The right step to budgeting

1. THE RIGHT STEP TO BUDGETING Presented by: FINANCE CARE EDUCATION http://financecareeducation.com/

2. Something About Budget • An estimate of income and expenditure for a set period of time is called budget. • Planning the right budget is different for different professionals. Preparing a budget can help you plan for future income and expenditures • A budget can be made for a person, family, group of people, business, government, country, multinational organization or just about anything else that makes and spends money. Budget

3. 7 steps of budgeting

4. Set Realistic Goals Goals for your money will help you make smart spending choices. Ask yourself: What do I want my finances to look like in one year? What’s important to me and start here.

5. Separate Needs and Wants Do I want this or do I need it? Ask yourself: Set clear priorities for yourself and the decisions become easier to make. Can I live without it? Will spending this money get me closer to my financial goals or further away?

6. Identify your Income and Expenses You probably know how much is your monthly income – but do you also know where it all goes? Find out by tracking what you’re spending means expenses. Spend as you normally would, but for a few weeks, jot down every cent you spend. It’s easy and you might be amazed by what you find out. Income a)Fix income b)Variable income Expenses a)Fix income b)Variable income

7. Income • A payment received for goods or services or other sources such as rent or investments is called income. • Your income is the money you earn or receive each week, bi-weekly, monthly. • It includes interest from a checking or savings account. • Including interest from a second job, hobbies items sold from what you made as a hobby, investments, and governmental supplement income.

8. Expenses • Cost or charge, cause or occasion of spending is called expenses. • Expenses are the bills and other things that you spend money on. • For example, the electric bill is an expense • In addition, Expenses can include going out to eat.

9. Design Your Budget When designing a budget, you need to: Determine monthly take-home income, understand bills and expenses, spend less than you make. Make sure that you are not spending more than you make. Balance your budget to accommodate everything you need to pay for. Monthly Budget

10. Put Your Plan into Action Match your spending to when you receive your income. Decide ahead of time what you’ll use each pay cheque for. Ask yourself: Have I allocated money for my necessities (housing, food, utilities, transportation, etc.)? Have I put money aside for my debt payments, unexpected expenses, savings and the fun stuff? This will protect you from going into debt further because you won’t rely on credit to pay for your living expenses. Housing, Food, Utilities, Transportation Income Debt payments, Unexpected expenses Credit card, Insurance

11. Occasional And Seasonal You know that things will “just come up”. Some big expenses like property taxes and insurance premiums come up only once or twice a year. Others are seasonal, such as school clothes in the fall and holiday gifts in December. Set money aside to pay for these expenses so you can afford them without going into debt.

12. Track your progress At the end of each month, you should re-evaluate your budget. Compare your actual expenses and income to your budget and make appropriate adjustments. Income Expenses Saving

13. End of the Budget Once your budget is done, things are bound to change. They always do. So stay flexible. And remember, a budget is only a guideline. It doesn't factor in non-financial considerations that can result from drastic changes in spending habits.