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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
    Discussion
    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    $X per month is withdrawn from transaction into savings account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
    12