make your money matter: use a budget
DESCRIPTION
Make Your Money Matter: Use a Budget. Facilitator’s Name Date. Objectives. Discuss factors that influence spending. Define a budget . (a.k.a. spending plan) Explain why a budget is key to financial stability, financial security & acquiring assets . - PowerPoint PPT PresentationTRANSCRIPT
Make Your Money Matter: Use a Budget (JAN 2013)
Make Your Money Matter: Use a Budget
Facilitator’s NameDate
Make Your Money Matter: Use a Budget (JAN 2013)
Objectives
• Discuss factors that influence spending.• Define a budget . (a.k.a. spending plan)• Explain why a budget is key to financial
stability, financial security & acquiring assets.• Identify and describe the budgeting process
steps.
2
Make Your Money Matter: Use a Budget (JAN 2013)
Best and Worst Decisions
3
Activity 1:
Write Your Best Money DecisionWrite Your Worst Money Decision
Make Your Money Matter: Use a Budget (JAN 2013)
Factors Impacting Spending
• Needs - essential for daily living
• Wants - nice, but not necessary
• Values - beliefs, what is worthwhile, desirable, or important to you
• Goals - what we want to achieve
4
Make Your Money Matter: Use a Budget (JAN 2013)
Identifying Values
5
What do you value in your life?
To identify values, lookwhere you spend yourtime and money.
Make Your Money Matter: Use a Budget (JAN 2013)
SMART Goals
6
Time Bound Attainable Realistic Measurable Specific
State exactly what will be done
State the dollar amount
Determine how it can be reached
Set a goal that is realistic for your situation and income
State when the goal will be reached
SMART Goals
Make Your Money Matter: Use a Budget (JAN 2013)
Examples-SMART Goals
• Short-term (Less than 1 year);• Mid-term (1-5 years or less)
– I will save $25 each month for 2 years for a washing machine costing $600 or less.
• Long-term (more than 5 years)– I will save $200 each month for 6 years to
fully fund my emergency fund to $14,400.
7
Activity 2: Write 2-3 personal financial goals.
Make Your Money Matter: Use a Budget (JAN 2013)
Goals and Family
• Family buy-in and cooperation are critical to reaching financial goals.
8
Make Your Money Matter: Use a Budget (JAN 2013)
What is a Budget?
• A guide for spending money that is used to record planned and actual spending over a period of time.
• Plans should be written on paper or electronic.
• Tell your money where to go instead of wondering where it went.
9
Make Your Money Matter: Use a Budget (JAN 2013)
Why Develop a Budget?
• Control spending on family priorities/goals.• Provide a ready made excuse for financial
decisions. • Create long term financial security. Acquire
assets.• Helps you to live within means/income.• Reduces family stress.• Reduces need for credit.
10
Make Your Money Matter: Use a Budget (JAN 2013)
Budget Components & Categories
• INCOME– Wages/Salary– Alimony– Child Support– Retirement income– Social Security– Public Welfare– Disability income
• EXPENSES– Savings/Emergency– Food – Housing – Utilities– Transportation– Insurances– Clothing
11
Make Your Money Matter: Use a Budget (JAN 2013)
Fixed Expenses
– Rent– House payment– Utility bills on budget
plans– Savings and
investments
– Loan payments– Retirement
contributions– Car payment– Monthly prescriptions– Insurance payments
12
Stay the same each month
Make Your Money Matter: Use a Budget (JAN 2013)
Variable Expenses
Change or vary each month
13
– Food/Groceries– Gas– Credit Card payments– Charaties/Donations– Child/Elder Care– Dry Cleaners/Laundry– School expenses– Health Care expenses– Repairs
– Hair/Manicure/ Massage
– Pet care– Movies/Sport events– Vacation– Parking/Tolls– Cable/Gas/Water– Miscellaneous
spending
Make Your Money Matter: Use a Budget (JAN 2013)
Periodic Expenses
14
Come one or more times each year at predictable times
– Taxes– Property taxes– Clothing/Uniforms– Tuition– Birthday/Anniversary/
Holiday gifts
– Health Care costs– Pet care– Car registration– Big ticket items– Trash/garbage bill
YRRP Website for Handouts:
Make Your Money Matter, Use a Budget
http://www.yellowribbon.mil/event-support
Make Your Money Matter: Use a Budget (JAN 2013)
