budgeting power point presentation

Budgeting and Financial Priorities

Budgeting and

Establishing Financial

Priorities

The PICPA• Pennsylvania Institute of Certified Public

Accountants• The PICPA is a professional association of

more than 22,000 members working together to improve the profession and serve the public interest.


Colleen Kuczynski

Changed 20,000 to 22,00

Financial Planning Process• Identify your values and goals• Develop a strategy to achieve those goals• Consider you current finances, risk tolerance,

and time horizons• Analyze all the factors that may arise while you

try to meet your goals


Prioritize Your Money• What are your needs?• What are your wants?• *Imagine you are financially secure and have more than

enough money to take care of your needs – now and in the future.– How would you live your life?– What would you do with your money?– Describe a life that is complete and fulfilling.

*Developed by George Kinder and the Kinder Institute of Life PlanningBudgeting and Financial Priorities

Possible First Priorities• Shelter– Apartment or house

• Transportation– Car or public transportation

• Health insurance• Food and clothing• College education


Possible Second Priorities • Budgeting and debt management• Creating an emergency fund• Saving for a vacation• Saving for a big-ticket item (e.g., a large screen

TV)


Goal in Budgeting• Income less expenses equals positive cash

flow• Positive cash flow can be used for:– A financial cushion– Debt repayment– Guilt-free indulgences– Charitable endeavors


Budgeting Basics• Assess yourself:– What is working? – Where can I improve?– Where am I today, and where do I want to

be in the future?


Budgeting• Concentrate on wealth accumulation– How much you earn has almost no

bearing on whether or not you will build wealth and meet your financial goals.

– It doesn’t matter how much you make, it matters how much you spend.


Recurring Fixed Expenses• Expenses that generally do not keep us from

saving more. They are easily tracked and the amount can usually be predicted.– Not necessarily “mandatory” expenses


Discretionary Expenses• Not as predictable but much more

manageable in terms of reducing spending and implementing budgeting guidelines for yourself and your family.


Unexpected Expenses• Why a cushion in your budget is needed– Set aside some of your earnings for the unexpected

things that come up in life:• Loss of a job• Car accident• Severe health problem

– Set up a separate savings account for your emergency fund.


Balancing Debt and Savings • Don’t wait until your debt is paid off to start

saving!• Determine how much potential positive cash

flow you have available, and allocate between debt repayment and savings.


Emergency Savings• In your savings fund you should have at least

enough money to cover three months of expenses.• Keep the savings liquid.– Cash savings accounting– Money market


Saving Priority Examples• Long-term goal: retirement accounts, saving

for college• Short-term goal: vacation, home

improvements, car purchase• Plan ahead for the next few years


Savings Tips• Pay cash instead of credit—this makes the

money you’re spending more tangible.• Never spend more than $100 (for example)

without taking 48 hours to think about it. This will help with impulsive spending.


Take Action• Decide how much to allocate to savings and

debt repayment goals.• Set up savings and debt payments automatically.– Payroll deductions directly to checking and

savings accounts– Automatic banking payments– Automatic transfers


Take Action• Other things won’t get in the way if the plan has

been systemized.• If you wait to save what’s “left over” after spending,

nothing will be there.• Pay yourself (your goals) first every month, before

expenses start to add up.• Track all spending in a software program (Microsoft

Excel spreadsheet, Quicken, etc.)


Questions?


budgeting power point presentation

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