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Published byBridget McKenzie Modified over 8 years ago
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A budget is a written record of the money that flows in and out of your household or pocket every month.
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Budgeting is the first step on the road to financial success. Controlling your day to day finances allows you to do the things you want to do.
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A balanced budget is when your expenses do not exceed your income. Start budgeting now – don’t wait until you’re financially “on your feet”, to begin to budget A budget is nothing more than the activity of balancing income vs. expenses.
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If you haven’t budgeted before, or feel at this point don’t have a good idea of where your money is going... For the next month, write down EVERYTHING you spend money on and anytime you receive money.
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Track your expenses Figure out the amount of money you’re spending What do you have to spend? What are you spending that is not a necessity?
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Essential expenses – HAVE to have in order to live Non-essential expenses –DON’T HAVE to have in order to live
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Fixed expenses are expenses that are the same from month to month. Mortgage or rent Insurance – auto & home Car payments Taxes School loans
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Variable expenses change from month to month. Car maintenance Gas Food Electricity, heat Phone
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Non-essential expenses are not necessities. Clothing (new) Books Movies Video games Other items, you want, but don’t need
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At the end of the month, break everything down into categories. Is your income greater than your expenses? YES! – Great, then you can save. NO! – There’s a problem!
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What can you cut out? Eating out too often? Buying things you don’t need?
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Pay yourself first! Use automatic transfers Use payroll deduction Take advantage of your =employer’s retirement plan
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A quick and easy way to save a little money is to toss your spare change into a jar or piggy bank!
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Negative Attitude Lack of motivation Unrealistic expectations Lazy Not consistent with completing daily/weekly Too many wants!
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Identify and write down your financial goals. Financial goals may be: Vacation College New car Down payment for a house Paying off credit card debts
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Short term – less than 1 year Mid term – 1 to 3 years Long term – 3 years or more
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Specific – what is the goal? How much should I save? How long will it take me? Realistic – you can reach it with your resources (time/money)
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Goal: pay off $1500 credit card balance (12% interest) When: within 12 months How much? $134 per month Is that realistic?
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Goal: $5,000 trip to Europe Summer 2015 When: in 18 months How much? $278 per month Is that realistic? Are you making any money by saving in a savings account?
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Goal: $15,000 for a down payment on a home When: in 5 years (60 months) How much? $250 per month Is that realistic?
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In most cases, you can take the amount you want to save and divide by the number of months. Save for $1,000/12months = need to save $84 each month If you misuse credit cards and make monthly payments then you will need to pay off quickly, including extra payments If you want to pay off credit cards or loans which include interest, visit servicecu.org and use the financial calculators.
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