Why should you budget? Help to manage to your money. Help to plan for your future. Ensures that you are able to make ends meet.
What’s budgeting? Establishing a planned level of expenditures,
usually at a fairly detailed level. The goal:
Income > Expenses. Expenditure: an amount of money that is
spent on something
Budgets can be a real‌
Balancing Act!
Wants and Needs WANTS
NEEDS
Going out to eat Movies
Rent Mortgage
Buying clothes when you
Utility Bills Food
Basic Clothing Cell Phone
don’t need them Cell Phone rings Texting Cable TV Computer
Savings
Types of Income… Earned-wages or salaries paid (earned) for
your job. Unearned-Income received that is not a result of your job. Examples: Interest, dividends from stock, birthday money, etc.
Types of Expenses: Fixed Cannot be easily changed. Remain essentially the same from month to month. Examples: Rent, Utility bills, car payment, etc.
Variable: Can be controlled. Change from month to month Examples: Entertainment, Food, Clothing
What We Don’t Want to Happen... What happens if we spend more than we
make? Loss or Debt:
Expenses are greater than revenue
How that happens: Spending too much on entertainment Spending money on wants not needs Not budgeting correctly!
Rank These Expenses In Order: Highest to Lowest Student Loan Telephone Entertainment Transportation Mortgage/Utilities Clothing/Personal Care Food Household Supplies Medicine/ Health Supplies Savings
Sample pie chart of expenses
Always Be Prepared! Emergency Fund money placed in savings to provide for
unpredictable expenses such as medical bills, repairs, or loss of income Having the emergency fund is a great way to put your mind at ease
Forecasting creating a long term budget covering 3 to 5 years
What We DO Want to Happen… What do we make if we have more money
coming in that going out?
Profit: When revenue is greater than expenses Revenue: a term used to describe money that is
earned and received, or will be received
How that happens: Spending more money on NEEDS than on
WANTS Sticking to your BUDGET!
How Do We Keep Track of Our Budget?  Envelope System: store the cash to meet
separate categories of household expenses in physically separate envelopes
 Budget Sheet: a sheet used to estimate revenue and expenses
Envelope System
Budget Sheet
Three More Kinds of Income Gross Income: your earned income BEFORE taxes
Net Income: your earned income AFTER taxes Discretionary Income: money remaining after all bills are paid off. It is income after subtracting taxes and normal expenses.