Personal Finance and Budgeting

&Tips for Surviving on a Low

Income

Budgeting -- Getting Started

• The Goal “Live Within Our Means”• Needs and Wants

• Obstacles• Social Pressure to Own Things• More Is Better• Use Credit to Delay Decisions• No Surplus to Cope With the Unexpected

• Always Adjusting Our Level of Spending to Increased Income

• Danger Point – Income = Outgo–Make More Money or Spend Less!

Steps to Budgeting• Step One–What is the present level of spending

• Step Two– Establishing Budgeting Goals

• Step Three – Developing a Control System– Sounding the Alarm

• Things to avoid– Discouragement– Legalism– Over-correction

Categories of Expenses• Housing• Food• Autos• Information/Data• Debts• Entertainment/Recreation• Clothing• Savings• Medical Expenses (insurance)• Miscellaneous• School/Child Care• Investments

cOnTrOl SyStEms• The Envelope System

• The Guideline Technique– Establish a level of spending in a

category and keep to it– Spend on the basis of the bottom line in

the category, not your checking account– Surplus goes to savings, not mad

money

Things that you can live without and survive!• Cell Phone – Pay as you go – buy the

phone upfront• Extended or Digital Cable– Basic cable is not really that bad– HULU, HULU +, Amazon Prime

• DSL or Broadband (sort of)• A new car

Recreation Vs. Entertainment• Recreation involves physical activity and

engagement– Recreation involves purchase of equipment,

then costs tend to be low• Buy used equipment

– Recreation is regenerative and good for us

• Entertainment tends to be passive and expensive– Eating out is entertainment, passive, and

expensive!!!– Going to a game instead of playing a game– Shopping is often entertainment

• Try Free Stuff

New Vs. Used?• Cars– Lease is hardly ever a good idea– No interest loans make new cars more

attractive – especially for popular models– Used car market is flooded with off-lease

vehicles, many very good deals

• Furniture / Appliances– Auctions– Consignment shops– Thrift stores

• Homes

No Impulse Buying• Buy only what you need – even if it’s a

great deal! If you really don’t need it, its not a deal!

• Watch ATM Fees on Cash Hits• Credit Cards Encourage Impulse Buys• When shopping, have a list and stick

to it• Gifts can break the bank• Research items you want on the web

and other places–When buying something think of hidden

costs

Try not to Pay Retail• Store Credit can be Deadly to your budget– even if you receive 10% off of Today’s

Purchase!

• Shop End of Season• Shop Deep Discount Retailers• Brand Names Vs Generic• Deep Discount Grocers

Credit Tips for Low Income Survival• Pay your entire bill every month

– If you can’t you have a long-term budget problem

• Find a low or no annual fee card– Forget gold or platinum cards

• Check your bill for errors• Shop for the lowest rate available (if unable

to pay off!)• If you carry a balance to the next month,

stop using the card– When you find yourself in a hole, quit digging!

• Pay off your highest interest loans/cards first

Food• Eat at home

• Pack your lunch

• If eating out for entertainment, go for lunch

• If you have time, buy fewer convenience foods

• Sometimes the box cake is cheaper than scratch

• Eating together is important socially

Get a Part-Time Job

• Extra income can really make a difference

• Makes a lot of sense if done for – Debt retirement– Relieving a financial pinch

• Great costs associated with the decision to take on more work– Less relationship time– Resentment– Sacrifices