoal Activity

What are Savings?What are Savings?

Benefits of SavingsBenefits of Savings

Ability to satisfy financial obligations comfortably

The difference between “getting by” and “getting ahead”

Capacity to achieve financial goals

Money Saving TipsMoney Saving Tips

• Track spending so you can identify opportunities to save

• Develop a savings plan

• Pay yourself first

• Seek alternatives for the things you need

• Put savings in liquid, interest-bearing account

• Set aside a portion when you have extra money

• Income Tax Refund

• Bonus

BudgetingBudgeting

• www.mint.com – provides personal budgeting tools

• www.bankrate.com – provide rates offered by lenders on everything from autos to retirement vehicles

• www.fool.com – tips on investing

• www.americasaves.org – tips on saving money

• www.freecycle.org – allows you to give away and obtain items in your specific living area. No barter/swapping etc…you must give it away and the person who wants it, must pick it up

Budgeting Budgeting ActivityActivity

Spending ≠ Spending PlanSpending ≠ Spending Plan

• Common reasons budgets fail

• We don’t set goals

• We don’t budget on regular basis

• We fail to face reality

• You can’t manage what you don’t measure

• We don’t account for unexpected expenses

Benefits of a Spending PlanBenefits of a Spending Plan

• Peace of mind

• Ability to weather unexpected expenses

• Freedom to take advantage of opportunities

• Ability to satisfy obligations

Expenses:

Fixed; Variable; Periodic

Savings:

Goals; “Life Happens”

Income:

Salary; Public benefits; Child Support/Alimony

IncomeIncome

• Income: wage/salary; public benefits; child support/alimony

• Gross income: Income before taxes and deductions. Your salary or hourly wage.

• Net income: Commonly referred to as your “take home pay.” This is your income after federal, state, and local taxes, and any deductions, such as medical insurance or retirement savings.

ExpensesExpenses

Fixed expense is a set amount of money that is to be paid at a regular time, usually

on a monthly basis

Flexible expense is one that you can change

Periodic expense are those that are not paid on a regular monthly basis

SavingsSavings

• Pay Yourself First

• Before you pay a single bill or make a purchase, set aside something for yourself (emergencies, goals, etc.)

• Automate Your Savings

• If your employer offers direct deposit, consider splitting your pay check into checking and savings accounts. Otherwise, set up an automatic savings plan.

The Beginnings of a BudgetThe Beginnings of a Budget

1. Identify current income and spending habits by diligently tracking income and expenses

2. Decide how you want to spend your money so that you meet financial obligations and goals

3. Identify income increasing and expense cutting opportunities to achieve #2

4. Continue ‘tracking’ to measure progress

Track—Where is your money going?Track—Where is your money going?

• Bank statements

• Receipts

• Copies of bills

• Credit card statements

• Pay stubs

Tracking Your Expenses Tracking Your Expenses ActivityActivity

Directing Your FundsDirecting Your Funds

Income $2000

Housing $600

Transportation $360

Debt $200

Food $280

Household $140

Savings $200

Misc. $220

Total $2000

Maximizing Your Spending PlanMaximizing Your Spending Plan

How do your expenses stack up against your income?

Do you need to increase your income?

Do you need to decrease your expenses?

What changes are you willing to make to your spending plan?

Achieving Financial SuccessAchieving Financial Success

Set Goals

• Take the S.M.A.R.T approach

Maximize Your Savings Plan

• Explore ways to increase income and reduce expenses

Budget and Track Expenses

• Account for every penny earned and spent

• Is your budget working? Review your tracked expenses and align with your spending plan.

Questions?Questions?