how to budget your money ann house, ms, cfcs. why should i budget my money? make your money go where...
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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
• 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
Additional Sponsors:
• Trish Cutler• F. Dean Miner, Jr.
Credits: