T H I S M O D U L E I S D E S I G N E D T O H E L P S T U D E N T S B U I L D A P R O P E R B U D G E T A N D E N C O U R A G E S M A R T S P E N D I N G .

CREATING A BUDGET

INTRODUCTION

• Do you not know where your money is being spent?• Do you often run out of money before you

expected?• Do you think you could manage your money

better?

If you answered yes to any of these questions, creating a budget can help you!

BASICS OF BUDGETING

• Having control over your money is important, both for your financial well-being and for your peace of mind

• Creating a budget with the help of a template can help you feel more in control of your finances and allow you to save more money for your short- or long-term goals

DID YOU KNOW . . .

Money is the number one reason for divorce in the United States.

Financial Infidelity – may be the new normal.

In a recent survey – 1 in 3 Americans (31%) who have combined their finances admitted lying to their spouses about money, and another 1/3 of these adults said that they have been deceived.

Breakdown of Money Lies• 58% hid cash• 54% hid minor purchases• 30% hid a bill• 16% hid a major purchase• 11% lied about debt• 11% lied about earnings

COLLEGE STUDENTS TODAY

• 40 million Americans have student loans. More than 70 percent of U.S. students who graduate with a bachelor’s degree leave with debt, which averages $28,400 – The White House (projectonstudentdebt.org)

SET YOUR GOALS

• Make a list of all the financial goals you want to accomplish over the short and long term

• Why are those goals are your priorities?• How do you plan to achieve them and how quickly do you need to

see the results• Short-term goals should take no longer than a year to achieve• For example, you may want to pay off your credit card debt or save up for

holiday presents

• Long-term goals may take years to reach• For example, saving for retirement or your child's education

• Don't think that your goals have to be set in stone, you can update your list whenever it's needed and apply it to your budget worksheet• If you don’t know where your savings goal should be, start by 

using the Merrill Edge retirement calculator to figure out how much money you may need in retirement

MAKE YOUR PLAN

• Start by dividing your net income into 2 broad spending categories• Fixed & variable expenses

• Fixed expenses stay the same each month• Mortgage or gym membership fees

• Variables expenses change from month to month• Entertainment or gas for your car

• For both fixed and variable expenses, you'll want to record how much you spend on each• You may consider using a personal budget template to account for

and categorize your monthly spending.

• You may also want to divide your spending into 3 basic categories• needs, savings, and wants

• Needs include fixed and variable costs that are essential to your daily well-being

• Savings include your emergency fund and retirement accounts • Wants covers everything else

KNOW YOUR NET INCOME

• Identify the money you have coming in, otherwise known as your income• Keep in mind that it's easy to overestimate what you can

afford if you think of your total salary as what you have to spend

• Remember to subtract your employer deductions• Social Security, taxes, 401(k) and flexible spending

account allocations

• Your final take-home pay is called net income and that is the number you should use when creating a budget

TRACK YOUR SPENDING

• Expenses can be difficult to track • Spending journal• Find a small notebook and use it to write down each purchase

you make every day for a month

• Save all receipts• Add them up at the end of the month

• Online banking record • If you use a debit or credit card for most purchases

• Smart phone apps• Expense IQ

• Once you have a good estimate of these expenditures each month, incorporate it into your personal budget worksheet

CREATE A MONTHLY BUDGET

• Did you stay within your budget?

Income    Expenses

Pay Check $ 850.00   Rent

$ 450.00

Financial Aid

$ 750.00   Groceries

$ 300.00

Scholarships

$ 150.00   

Entertainment

$ 200.00

Gifts $ 100.00   Utilities

$ 140.00

Total $ 1,850.00   

Miscellaneous

$ 100.00

      Dining out $ 60.00

      Total $ 1,250.00

UNDERSTAND WHERE YOUR MONEY IS GOING

36%

24%

16%

11%

8% 5%

Monthly Living Expenses

Rent

Groceries

Entertainment

Utilities

Miscellaneous

Dining out

12

SMALL PURCHASES ADD UP

oGrande White Chocolate Mocha @ $4.25o$4.25 x 30 days = $ 127.50o$4.25 x 365 days = $ 1,551.25

o8in Italian Night Club from Jimmy Johns @ $5.75o$5.75 x 30 days = $ 172.50o$5.75 x 365 days = $2,098.75

PERSONALIZE YOUR BUDGET

• You can customize a budget to your own needs• After you've determined what to set aside for

your fixed expenses, you can alter the amount earmarked for variable items• The variable category gives you more wiggle

room in how much you decide to spend where, allowing you to prioritize as you see fit• For example, you might decide you can spend less on

clothes each month in order to give yourself more money to save toward buying a new TV

HAVE A MONTHLY CHECK-IN

• Take a look at your spending every month and compare it to your personal budget worksheet to see how things are going

• If you find that you're often going over-budget in some areas out of necessity, you should consider cutting elsewhere to keep things under control

WORK CITED

• Bank of America• Reuters