Roadmap to Financial Stability: Personal & Household Budgeting

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Outline of Session

Budgeting FundamentalsBudgeting Fundamentals

Budgeting MythsBudgeting Myths

Expense TrackingExpense Tracking

Financial HabitsFinancial Habits

Income

• Gross vs. Net• Deductions• Net Income Ranges

Income

• Gross vs. Net• Deductions• Net Income Ranges• Who Uses Gross?

Who Uses Net?

Income

• Gross vs. Net• Deductions• Net Income Ranges• Who Uses Gross?

Who Uses Net?–Government–Lenders–We do

Needs versus Wants

• Justify overspending on so-called “needs”

Needs versus Wants

• 3 Needs:–Shelter & Security–Food & Water–Protective Clothing

Needs versus Wants

• 3 Needs:–Shelter & Security–Food & Water–Protective Clothing

• Healthcare & Children’s Needs

Types of ExpensesTypes of Expenses

• FixedFixed

• VariableVariable

• PeriodicPeriodic

Same every monthSame every month• FixedFixed

Change from month Change from month to monthto month

Same every monthSame every month• FixedFixed

Change from month Change from month to monthto month

Same every monthSame every month

Occur Occur irregularlyirregularly

• FixedFixed

Balance Checkbook

• Keep Register Keep Register CurrentCurrent

• Debit Cards!Debit Cards!

• Compare to Compare to StatementsStatements

• Get Above $0!!!Get Above $0!!!

Basics of a Budget

• What you EXPECT to earn.What you EXPECT to earn.

• What you EXPECT to What you EXPECT to spend.spend.

Basics of a Budget

• What you EXPECT to earn.What you EXPECT to earn.

• What you EXPECT to What you EXPECT to spend.spend.

• But is that all?!But is that all?!

1. Write goals2. Track expenses3. Prioritize expenses4. Estimate monthly net

income5. Add up monthly

expenses6. Income must be greater

than expenses

Steps To Making A Budget

Financial Myths and Realities

Why some people DON’T Budget

MYTHMYTH REALITYREALITY

I just NEED MORE MONEY!

It’s NOT how much you earn. It’s how much you keep!

Too RESTRICTIVE!

Greater CONTROL & FREEDOM

Too RESTRICTIVE!

Balancing Balancing checkbook is checkbook is good enoughgood enough

Balancing checkbook is good enough

Budgets plan for Budgets plan for FUTURE, not pastFUTURE, not past

No time!No time!

No time!No time! Ounce of Ounce of PREVENTION is PREVENTION is worth a POUND of worth a POUND of curecure

I didn’t cause I didn’t cause these problems.these problems.

Nobody wants you Nobody wants you to succeed like to succeed like you!you!

•Be honest with yourself!•Write 3 motivating goals.•Be specific!

• Estimate monthly net income1. Salary, wages2. Assistance (social security, state

• Prioritize Your Expenses

EXPENSES PriorityBUDGET

(Projected)ACTUAL (Spent)

EMERGENCY SAVINGS

HOUSING

UTILITIES

• Prioritize Your Expenses• Estimate how much you will spend during

the month.1. Savings2. Housing3. Utilities

EXPENSES PriorityBUDGET

(Projected)ACTUAL (Spent)

EMERGENCY SAVINGS

HOUSING

UTILITIES

Compare Income With Your Expenses

•See Budget Planner chart for suggested spending guides. NOT set in stone.

Monthly Income vs. Expenses

$1,000

$1,500

$2,000

$2,500

Net Income Expenses

Positive Net Income Negative Net IncomeMonthly Income vs. Expenses

$1,000

$1,500

$2,000

$2,500

Net Income Expenses

Consider your“Budget Busters”

$6.50/weekday=$1,700/Yr

• Fast Food

$30/week=$1,560/Yr

• Fast Food• Entertainment

$4.50/weekday=$1,200/Yr

• Fast Food• Entertainment• Latté/Gourmet Coffee

• Fast Food• Entertainment• Latté/Gourmet Coffee• Tobacco

$4.50/day=$1,650/Yr

• Fast Food• Entertainment• Latté/Gourmet Coffee• Tobacco• Cable/Satellite TV

$83.50/month=$1,000/Yr

$27/week=$1,400/Yr

• Fast Food• Entertainment• Latté/Gourmet Coffee• Tobacco• Cable/Satellite TV• Housekeeper

$75/month=$900/Yr

• Fast Food• Entertainment• Latté/Gourmet Coffee• Tobacco• Cable/Satellite TV• Housekeeper• Cell Phone

$10/week=$520/Yr

• Fast Food• Entertainment• Latté/Gourmet Coffee• Tobacco• Cable/Satellite TV• Housekeeper• Cell Phone• Lottery

Set goals on how to minimize your budget Set goals on how to minimize your budget bustersbusters

1. Keep good records – keep receipts

Tracking Your Expenses

1. Keep good records – keep receipts2. Wrap debit card receipts around card

1. Keep good records – keep receipts2. Wrap debit card receipts around card3. Set up a filing system: Envelopes,

cabinets, scanning, files, etc…

At month’s end…1. Add up the categorized receipts for

each category

EXPENSES BUDGET ACTUAL

ENTERTAINMENT $100MONTHLY DEBT PAYMENTS $175

EXPENSES TOTAL (enter below)

$200$260$275

each category2. Compare with the projected budget

EXPENSES BUDGET ACTUAL

ENTERTAINMENT $100MONTHLY DEBT PAYMENTS $175

EXPENSES TOTAL (enter below)

$200$260$275

each category2. Compare with the projected budget3. Adjust budget AND/OR behaviors

Self-Affirmation

Please Repeat After Me:Please Repeat After Me:

Self-Affirmation

I Live by a Budget!I Live by a Budget!

Self-Affirmation

I Live by a I Live by a Budget!Budget!

Self-Affirmation

I Live by a I Live by a Budget!Budget!

More Financial Habits

SAVINGS PLAN– Not just an Account– Pay yourself first (10-15%

of take home)– Get to $1,000– Goal of 3-6 months of

survival expenses– Consistency more

important than amount

For Better or for Worse•Write down MUTUAL Financial Goals•15 min Weekly Review Together

Family Financial Habits

Children• Let them see you budgeting

• Let them help with priorities

• Connect behavior to consequences

Consider Your Other Habits…

•Weekly menu?

•Shop with list & calculator?

•Carrots

•Juice•Soap

•Weekly menu?

•Shop regularly?

•Weekly menu?

•Shop regularly?

•Cash or plastic?

Thank You!Thank You!

Roadmap to Financial Stability: Personal & Household Budgeting

Economy & Finance

Transcript of Roadmap to Financial Stability: Personal & Household Budgeting

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