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Unit 2a Budgets

Unit 2a Budgets






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    Unit 2a Budgets Unit 2a Budgets Presentation Transcript

    • GENC3003Personal Financial Planning
      Andrew Hingstonandrew.hingston@unsw.edu.au
      Unit 2: Budgets
    • 2
      What is a budget?
      It is a plan for your money over the next year:
      Income from working, parents, youth allowance
      Expenses from …
      Income – Expenses = Savings (or Dis-saving if negative!)
      It is forward looking (over next year)
      But future is uncertain …
      So actual income and expenses will be different
      Budget is a “best guess”
      Usually best to have “average monthly” and “total yearly”
    • 3
      What does a simple budget look like?Budget for 200X
    • 4
      Why have a budget?
      Knowledge of your finances = power over them
      Know where our money comes from (income)
      Know where the money is going (expenses)
      Identify areas of over-spending to cut back
      … which will find extra money to save
      Helps us to be disciplined with our money
    • 5
      What do difficulties do you think people have when making a budget?
      What difficulties do they have sticking to budgets?
    • 6
      Regularly tracking expenses
      Track all income and expenses for two months
      … before making your first budget
      = much more accurate budget!
      Then track expenses after making budget
      … to see whether you are sticking to budget
    • 7
      What are some tips?
      Make tracking expenses easy as possible
      Use software (Quicken or Money or other)
      Make habit of collecting receipts
      Use eftpos and download transactions from website
      Be realistic with your budget
      Allocate enough money for having some fun
      Be flexible – the future is uncertain
      Add “miscellaneous” – preferably 10% of total expenses
      Aim to always save at least 5% of your income
      If you can’t, then get a casual job or cut back in expenses
    • 8
      Expense tracking methods
      Extreme tracking
      Track every dollar, every month (using software)
      Best method but some people can’t keep it up!
      Electronic tracking
      Track all eftpos transactions + total changes in cash
      Good but where is all the cash being spent?
    • 9
      Audit tracking
      Track every dollar for only two months a year
      Good but what if they are not representative of the other months?
      Fixed savings tracking
      $X per month is withdrawn from transaction into savings account
      You are free to “spend” the rest
      Controls total expenses but where is it all going?
      Match method to personality type
      It must be sustainable over the long-term!
    • 10
      Expense tracking assignment
      See course outline for detailed information
      Track all income & expenses
      Using spreadsheet provided at website
      Submit spreadsheet on website at checkpoints
      Read course outline for instructions on tricky issues
      Irregular and large bills and expenses
      Irregular income and holiday work
      Special instructions for people living with their family
    • 11
      Tips for recording expenses
      Ask for receipts whenever you buy something.
      Update your spreadsheet each day
      Use “Task scheduler” to make it open at 8pm each day
      Count cash at start of week
      Count cash one week later
      Note ATM withdrawals and expenses
      Reconcile change in cash vs expenses
      Missed something? Put as “miscellaneous”
    • Stop and read
      Now read:
      Chapter 2
      Your Budget