1. BBI 2O - Budgeting Track-o-matic

2. A budget can help you: keep track of your income and expenses
BBI 2O - Budgeting
A budget can help you:
keep track of your income and expenses
stay on top of your monthly bills
be prepared for unexpected expenses
avoid overspending
figure out how much you need to save to meet your financial goals

3. 5 Components of a Budget…

4. 1. Net Income
List your salary or self-employment income as well as any other income you receive, such as:
Bonus pay
Dividends and interest
Commissions
Alimony and/or child support
Public assistance
Pension or retirement income
While totaling your monthly earnings, don’t overlook such things as bonus pay, commissions or alimony and child support. All income should be tracked.

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

6. 3. Variable Expenses
A variable expense is a cost or obligation that occurs regularly, but may vary in amount.
Groceries
Car repair
Dentist
Lawn care
Holidays
Lessons
Magazines
Travel
Sports & recreation
Vacation
Pets
Hobbies
Birthdays
Charitable donations
Variable expenses include such items as medicines, gasoline, or credit card payment.

7. 4. Discretionary Expenses
Discretionary expenses are your indulgences – things you splurge on but can live without.
To track these expenses, look at bank/credit card statements, estimate expenses for cash purchases or keep a daily log. Examples:
Restaurants
Massage
Manicure
Concert tickets
What are some things you could live without?

8. 5. 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.
The object of a budget is to keep expenses at or below income. Where do you stand?

9. If You Have a Deficit
If your income is less than your outgo, begin cutting back on non-essentials:
Cut discretionary expenses – you don’t need to eat out!
Spend less on variable expenses
Use cash instead of credit cards – it is more difficult to part with cash!
Be realistic—take control of your spending now
Take a look at your spending and become more conscious of what you spend your money on. Spend less every day—cut out restaurants and cook at home; make sack lunches for you and your family; instead of buying books, use the library. Make it a point to spend less every day.

10. Tips for Cutting Expenses…
Cook meals at home instead of eating out
Make tea or coffee at home
Make your own lunch and take it to work/school
Use the library instead of buying books
Use public transportation or carpool
Reduce or eliminate your cable/satellite service
Cut your clothes budget – only shop for items you truly need
Many other tips can be found online!
Take a look at your spending and become more conscious of what you spend your money on. Spend less every day—cut out restaurants and cook at home; make sack lunches for you and your family; instead of buying books, use the library. Make it a point to spend less every day.

11. If You Have a Surplus If your income is greater than your outgo:
Create a plan to eliminate debt. Pay off credit cards first. Pay off lines of credit and other loans. Put extra money on your mortgage.
Consider your short-term goals. Would you like to make a purchase? Re-model your home? Take a trip?
Consider your long-term goals. A new house? A new car? Education for your children? Early retirement?
Take a look at your spending and become more conscious of what you spend your money on. Spend less every day—cut out restaurants and cook at home; make sack lunches for you and your family; instead of buying books, use the library. Make it a point to spend less every day.

12. Preparing a Personal Budget
Step 1: Calculate the amount of expected income.
Step 2: Calculate expenses.
Include regularly occurring fixed expenses.
Take a look at your spending and become more conscious of what you spend your money on. Spend less every day—cut out restaurants and cook at home; make sack lunches for you and your family; instead of buying books, use the library. Make it a point to spend less every day.
Estimate variable expenses that change monthly.
Step 3: Calculate amount left over.

13. Steps for Making a Budget
Total monthly income
Track expenses
Compare income to expenses
Evaluate and adjust
It’s difficult to manage your finances if you don’t know how much money you have or where it’s being spent. A budget has two parts – income and expenses. Track and list your expenses and then compare that to your income.