The document discusses budgeting and financial planning. It defines budgeting as a short-term forecast of income and expenses, usually monthly or weekly. Financial planning is defined as long-term forecasting over multiple years, including savings, investments, and planning for major life events. The document provides tips for budgeting, including starting with a goal, tracking spending, paying yourself first, and reviewing your budget regularly. It emphasizes that budgeting helps manage money and achieve financial goals.

1. Budgeting
September 13, 2010
Bus 12 – Money Matters R. Okumoto

2. Topics TodayTopics Today
Bus 12 – Money Matters R. Okumoto
 What is Budgeting ?
 What is Financial Planning ?
 How do you Measure your Financial Health ?
 How do you keep track of Paperwork ?
 What are the Basic Money Math Formulas ?

3.  Budgeting = Short term forecast of income & spending
(monthly or weekly)
 Financial Planning = Long term forecast of income & spending
(Multiple Years)
(Typically includes savings & investment planning)
(Typically includes major life event planning: marriage,
kids, homes, retirement)
What is Budgeting ?
Bus 12 – Money Matters R. Okumoto

4.  Budgeting = Short term forecast of income & spending
(monthly or weekly)
 Financial Planning = Long term forecast of income & spending
(Multiple Years)
(Typically includes savings & investment planning)
(Typically includes major life event planning: marriage,
kids, homes, retirement)
What is Financial Planning ?
Bus 12 – Money Matters R. Okumoto

5. Who Budgets? - Government
Bus 12 – Money Matters R. Okumoto

6. Who Budgets? - Business
Bus 12 – Money Matters R. Okumoto

7. Who Budgets? - Schools
Bus 12 – Money Matters R. Okumoto

8. Who Budgets? - Movies
Bus 12 – Money Matters R. Okumoto

9. Who Budgets? - YOU
Bus 12 – Money Matters R. Okumoto

10.  Budgeting enables you to manage your money
 Budgeting structures your spending
 Budgeting provides a structure to analyze your spending
 Budgeting is a tool to help you achieve your financial goals
 It also serves as a back up in case something happens to you
So…Why Budget ?
Bus 12 – Money Matters R. Okumoto

11.  Budgeting enables you to manage your money
 Budgeting structures your spending
 Budgeting provides a structure to analyze your spending
 Budgeting is a tool to help you achieve your financial goals
 It also serves as a back up in case something happens to you
So…Why Budget ?
Bus 12 – Money Matters R. Okumoto

12.  Budgeting enables you to manage your money
 Budgeting structures your spending
 Budgeting provides a structure to analyze your spending
 Budgeting is a tool to help you achieve your financial goals
 It also serves as a back up in case something happens to you
So…Why Budget ?
Bus 12 – Money Matters R. Okumoto

13.  Budgeting enables you to manage your money
 Budgeting structures your spending
 Budgeting provides a structure to analyze your spending
 Budgeting is a tool to help you achieve your financial goals
 It also serves as a back up in case something happens to you
So…Why Budget ?
Bus 12 – Money Matters R. Okumoto

14.  Budgeting enables you to manage your money
 Budgeting structures your spending
 Budgeting provides a structure to analyze your spending
 Budgeting is a tool to help you achieve your financial goals
 It also serves as a back up in case something happens to you
So…Why Budget ?
Bus 12 – Money Matters R. Okumoto

15.  To ensure that:
 You will incur minimal Financial Crises
 You will likely survive any Financial Crises
Why do all this?
Bus 12 – Money Matters R. Okumoto

16.  Start with a Goal
 Build the Plan
 Track Spending – start with Major items
 Categorize Spending
 Pay yourself First
 Be Flexible
 Use free tools and assistance
 Review and improve: trial & error
How to Budget
(The Process)
Bus 12 – Money Matters R. Okumoto
2

17.  Start with a Goal
 Build the Plan
 Track Spending – start with Major items
 Categorize Spending
 Pay yourself First
 Be Flexible
 Use free tools and assistance
 Review and improve: trial & error
How to Budget
(The Process)
Bus 12 – Money Matters R. Okumoto

18.  Start with a Goal
 Build the Plan
 Track Spending – start with Major items
 Categorize Spending
 Pay yourself First
 Be Flexible
 Use free tools and assistance
 Review and improve: trial & error
How to Budget
(The Process)
Bus 12 – Money Matters R. Okumoto

19.  Start with a Goal
 Build the Plan
 Track Spending – start with Major items
 Categorize Spending
 Pay yourself First
 Be Flexible
 Use free tools and assistance
 Review and improve: trial & error
How to Budget
(The Process)
Bus 12 – Money Matters R. Okumoto

20.  Start with a Goal
 Build the Plan
 Track Spending – start with Major items
 Categorize Spending
 Pay yourself First
 Be Flexible
 Use free tools and assistance
 Review and improve: trial & error
How to Budget
(The Process)
Bus 12 – Money Matters R. Okumoto

