make your money matter: use a budget (jan 2013) make your money matter: use a budget facilitators...

Make Your Money Matter: Use a Budget (JAN 2013)

Make Your Money Matter: Use a Budget

Facilitator’s NameDate


Objectives

• Discuss factors that influence spending.• Define a budget . • Explain why a budget is key to financial

stability, financial security & acquiring assets.• Identify and describe the budgeting process

steps.

2


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

3


Identifying Values

4

What do you value in your life?

To identify values, lookwhere you spend yourtime and money.


SMART Goals

5

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


Goals and Family

• Family buy-in and cooperation are critical to reaching financial goals.

6


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.

7


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.

8


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

9


Fixed Expenses

• Fixed: stay the same each month– Rent, house payment, utility bills on budget

plans, savings

10


Variable Expenses

• Variable: changes or varies each month– Groceries/food, non-budget plan utility bills

11


Periodic Expenses

• Periodic expenses: expenses come one or more times each year at predictable times.– Auto insurance, property taxes, water bills

12


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

13


14

Budget Worksheet #1


Budget Worksheet #2

15

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


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%)

16


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 Incom

e & Expen

ses 2. Create Your Income & Expense Categories

3. Assign Money to

each Category

4. Use/implement your

plan

5. Evaluate & make

adjustments

17



• 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


plan

5. Evaluate & make

adjustments

18



• Step 3—Allocate your income for the expenses – Income minus

expenses should equal 0


2. Create Your Income & Expense Categories

3. Assig

n Money

to each Categ

ory

4. Use/impl

ement your plan

5. Evaluate & make

adjustments

19



• Step 4-Use the plan– Look for changes

that can be made or that need to be made

1. Track Income & Expense

s

2. Create Your

Income & Expense

Categories

3. Assign Money to

each Category

4. Use/i

mplement

your plan

5. Evaluate & make

adjustments

20



• Step 5-Evaluate the plan and adjust– Are you reaching

your goals?– Are there plan

changes that can be made?


2. Create Your Income & Expense Categories

3. Assign Money to

each Category


plan

5. Evalua

te & make adjustments

21


Objectives

• Discuss factors that influence spending.• Define a budget . • Explain why a budget is key to financial

stability, financial security & acquiring assets.• Identify and describe the budgeting process

steps.

22


• 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.

23

Budgeting Tips


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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

Facilitator’s NameDate

make your money matter: use a budget (jan 2013) make your money matter: use a budget facilitators...

Documents

money matter

budget step

budget plans

budget worksheet

budget facilitators

expenses income

spending money

track income expenses