1. Where Does the Money Go?
Chapter 2: Budgeting

2. Budget
You can maximize the amount of satisfaction you get from your money with a money plan or a budget.

3. Budget A detailed financial forecast used to
plan, control, and evaluate your
spending and saving
in order to satisfy immediate needs and reach future goals.

4. Value of a Budget A budget performs three functions:
It is your spending plan.
It becomes the control mechanism that helps you stay on course and meet your spending and saving targets.
It is the basis for evaluating actual spending and comparing it to your plan.

5. Budgeting Process Step One: Forecast Your Income
Step Two: Forecast Your Expenses
Step Three: Balance Your Worksheets
Step Four: Spend According to Your Plan
Step Five: Compare Your Actual Earning & Spending with Your Targets
Step Six: Repeat the Process

6. Step One: Forecast Your Income
Create an Income Worksheet
Categories might include:
Allowance
Salary from Job
Income from Savings Account
Gifts
*Think about what your income each month would be.

7. Step One: Forecast Your Income
You’ve Calculated your Income
So…How Much Money do you have
Available to Spend & Save for the
Month?

8. Step Two: Forecast Your Expenses
Create Worksheets for each of the following:
Fixed Expenses
Rent
Car Payment
Insurance
Savings
Tuition
Goals - Gifts, Vacations, Car

9. Step Two: Forecast Your Expenses
Create Worksheets Continued:
Living Expenses
Utilities (Electric, Phone, Cable, Heat)
Cell Phone
Food
Recreation (Movies, etc.)
Gas
Clothes
Personal Grooming (Hair/Nails)

10. Step Two: Forecast Your Expenses
Think about what your expenses would be for each month.

11. Step Three: Balance Your Worksheets
You are now going to shape your information into a budget!
Subtract the following:
Fixed Expenses
Savings
Living Expenses
From your total monthly income.
*You should end up with a balanced budget
of zero. If not, you need to go back and
adjust some of your spending!

12. Step Four: Spend According to Your Plan
You have created a balanced budget, but now you must spend according to your plan!
Use your budget to control and guide your actual, everyday spending.
For many people, this is the hardest step.

13. Step Five: Compare Your Actual Earning & Spending with Your Targets
Now you need to put your budgeting process to use.
Compare your actual spending to your planned targets to evaluate your spending decisions.
Where does your money go?
In which areas do you need to pay special
attention to expenditures?

14. Step Six: Repeat the Process
Budgeting is not a “thing.” It is a process.
Goal Achievers repeat Steps One through
Five each month.
Goals change, prices rise, your awareness
of your spending habits improves.
The more you use your budget, the easier it
will become and the more successful you will
be!