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BUDGETS

BUDGETS. Budget—a plan for spending and saving your funds based on your income and expenses. WHY MAKE A BUDGET?. A budget can help you: Avoid running out of money between paychecks Evaluate your spending habits and make better choices Set aside savings for unexpected expenses

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BUDGETS

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  1. BUDGETS Budget—a plan for spending and saving your funds based on your income and expenses

  2. WHY MAKE A BUDGET? A budget can help you: • Avoid running out of money between paychecks • Evaluate your spending habits and make better choices • Set aside savings for unexpected expenses • Work toward your financial goals

  3. PARTS OF A BUDGET INCOME Gross Income Net Income EXPENSES Fixed expenses Variable expenses Discretionary expenses

  4. FIXED EXPENSES Fixed expenses—regular payments that do NOT vary in amount EXAMPLES: Rent Car Loan

  5. Variable Expenses Variable expenses—expenses that normally increase or decrease EXAMPLES: Groceries Clothing Utility bills Reminder: The more accurate you estimate expenses the more effective your budget will be.

  6. METHODS FOR ESTIMATING EXPENSES • Your past spending • Expert recommendations • National averages

  7. SAVINGS Plan for savings! Savings help you reach long-term financial goals! Savings are really a means of paying yourself!

  8. BALANCE THE BUDGET Formula: INCOME - EXPENSES 0

  9. RECOMMENDATIONS

  10. USE THE BUDGET • Discipline yourself • Track your income • Track your expenses

  11. EVALUATE THE BUDGET • Adjust monthly • Adjust annually • Examine circumstances • Re-evaluate goals • Check flexibility

  12. SAMPLE BUDGET • SEE DOCUMENT Sample budget

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