How To Budget Your Money Ann House, MS, CFCS

Why should I budget my money? Make your money go where you want it to go Pay off debt Resist the urge to overspend Make your money work for you Budgeting your money will help you make smart money choices:

Budget Wisely Being smart about money can help you : Start saving Finance a higher education Buy a house Build a retirement fund Improve the quality of your life

Steps for Making a Budget Total monthly income Track expenses Compare income to expenses Evaluate and adjust

Total Your Monthly Earnings Bonus pay Dividends and interest Commissions Alimony and/or child support Public assistance Pension or retirement income List your salary or self-employment wages as well as any other income you receive, such as:

Fixed Expenses A fixed expense is a cost or obligation that occurs regularly and doesn’t vary in amount.

List Fixed Expenses Rent/mortgage Car payment Insurance Groceries Utilities It’s important to know where your money is going. Make a list of all your fixed expenses:

Variable Expenses A variable expense is a cost or obligation that occurs regularly, but may vary in amount.

Examples of Variable Expenses Car repair Dentist Lawn care Holidays Lessons Magazines Recreation Travel Sports Vacation Pets Insurance Hobbies Birthdays Contributions

List Variable Expenses Write down all variable expenses for one month, even small ones. This is important – it will help you understand your spending habits Write down every purchase, even cash purchases You may be surprised at how much you spend in each category

Discretionary Expenses Discretionary expenses are your indulgences – things you splurge on but that you can live without.

List Discretionary Expenses Restaurants Massage Manicure Concert tickets Look at bank/credit card statements and estimate expenses for cash purchases or keep a daily log to track these expenses. Examples:

Compare Expenses to Income Which is higher, your income or expenses? If you’re spending more than you’re bringing home each month, you have a deficit. If you’re spending less than you’re bringing home each month, you have a surplus.

If You Have a Deficit If your income is less than your outgo, begin cutting back on nonessentials: Spend less on variable expenses. Use cash instead of credit cards. Be realistic—take control of your spending now.

Use the Step-Down Method Instead of drastically cutting things out of your lifestyle, try the Step-Down method. If your family has a tradition of going to a movie and dinner every week, try renting a movie and eating popcorn.

The Step-Down Method If a haircut at a salon normally costs $15, get a $5 haircut at a beauty college instead. If you enjoy winter sports, try snowshoeing instead of skiing. Offer your services in place of a gift, like babysitting for your sister for a night out.

Tips for Saving $$$ from America Saves Save $.50 a day in loose change$15 Bring lunch to work ($5/day) $100 Cut soda pop consumption (60¢ day)$18 Eat out 4 fewer times a month$60 Eliminate premium cable channels$20 Buy grocery store brands$10 Avoid credit card late fee$25

If You Have a Surplus Saving is the key to a successful financial future. Direct your savings toward your primary objectives: Emergency funds Child’s education Home ownership Retirement

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Trish Cutler F. Dean Miner, Jr. Credits: