Drafting a Budget

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  • I have provided 2 sample budgeting worksheets in your packet.
  • Drafting a Budget

    1. 1. Drafting a Budget Isaias Sarmiento Financial Literacy Coordinator
    2. 2. Why do we use money saving tools? <ul><li>Our incomes are limited. </li></ul><ul><li>We hope that at the end of the month, our incomes and expenses balance out. </li></ul>
    3. 3. How do I know if I’m spending too much? <ul><li>Use a monthly budget. </li></ul><ul><li>A budget is a list of your expected income and expenses for a given period of time. </li></ul><ul><li>Use recent receipts, bank statements, and credit card statements to estimate expenses. </li></ul>
    4. 4. Sample Budget <ul><li>Monthly Net Income </li></ul><ul><ul><li>My job $2000 </li></ul></ul><ul><ul><li>My spouse’s job $1000 </li></ul></ul>
    5. 5. Sample Budget <ul><li>Monthly Expenses </li></ul><ul><ul><li>Rent $1100 </li></ul></ul><ul><ul><li>Rental Insurance $10 </li></ul></ul><ul><ul><li>Electricity $50 </li></ul></ul><ul><ul><li>Heat $70 </li></ul></ul><ul><ul><li>Internet $40 </li></ul></ul><ul><ul><li>Cable TV $55 </li></ul></ul><ul><ul><li>Landline Phone $38 </li></ul></ul><ul><ul><li>Cell Phone $127 </li></ul></ul>
    6. 6. Sample Budget <ul><ul><li>Car payment $210 </li></ul></ul><ul><ul><li>Car insurance $100 </li></ul></ul><ul><ul><li>Gasoline for car $80 </li></ul></ul><ul><ul><li>Car maintenance $70 </li></ul></ul><ul><ul><li>Day care/babysitter $105 </li></ul></ul><ul><ul><li>Clothing $45 </li></ul></ul><ul><ul><li>Laundry $20 </li></ul></ul><ul><ul><li>Groceries $400 </li></ul></ul><ul><ul><li>Eating out $75 </li></ul></ul>
    7. 7. Sample Budget <ul><ul><li>Medical visits $20 </li></ul></ul><ul><ul><li>Gifts to family $50 </li></ul></ul><ul><ul><li>Church donations $300 </li></ul></ul><ul><ul><li>Magazines $20 </li></ul></ul><ul><ul><li>Life insurance $15 </li></ul></ul><ul><ul><li>School tuition $255 </li></ul></ul><ul><ul><li>Hair/Nails $60 </li></ul></ul><ul><ul><li>Gym membership $35 </li></ul></ul><ul><ul><li>Netflix $9 </li></ul></ul><ul><ul><li>Other Entertainment $100 </li></ul></ul>
    8. 8. Sample Budget <ul><ul><li>Student loans $100 </li></ul></ul><ul><ul><li>Unpaid taxes $125 </li></ul></ul><ul><ul><li>Unpaid medical bills $65 </li></ul></ul><ul><ul><li>VISA credit card $55 </li></ul></ul><ul><ul><li>Mastercard $80 </li></ul></ul><ul><ul><li>Discover card $50 </li></ul></ul><ul><ul><li>American Express $90 </li></ul></ul><ul><ul><li>Loans from family $50 </li></ul></ul><ul><ul><li>Bank loan $85 </li></ul></ul>
    9. 9. Sample Budget <ul><ul><li>Personal savings $25 </li></ul></ul><ul><ul><li>Miscellaneous $200 </li></ul></ul>
    10. 10. Compare Income against Expenses <ul><li>Monthly Income $3000 </li></ul><ul><li>Monthly Expenses $4384 </li></ul><ul><li>Difference -$1384 </li></ul>
    11. 11. Next Steps <ul><li>If the difference is negative, find ways to cut expenses and increase income until the budget is balanced. </li></ul><ul><li>Save more toward personal savings in case an emergency happens… again. </li></ul>
    12. 12. How to Track Expenses <ul><li>Use pencil and paper or spreadsheet. </li></ul><ul><li>FOOD Amount Planned $_475__ </li></ul><ul><li>Date Item Amount </li></ul><ul><li>10/5 Lunch $5.66 </li></ul><ul><li>10/7 Groceries $46.88 </li></ul><ul><li>10/8 Snacks $3.42 </li></ul>
    13. 13. How to Track Expenses <ul><li>Use FREE online budgeting software. </li></ul><ul><ul><li>Mint.com </li></ul></ul><ul><ul><li>Wesabe.com </li></ul></ul>
    14. 14. Next Steps <ul><li>Budgeting is a dynamic process. </li></ul><ul><li>Life circumstances change, so the budget should reflect these changes. </li></ul>
    15. 15. Final Thoughts <ul><li>Live within (or below) our means. </li></ul><ul><li>Save for that rainy day… or when the rain destroys the roof of your house. </li></ul><ul><li>Use credit wisely. </li></ul><ul><li>Pay your bills on time every month. </li></ul>
    16. 16. Final Thoughts <ul><li>Educate yourself about personal finance. </li></ul><ul><ul><li>Read about a financial topic that interests you or is related to what you’re going through financially. </li></ul></ul><ul><ul><li>The more informed we are, the more likely we are to make smart decisions. </li></ul></ul>

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