1. BUDGETING, SCHMUDGETING…WHY DO I NEED A SPENDING PLAN? By Julie Chapman for

2. SPENDING PLAN – WHAT? EXPENSES FOR THE TYPICAL AMERICAN FAMILY LOOK SOMETHING LIKE THIS: 30% HOUSING 20 % TRANSPORTATION 15% FOOD 18% OTHER 10% SAVINGS 7% INSURANCE GIFTS, CLOTHING, HAIR CAIR, PERSONAL CARE, ENTERTAINMENT, ETC

3. SPENDING PLAN – WHAT? WHAT IS A SPENDING PLAN? A METHOD OF TRACKING PLANNED AND ACTUAL INCOME AND EXPENSES FOR A SPECIFIED TIME, USUALLY A MONTH WHO SHOULD HAVE A SPENDING PLAN? EVERYONE! REMEMBER FAILING TO PLAN AND PLANNING TO FAIL???

4. SPENDING PLAN – WHAT? WHAT ARE THE COMPONENTS OF A SPENDING PLAN?  INCOME: any money coming in  EXPENSES: money being paid out  FIXED EXPENSES: DO NOT CHANGE AND/OR ARE REQUIRED EACH MONTH  VARIABLE EXPENSES: OPTIONAL EXPENSES; AMOUNT VARIES

5. SPENDING PLAN – WHAT? CHECK FOR UNDERSTANDING IDENTIFY THE FOLLOWING AS EITHER INCOME, FIXED EXPENSE OR VARIABLE EXPENSE: CABLE TV BILL FIXED EXPENSE BIRTHDAY CHECK TO YOU INCOME

6. SPENDING PLAN – WHAT? RENT FIXED EXPENSE UTILITIES FIXED EXPENSE GROCERIES VARIABLE EXPENSE

7. SPENDING PLAN – WHAT? PAYCHECK INCOME SNACKS AT SCHOOL VARIABLE EXPENSE GAS FOR YOUR CAR VARIABLE EXPENSE CELL PHONE BILL FIXED EXPENSE

8. SPENDING PLAN – WHAT? WHEN FORMULATING YOUR SPENDING PLAN: INCOME – EXPENSES MUST = ZERO ( IF YOU HAVE MONEY LEFT OVER, PUT IT IN SAVINGS! IF YOU DON’T HAVE ENOUGH TO COVER YOUR EXPENSES, YOU MUST CHANGE SOME OF THOSE EXPENSES.) MANY PEOPLE SPEND MORE THAN THEY MAKE SO THEIR EXPENSES ARE GREATER THAN THEIR INCOME! THIS MEANS DEBT! YOU MUST FIGURE OUT HOW TO LIVE ON WHAT YOU MAKE AND STAY OUT OF DEBT! THIS IS ONE OF THE KEYS TO A HAPPY LIFE!

9. SPENDING PLAN – HOW? FIVE STEP SPENDING PLAN 1.TRACK CURRENT INCOME AND EXPENSES 2.CREATE YOUR INCOME AND EXPENSE CATEGORIES AND ALLOCATE EVERY DOLLAR FROM #1 TO THE CATEGORIES. EXAMINE WHERE YOUR MONEY GOES! 3.BASED ON THE TRACKING DONE IN #1, ALLOCATE AMOUNTS TO YOUR INCOME AND EXPENSE CATEGORIES FOR THE COMING MONTH 4.START YOUR PLAN 5.EVALUATE YOUR PLAN AND MAKE ADJUSTMENTS

10. SPENDING PLAN – HOW? STEP 1. TRACK CURRENT INCOME AND EXPENSES YOU HAVE TO KNOW WHERE YOUR MONEY IS GOING BEFORE YOU CAN TRY TO CONTROL IT. KEEP UP WITH EVERY PENNY YOU SPEND FOR AT LEAST A WEEK. A MONTH WILL GIVE AN EVEN CLEARER PICTURE WRITE DOWN EVERY DOLLAR YOU BRING IN FOR THE SAME PERIOD. (unfortunately, this is usually way easier)

11. SPENDING PLAN – HOW? STEP 1. TRACK CURRENT INCOME AND EXPENSES WRITE IT DOWN ON PAPER USE AN APP ON YOUR SMARTPHONE USE SOFTWARE IN YOUR COMPUTER IT DOESN’T MATTER HOW YOU DO IT, JUST DO WHAT WORKS FOR YOU!

