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BUDGETING. Budget Categories. Income--$$$ coming IN Expenses--$$$ going OUT Fixed Flexible Discretionary Savings (10% of income). Fixed Expenses. Regular Payments (Fixed every month) Rent (Up to 30% of your income) House payment (Up to 30% of your income) Car payment
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Budget Categories • Income--$$$ coming IN • Expenses--$$$ going OUT • Fixed • Flexible • Discretionary • Savings (10% of income)
Fixed Expenses • Regular Payments (Fixed every month) • Rent (Up to 30% of your income) • House payment (Up to 30% of your income) • Car payment • Insurance premiums
Flexible Expenses • Regular Expense (have some control) • Utilities (water, electricity) • Clothing • Groceries
Discretionary Expenses • Spending within your control • Entertainment • Video Games • Cell phone • Cosmetics • Eating Out
Guess Discretionary Expense The Category! Fixed Expense Allowance Income
Fixed Expense Flexible Expense Interest Earned Income Flexible Expense
Fixed Expense Discretionary Discretionary
Steps for Creating a Budget • Evaluate Income • Evaluate Expenses • Record the Numbers! (Excel has some budgeting templates.) • Estimate first, then put in actual numbers as the occur.
Advantages for Creating a Budget • Allowing individuals to plan ahead for expenses • Reducing money-related anxiety • Helping to avoid overspending • Creating a savings plan • Helping to avoid late fees and additional interest charges associated with late payments
Ways to Cut Expenses and Save • Adjust flexible expenses • Plan discretionary expenses • Do not carry cash—too easy to spend • Pay off debt as fast as possible • Control use of credit cards • Pay bills on time • Change jar • Open savings account in another bank
Final Tip ALWAYS PAY YOURSELF FIRST!!! (SAVE!!!) Shoot for 10% of income