Gross vs. Net Pay2012 PA Minimum Wage=$7.25
$8.00 x 40 hours per week=$320 week x 4 weeks=$1,280 per month
Gross Pay $1,280-39.39 State Tax 3.07%
-97.92 Social Security (7.65%)
-128.00 Federal Tax @ 10%Net Pay (Take home) $1014.79
15
Make Your Money Matter: Use a Budget (JAN 2013)16
Budget Worksheet #1
Make Your Money Matter: Use a Budget (JAN 2013)
Budget Worksheet #2
17
Net Income (Per week or month) $1200 A B C D Expense Category Planned Remaining
(income minus each expense)
Actual amount Spent
% of income per expense
Pay-Yourself First $20 1180 $20 2 Housing (Rent/Mortgage) $400 780 $400 33 Car Payment $250 530 $250 21 Car Insurance $50 480 $50 4 Gas $100 380 $80 7 Food $140 240 $160 13 Clothing $20 220 $20 2 Entertainment $20 200 $20 2 Utilities $200 0 $200 17 Total 1,200 1,200 101%*
Income 1200 *slightly -Expenses -1200 above
0 100 % due to rounding
Make Your Money Matter: Use a Budget (JAN 2013)
How Much to Spend Per Category
Fixed Expenses Flexible ExpensesPay-Yourself-First (10-15%) Food (12-30%)
Housing & Utilities (20-45%) Transportation (5-20%)Insurance (2-10%) Clothing (1-10%)
Savings/Investments (0-10%) Medical (2-8%)Taxes (8-10%) Entertainment/vacation (2-5%)
Personal (2-5%)Credit (0-15%)Gifts/Contributions (1-10%)
18
YRRP Website for Handouts:Make Your Money Matter, Use a Budgethttp://www.yellowribbon.mil/event-support
Make Your Money Matter: Use a Budget (JAN 2013)
How to Create a Budget
• Step 1--Track current income and expenses
• Use a small notebook to record expenses
• Keep receipts• Use cell phone note
pad• Use debit card
records
1. Track Income & Expenses
2. Create Your Income & Expense
Categories
3. Assign Money to each
Category
4. Use/implement
your plan
5. Evaluate & make
adjustments
19
Make Your Money Matter: Use a Budget (JAN 2013)
How to Create a Budget
• Step 2—Create personal income & expense categories– Customize to suit
your expenses.
1. Track Income & Expenses
2. Create Your
Income & Expense
Categories
3. Assign Money to each
Category
4. Use/implement
your plan
5. Evaluate & make
adjustments
20
Make Your Money Matter: Use a Budget (JAN 2013)
How to Create a Budget
• Step 3—Allocate your income for the expenses – Income minus
expenses should equal 0
1. Track Income & Expenses
2. Create Your Income & Expense
Categories
3. Assign Money to
each Category
4. Use/implement
your plan
5. Evaluate & make
adjustments
21
Make Your Money Matter: Use a Budget (JAN 2013)
How to Create a Budget
• Step 4-Use the plan– Look for changes
that can be made or that need to be made
1. Track Income & Expenses
2. Create Your Income & Expense
Categories
3. Assign Money to each
Category
4. Use/implement
your plan
5. Evaluate & make
adjustments
22
Make Your Money Matter: Use a Budget (JAN 2013)
How to Create a Budget
• Step 5-Evaluate the plan and adjust– Are you reaching
your goals?– Are there plan
changes that can be made?
1. Track Income & Expenses
2. Create Your Income & Expense
Categories
3. Assign Money to each
Category
4. Use/implement
your plan
5. Evaluate & make
adjustments
23
Make Your Money Matter: Use a Budget (JAN 2013)
Objectives
• Discuss factors that influence spending.• Define a budget . (a.k.a. spending plan)• Explain why a budget is key to financial
stability, financial security & acquiring assets.• Identify and describe the budgeting process
steps.
24
Make Your Money Matter: Use a Budget (JAN 2013)
• Don’t discount impact of small expenditures.• Use the wait and remember technique to curtail impulse
spending.• Cut a routine expense for a period of time.• Read articles and books with cost cutting ideas.• Spend within your means. Don’t spend money you
don’t have.• Keep track of the pennies and you will worry less about
the dollars.• Using a budget can increase financial stability, security
and acquire assets.
25
Budgeting Tips
Make Your Money Matter: Use a Budget (JAN 2013)26
Closing Thought
“Any man can make money, but it takes a special kind of man to use it responsibly.”
A.G. Gaston, Businessperson1892-1993
Make Your Money Matter: Use a Budget (JAN 2013)
Make Your Money Matter: Use a Budget
Facilitator’s NameDate