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Building a Better Budget
Building a Better Budget
© 2005 BALANCE FINANCIAL FITNESS PROGRAM
Why Budget?
• Achieve goals• Use money efficiently• Become financially secure
Obstacles to Getting Started
• Feeling there is never enough money• Easy to postpone saving• Hard to confront past decisions
• Goals are overwhelming• Don’t want to make lifestyle changes
Your Lifetime Earnings
$30K $60K $90K
10 years $ 395,400 $ 790,800 $1,186,300
20 years $1,103,600 $2,207,100 $3,310,700
30 years $2,371,700 $4,743,500 $7,115,200
It’s not the size of your paycheck… it’s how you use it.
(NOTE: Figures assume 6% annual increase)
Characteristics of Goals
• Specific• Cost• Date
• Measurable• Reasonable and realistic
Make a Priority List
• Set short-, intermediate-, and long-term goals:
Emergency 1 year $1800$150
Repay debt 3 years $5000$200
Retirement 30 years $1,000,000$350
Financial Goal Chart
Establish an Emergency Account
• 3-6 months x living expenses• Liquid account
Repay Debt While Saving for Other Goals
• Promote good habits• Won’t rely on credit for emergencies• Reduce taxable income
Visa Card Example
• Balance $2000• Interest rate $19.8%• Annual fee $40
Making only the minimum payments…• It will take 31 years• It will cost $10,200
Start Saving Now
• Don’t wait until after bills are paid• Consider yourself an essential expense
Track Where It Goes
• Write it all down• Keep receipts• Use checks or debit cards• Monitor ATM use• Computer tracking programs
Tracking Expenses
Construct the Budget
• Paper budget form• Spreadsheet
Income
• Withholding• Non-guaranteed income
• Overtime• Bonuses
• Fluctuating income• Commissions• Seasonal
Income
Expenses
• Evaluate cash-flow• Essential expenses
• Fixed and variable
• Discretionary expenses• Periodic
Expense Form
Action Item List
• Increase income• Overtime, part-time, better pay, sell things
• Decrease spending• Reduce, substitute,postpone, forego
Budget Busters - Debt
• Stop charging – close accounts• Seek lower interest rates• Consolidate payments
Budget Busters - Spending
• Need vs. Wants Test• Do I need it?• Do I need it now?• What would happen if I didn’t have it?
Stay Motivated
• Visualize success• Stay organized• Be realistic• Monitor progress• Expect setbacks• Reward yourself along the way
What Are You Going to Do Now?
• What can you do today?• What can you do in the next 3 months?• What can you do this year?
Duke Credit Union Financial Education Center
• Contact:• Scottie Dowdy, CCUFC• Cassandra Taylor• Financial Counselors• Call: 684-6704• www.dukefcu.org