Roadmap to Financial Stability: Personal & Household Budgeting

© 04/13/23 National Financial Education Centerat Debt Reduction Services

www.NationalFinancialEducationCenter.org

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Your Your Roadmap to Roadmap to Financial Financial StabilityStability



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Headquartered in Boise,Idaho since 1996Headquartered in Boise,Idaho since 1996

Financial educatorsFinancial educators




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!





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.





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

help)




• 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

$-

$500

$1,000

$1,500

$2,000

$2,500

Net Income Expenses

Positive Net Income Negative Net IncomeMonthly Income vs. Expenses

$-

$500

$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




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

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)

$60

$200$260$275





each category2. Compare with the projected budget

EXPENSES BUDGET ACTUAL

ENTERTAINMENT $100MONTHLY DEBT PAYMENTS $175

EXPENSES TOTAL (enter below)

$60

$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



Family Financial Habits

Children• Let them see you budgeting

• Let them help with priorities

• Connect behavior to consequences



Consider Your Other Habits…





•Weekly menu?





•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