12. SPENDING PLAN – HOW? STEP 2. CREATE YOUR INCOME AND EXPENSE CATEGORIES WILL REFLECT YOUR OWN, PERSONAL LIFESTYLE, BUT CERTAIN CATEGORIES WILL APPLY TO MOST INCOME – USUALLY WAGES FROM A JOB; USE YOUR NET PAY OTHER INCOME – GIFTS, INVESTMENTS

13. SPENDING PLAN – HOW? STEP 2. CREATE YOUR INCOME AND EXPENSE CATEGORIES EXPENSES (SUGGESTED ONLY; YOURS MAY DIFFER)  SAVINGS (PAY YOURSELF FIRST)  HOUSING (HOUSE PAYMENT OR RENT)  UTILITIES  TRANSPORTATION  INSURANCE  SAVINGS  FOOD  ENTERTAINMENT  OTHER

14. SPENDING PLAN – HOW? 3. BASED ON THE TRACKING DONE IN #1, ALLOCATE AMOUNTS TO YOUR INCOME AND EXPENSE CATEGORIES FOR THE COMING MONTH  THIS IS THE HARD PART. THE FIRST TIME YOU DO THIS, IT MAY SEEM LIKE YOU ARE JUST GUESSING. STAY WITH IT. IT GETS EASIER!  YOU MAY ALSO USE THE “TYPICAL AMERICAN” EXPENSE PERCENTAGES  HOUSING 30%- TRANSPORTATION – 20%  FOOD 15%- INSURANCE – 7%  SAVINGS 10%- OTHER 18% (MORE DETAIL HERE)

15. SPENDING PLAN – HOW? 4. START YOUR PLAN CONTINUE TRACKING INCOME AND EXPENSES NOW ENTER THEM INTO THE CATEGORIES IN YOUR SPENDING PLAN USE PENCIL AND PAPER or SMARTPHONE APP or SOFTWARE ON YOUR COMPUTER

16. SPENDING PLAN – HOW? 4. START YOUR PLAN YOU MUST USE CONTROL HERE! IF YOU ARE OVERSPENDING IN ONE CATEGORY, CUT BACK OR SPEND LESS IN ANOTHER CATEGORY. IF YOU DON’T USE SOME TYPE OF CONTROL, YOU HAVE WASTED YOUR TIME!!

17. SPENDING PLAN – HOW? 5. EVALUATE YOUR PLAN AND MAKE ADJUSTMENTS AT THE END OF THE MONTH, YOU MUST ANALYZE YOUR PLAN AND DECIDE IF ADJUSTMENTS ARE NECESSARY.  DID YOU OVERSPEND IN ONE CATEGORY? WAS IT NECESSARY OVERSPENDING? IF SO, YOU MAY NEED TO CHANGE THE AMOUNT BUDGETED! IF NOT, YOU NEED TO EXERCISE MORE CONTROL IN THE COMING MONTH.  SPENDING PLAN WILL NEED ADJUSTMENTS FOR AT LEASE SEVERAL MONTHS. EXPECT THIS AND DON’T GET DISCOURAGED

18. SPENDING PLAN – HOW? 5. EVALUATE YOUR PLAN AND MAKE ADJUSTMENTS  KEEPING A SPENDING PLAN IS A HABIT! START NOW WHILE YOUR FINANCIAL SITUATION IS FAIRLY SIMPLE.  DON’T SAY “I DON’T NEED TO DO THIS NOW.”  START NOW AND IT WILL BE EASY FOR YOU WHEN YOU ARE ON LIVING ON YOUR ON!

19. SPENDING PLAN – HOW? LETS PRACTICE CREATING SPENDING PLANS!