Budgeting

1. Budgeting Ch. 6

2. Types of financial goals • Budget – plan for dividing your income among spending & savings. • Short-term goal – 1-2 years • Ex. Purchase a TV, visit a long-distance friend • Long-term goal – 2+ years • Career, education, home, business, family, retirement Short-term leads to long-term.

3. Your goals affect others • Current family goals • Future family goals • Community involvement

4. Tracking income & expenses • See where your money goes • Income – paycheck, allowance, gifts • Spending – receipts, statements, checks • Filing system • Effective record keeping • organized, complete & easy to find

5. Fixed & Flexible Expenses • Fixed – amounts you have committed to spend. • Ex. Car payment, rent, power, phone, insurance • Flexible – choose to spend. • Ex – clothing, shoes, luxury goods – designer vs. non-name brand, entertainment.

6. Budget Worksheet • Budget worksheet – a planning document where you record expected income, actual income & short term spending. • Create a worksheet • 4 columns • 1st sources of income, categories of spending & savings • Expected amounts to receive, spend or save. • Actual amounts • The difference between expected & actual

7. 2) Estimate your income • Uneven income – gifts & bonuses • Income is real • 3. Estimate your Expenses & savings • Plan for uneven expenses • Plan your savings • 4. Record actual income & expenses • 5. Calculate the differences