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Planning a budget
Lifestyle – Pre-budgeting
Lifestyle is a way of living that reflects that person’s attitudes and values Where will you live? Rent or Own What do you prefer in clothing? Latest
styles, sales, or resale What are your tastes in food? Eat out,
microwave meals or made from scratch What transportation will you use? Own
car, public transportation or biking
What are your values?
1. Savings2. Food rank them 1-
103. Clothes 4. Sports/Recreation5. Church/giving 6. Car 7. School expenses 8. Hobbies 9. Social Activities 10. Personal appearance
Importance of Budgeting A budget is a plan for using your
money in a way that meets your wants and needs
Helps to control spending and accomplish goals
Not designed to deprive but assist in reaching personal goals
What Makes a Good Personal Budget? Ability to cover basic expenses Cash for the unexpected Savings for the future
**Create a budget you can live with!!**
Steps in Planning a Budget 5 Steps to planning a budget
1. Set your goals2. Estimate your income3. Estimate your expenses4. Plan for savings5. Balance and adjust your budget
Set your Goals What do you want to accomplish in
the next month? What is important to you? Are your goals practical?
It is useless to set a goal to buy a computer in one year if your income per year is less than the computer costs.
Estimate your Income Gross Pay – the total amount of
money you earned for a specific time Deductions – are certain amounts
that are subtracted from your pay before you receive your paycheck
Net Pay = Gross pay minus deductions sometimes called take home pay
Estimate your Expenses Fixed—paid regularly
Rent, insurance, car payments Variable (Flexible)—amount varies
Food, clothing, gas for car
**DISPOSABLE INCOME - FIXED EXPENSES – - VARIABLE EXPENSES =DISCRETIONARY INCOME
Plan for Savings Help to protect against unexpected
expenses Helps with future wants Helps with expenses that are
higher than you budgeted for PYF (Pay Yourself First)—10% right
when you get your check
Balance and adjust budget Check to be sure that actual
expenses are actually meeting costs you budgeted for
Check weekly, monthly and yearly Either cut expenses or increase
income
Personal BudgetINCOME TOTALS
Work
Allowances
Lunch Money
TOTAL INCOME
EXPENSES
Daily Lunches
Supplies
Snacks
Entertainment
SAVINGS
Deposits
TOTAL EXP & SAVINGS
Ways to Stick to a Budget
Shop with budget in mindPlan for large purchases so you
know you can afford themNegotiate when possibleAvoid impulse buyingWatch for salesTrack purchases
Minimum Wage $7.25/hour 40 hours a week, 52 weeks
Yearly income BEFORE taxes = $15,080
Taxes = 23% of income How much will you make each
month? Approximately $967
Other job $40,000/year before taxes Taxes = 23% of income
How much will you make each month? Approximately $2567