The document provides steps for proper budgeting. It begins by defining a budget and the key types of information included - needs versus wants. It then discusses the importance of budgeting to live within your means. The main steps outlined are to set financial goals, estimate income, budget for unexpected and fixed expenses, budget variable expenses, and record spending. Tips are provided such as decreasing impulse purchases, carrying less cash, and shopping smart with coupons.

1. $Budgeting$
Aim: How can we learn the steps to
budget properly?
Do Now: What is a budget?
What are two main types of information
that appear on a budget?

2. Why Budget?
$ You need to develop a plan for using your
money to best meet your needs.
– Helps you live within your means
– Helps you decide how to spend your money
wisely

3. Write down 6 things you have spent
money on this past week.
Put an N for need or a W for want next
to each item!

4. Living within your means
$ What is the difference between needs and
wants?
– Needs: things you must have
– Wants: things you would like to have

5. What happens if your expenses
are higher than your income?
$ Decrease your spending: ie: An expense
that can be adjusted or eliminated, such as
luxury items like designer clothes
$ Pay Cash Only- no credit cards or loans:
Keep all receipts or record all cash
purchases
$ Reduce impulse buying: spur of the
moment spending
$ Shop Smart: Coupons/Discounts

6. $ Increase income: look for a new job or an
additional job; ask for a raise
$ Decrease variable expenses
$ Before making purchases, consider
companion expenses: Hidden costs that
accompany a purchases
$ Carry a limited amount of cash
$ Shop smart: Discount/Coupons
What happens if your expenses
are higher than your income?

7. Steps to Budgeting:
1. Set Financial Goals: What would you like to
accomplish with this money?
– Make them specific!
• Short term: Takes 3 months or less
– Ex: saving for a trip
• Long term: Takes more than one year to achieve
– Ex: saving for a condo
2. Estimate Your Income : What money will be
coming in?
– Ex: Paycheck
• Gross Income – Money before taxes and other deductions
• Net Income – Money after taxes and other deductions
– Don’t include money that you cannot depend on
(Gifts/Bonuses) Wait until they are RECEIVED!!!!

8. Steps to Budgeting:
3. Budget for Unexpected Expenses and Savings: What if
I need money for an emergency?
– Allocate a designated amount to be put into savings
– Having an “emergency” 3-6 months worth of living
expenses in case someone loses a job, medical
expenses or other emergency situation.
– Always consider savings as an expense  10% of
income minimum
4. Budgeting for fixed expenses: How much do I know I
have to pay each month?
– Monthly expenses that remain the same from month to
month
• Ex: Car payment- Will always be $250 per month
• Ex: Mortgage- Will always be $3000 per month

9. Steps to Budgeting:
5. Budgeting for Variable Expenses: How much should I
estimate to pay each month?
– These expenses change from month to month depending on
needs, wants and Usage (ex: electric bill)
– Not as easy to budget for, when in doubt estimate higher
6. Record what you spend: What am I spending my
money on?
– Keep track of expenses and revise budget when necessary
– You may need to ADJUST (reduce/eliminate) spending to
achieve your goals. Examples:
• “Brown Bagging” Lunch
• Generic Vs. Name Brand
Habit Price Monthly Cost Yearly Cost
1 cup of coffee every day $2 $60 $720
1 can of Red Bull $4 $120 $1240
Going out for lunch every day $5-$10 $150-$300 $1800-$3600
3 Chocolate bars a week $3 $36 $432