Basic Financial Information for Life Live like no one else so that someday you can live like no one else Dave Ramsey

The Basics 1.) Create a budget 2.) Have an emergency fund 3.) Live within your means – House, Car, etc. 4.) Avoid debt at all costs – Pay off as soon as possible 5.) Have a term life insurance policy – What is this? 6.) Save for retirement 7.) Save for your kids college

Creating a Budget Why is budgeting so important? Since budgeting allows you to create a spending plan for your money, it ensures that you will always have enough money for the things you need and the things that are important to you. Budgeting is simply balancing your expenses with your income. If they don't balance and you spend more than you make, you will have a problem. Many people don't realize that they spend more than they earn and slowly sink deeper into debt every year.

Creating a Budget Budget Forecasting and Planning Once you create your first budget, begin to use it and get a good feel for how it can keep your finances on track, you may want to map out your spending plan or budget for 6 months to a year down the road. you can easily forecast which months your finances may be tight and which ones you'll have extra money.  You can then look for ways to even out the highs and lows in your finances so that things can be more manageable and pleasant.

How to Budget Six steps for Success Step 1: Setting Goals Before you can begin to manage your money, you need to identify what is important to you. Write down what is important to you and use your list to help you determine goals for your money. Step 2: Identifying Income and Expenses Start by making a list of all your household income sources and the amounts. Include everything: wages (after taxes), commissions, self– employment income, child tax benefits, pensions, child maintenance & spousal support, and other regular income.

How to Budget Six steps for Success Step 2: Identifying Income and Expenses Cont’d Now it’s time to record your spending. Spending includes everything you spend your money on. Some of our spending is on a weekly or monthly basis, e.g. fuel for the car, groceries, paying utility bills. There are also seasonal or annual expenses that need to be accounted for in our budget, e.g. gifts, vet bills, holidays, home repair, new glasses or clothing. To calculate monthly amounts for your annual expenses, simply divide the amount that you spend each year on these items by 12. It may not be easy at times or you may forget to record some items. However, tracking is a very important part of identifying your expenses.

How to Budget Six steps for Success Step 3: Separate Needs from Wants As people track their spending, they discover that some of their money gets used for things they really don’t need. Instead, they merely want them and often buy them impulsively. Step 4: Design Your Budget Relax, your budget is your spending plan – it will allow you to live within your means, avoid the stress of money troubles and give you the freedom to make choices with what you have. will allow you to map your way to reaching your goals.

How to Budget Six steps for Success Step 5: Put Your Plan into Action If you are paid every two weeks, then align your spending to a two-week schedule; if monthly, then a monthly schedule. Step 6: Looking Ahead Any good plan must involve monitoring, periodic review, and occasional re-evaluation. It will take a month to start falling into place. During the second month, you will work out some of the kinks By the third month, your spending plan should be up and running.

Creating a Home Budget Use this link to prepare your home budget Making a home Budget Your fictitious income will be 5,000 per month

Credit vs. Cash As a rule of thumb, I would always say cash is better but Credit cards can be valuable on occasion. Cash Pros There’s no denying the convenience of cash If you only spend the cash you have, you can’t carry a balance and won’t pay interest on purchases. less likely to overspend.

Credit vs. Cash Cash Cons Most vulnerable to theft. It’s harder to be prepared for an emergency. Some people say they are more likely to overspend when they have cash in their wallet because it makes them “feel rich.”

Credit vs. Cash Credit Pros Can be a more convenient method of payment than using cash. Conduct transactions online and over the phone. You may earn cash rewards just by making purchases. You’re covered in an emergency.

Credit vs. Cash Credit Cons Credit cards require discipline. If you don’t pay your entire statement balance in full and on time every month, you will be charged interest on your purchases. Using the link below and the following numbers, determine your debt repayment: Balance owed – $2,000 Interest Rate – 18% Expected Monthly Payment - $50.00 Desired Payoff Timeframe – 12 Months Interest Calculator

Baby Steps For Living Dave Ramsey If you follow these 7 steps throughout your lifetime, you will have what is known as Financial Freedom!!! Step 1 – Emergency Fund Create a $1,000 Emergency Fund first! Income >$40,000 - $1,000 Income</=$20,000 - $500.00 Allows for any small emergencies that might arise Eliminates use of credit card!!!!!

Baby Steps For Living Dave Ramsey Step 2 – Pay off all debt using Debt Snowball Begin with smallest debt owed and progress to larger debts owed. Crush the smallest debt while making minimum payments on larger debts After one debt is payed off, go to next smallest! Will require discipline Beans and rice Cheap car

Baby Steps For Living Dave Ramsey Step 3 – 3-6 months of expenses in savings Calculate, from your budget, what these expenses would be Save, Save, Save!!!!!!!! Emergencies always happen Lost job Appliance replacement Health issues, etc.

Baby Steps For Living Dave Ramsey Step 4 – Invest 15% of household income into Roth IRA’S and pre-tax retirement Now it’s time to get serious about retirement With no payments and a fully funded emergency fund, put 15% of your income toward the retirement of your dreams! Do you want to work until your 70, 75, 80?????????

Baby Steps For Living Dave Ramsey Step 5 – Save for College With college expenses and tuition continuing to rise now is the time to save Saving now will put you ahead of the game when your kids graduate from high school You can use 529 college savings funds or ESA’s (education Savings Accounts) These are pre-taxed – meaning that they withdraw money from your paychecks before taxes are taken out So, if you have $100.00 taken out of paycheck, you will only see about $75.00 missing from your pay!!!!

Baby Steps For Living Dave Ramsey Step 6 – Pay off Home Early There's only one more debt standing in the way of freedom from all debt—paying off the mortgage. Baby Step 6 is the big one! Can you imagine life with no house payment? Any extra money you can put toward the mortgage will result in tens of thousands of dollars of interest saved and months (or even years) of not having a payment hanging over your head. Always save for a down payment, at least 20%, and choose a 15 year mortgage.

Baby Steps For Living Dave Ramsey Results…… This journey to debt freedom is a marathon. Stay focused and intense, and keep a steady pace. And don't forget to celebrate each little victory along the way. Don’t forget, once you build wealth, it’s then time to live and give like no one else!!!!