Spending in the Dark
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Transcript of Spending in the Dark
SPENDING IN THE DARK
Bill TaylorUW Extension
Northeast Area Community Development Educator
CHRISTMAS IS COMING!!How many $$ can you afford?How much did you spend last
year?How much do you have set aside
for Christmas spending?How much can you afford to set
aside next year for Christmas spending?
OTHER SPECIAL EVENTSHow do you plan spending for:
◦Birthdays?◦Vacations?◦Graduation?◦Etc.
PERIODIC SPENDINGHow do you plan for larger
expenses that only happen now and then?◦i.e.
Property taxes Car license Car and homeowner’s insurance Major repairs or maintenance
LIGHTING UP THE DARK
Unless you use some proven methods, handling these types of expenses is like shooting in the dark at a moving target.
TRACK YOUR SPENDING
You are spending in the dark until you know what your NEEDS and WANTS are costing you
THE DARK
THE DAWNINGTrack your expenses
◦Save a receipt for EVERY purchase◦For 3 months – for average and
accuracy◦Every nickel, dime, and dollar
Write yourself a paper receipt when you don’t get one from the vending machine, etc.
◦Every week sit down with your receipts and record your expenditures on a spending record, within categories
ENTERING EXPENSESEnter weeklyTotal monthly
◦Add all the category totals to check your total spending for the month
SET GOALS
FINANCIAL GOALSDetermine your major household
financial goals◦i.e. – down payment on a home,
paying off debts, new car, etc.◦List them◦Determine a time line or deadline for
each◦Determine a cost for each◦Prioritize – which comes first?
KEYKey to goal accomplishment:
◦WRITE THEM DOWN◦REVIEW THEM EVERY TIME YOU PAY BILLS
They become part of your subconscious mindset
ESTABLISH BUDGET
DEVELOPING A BUDGET
Most accurate after 3 months of tracking expenses◦But you don’t have to wait 3 months
to startList total anticipated income for
an average monthList anticipated expenses for an
average month◦Divide the expenses into groups to
help in deciding how much they will be
EXPENSESTwo ways to group
◦Needs vs. Wants Needs – what you have to have to live
Basic food, rent/mortgage, basic transportation, minimal clothes, medical, insurance, etc.
Wants – extras for comfort and enjoyment Entertainment, electronics, snacks, knick
knacks, eating out, etc. Be careful you don’t justify wants as
needs Needs must be paid before wants are
considered
EXPENSES (cont.)
Two ways to group (cont.)
◦Fixed vs. Variable Fixed – the same each month
Few basic bills Relatively easy to list
i.e. rent, housing payment, car payment, insurance, child care, etc.
Variable – varies month to month i.e. food, clothing, medical, entertainment, gas
& oil, etc. Must track over several months to be accurate
Repeat whenever situation changes or the budget needs major adjustments
PERIODIC EXPENSESList those periodic expenses we
started the lesson discussing◦Determine how much you need or
want to spend on each i.e. bi-annual property taxes - $1000,
Christmas gifts - $500
PERIODIC EXPENSES (cont.)
◦Determine how many months you have to put money away for each and divide that number into the total amount Property tax - $1000 ÷ 6 mo. = $167/mo. Christmas gifts
Saving all year - $500 ÷12 mo. = $42/mo. Starting in August - $500 ÷ 4 mo. = $125/mo.
Decide whether the periodic expense is a fixed or a variable expense and list the monthly amount in that group
BUDGET COMPLETIONList anticipated:
◦ Income Total
◦Fixed Expenses Total
◦Variable Expenses Total
Subtract total Fixed & Variable expenses from total Income◦ Is there enough income to cover the
expenses?
NEGATIVE BALANCEIf final budget figure is a
negative, you MUST change something◦Increase income◦Decrease expenses◦Dip into savings - this can’t continue
Next month: December 5 @ 7:00 p.m.: Communication about Finances and Estate Planningby Cole Ehmke, Extension EducatorGo to http://www.uwyo.edu/ces/money/