21.  Start with a Goal
 Build the Plan
 Track Spending – start with Major items
 Categorize Spending
 Pay yourself First
 Be Flexible
 Use free tools and assistance
 Review and improve: trial & error
How to Budget
(The Process)
Bus 12 – Money Matters R. Okumoto

22.  Start with a Goal
 Build the Plan
 Track Spending – start with Major items
 Categorize Spending
 Pay yourself First
 Be Flexible
 Use free tools and assistance
 Review and improve: trial & error
How to Budget
(The Process)
Bus 12 – Money Matters R. Okumoto

23.  Start with a Goal
 Build the Plan
 Track Spending – start with Major items
 Categorize Spending
 Pay yourself First
 Be Flexible
 Use free tools and assistance
 Review and improve: trial & error
How to Budget
(The Process)
Bus 12 – Money Matters R. Okumoto
3

24.  Use free tools and assistance
Quicken Online - Recently became free of charge. Tracks your
spending and categorizes it automatically.
SimpleD - An “open source Windows application designed for
personal or household financial management.” The
screenshots actually look pretty slick.
AceMoney Lite - Freeware version of an offline personal
finance management program. It even downloads stock
quotes from the internet.
PearBudget - An Excel spreadsheet that has definitely had a
lot of time put into it. It’s a bit busy.
How to Budget
(The Process)
Bus 12 – Money Matters R. Okumoto

25.  Use free tools and assistance
Buddi - An open-source personal finance and budgeting
program, which will run on any machine with Java installed.
Mo.neytrack.in - A “free online webapp that allows you to
track all your expenses and income.”
Grisbi - Another offline open-source personal finance app.
Budget Master - A free personal budgeting program that
offers charts and visual reports
Microsoft Office Accounting Express 2007 - Seems targeted at
business, so this may be overkill for home budgets. But it’s
free!
How to Budget
(The Process)
Bus 12 – Money Matters R. Okumoto

26. How to Budget
(Example)
INCOME / EXPENSE ITEMS JAN FEB MAR
Income – Wages (net of taxes)
Income – Investments
$ 1,200
1,400
$ 1,200
1,200
$ 1,200
900
Net Income $ 2,600 $ 2,400 $ 1,900
Expenses: Fixed – Rent
Expenses: Fixed – Car Payment
Expenses: Fixed – SJSU Tuition
$ 500
300
0
$ 500
300
1,200
$ 500
300
0
Expenses: Variable – Food
Expenses: Variable – Cell Phone
Expenses: Variable – Utilities
Expenses: Variable – Credit Card
Expenses: Variable – Gas
Expenses: Variable - Entertainment
Expenses: Variable – Pay yourself
200
50
50
300
100
200
100
200
50
50
300
100
200
100
200
50
50
300
100
200
100
Total Expenses $ 1,800 $ 3, 000 $ 1,800
Surplus / (Deficit) $ 800 ($ 600) $ 100
Bus 12 – Money Matters R. Okumoto

27. How to Budget
(Example)
INCOME / EXPENSE ITEMS JAN FEB MAR
Income – Wages (net of taxes)
Income – Investments
$ 1,200
1,400
$ 1,200
1,200
$ 1,200
900
Net Income $ 2,600 $ 2,400 $ 1,900
Expenses: Fixed – Rent
Expenses: Fixed – Car Payment
Expenses: Fixed – SJSU Tuition
$ 500
300
0
$ 500
300
1,200
$ 500
300
0
Expenses: Variable – Food
Expenses: Variable – Cell Phone
Expenses: Variable – Utilities
Expenses: Variable – Credit Card
Expenses: Variable – Gas
Expenses: Variable - Entertainment
Expenses: Variable – Pay yourself
200
50
50
300
100
200
100
200
50
50
300
100
200
100
200
50
50
300
100
200
100
Total Expenses $ 1,800 $ 3, 000 $ 1,800
Surplus / (Deficit) $ 800 ($ 600) $ 100
Bus 12 – Money Matters R. Okumoto

28. How to Budget
(Example)
INCOME / EXPENSE ITEMS JAN FEB MAR
Income – Wages (net of taxes)
Income – Investments
$ 1,200
1,400
$ 1,200
1,200
$ 1,200
900
Net Income $ 2,600 $ 2,400 $ 1,900
Expenses: Fixed – Rent
Expenses: Fixed – Car Payment
Expenses: Fixed – SJSU Tuition
$ 500
300
0
$ 500
300
1,200
$ 500
300
0
Expenses: Variable – Food
Expenses: Variable – Cell Phone
Expenses: Variable – Utilities
Expenses: Variable – Credit Card
Expenses: Variable – Gas
Expenses: Variable - Entertainment
Expenses: Variable – Pay yourself
200
50
50
300
100
200
100
200
50
50
300
100
200
100
200
50
50
300
100
200
100
Total Expenses $ 1,800 $ 3, 000 $ 1,800
Surplus / (Deficit) $ 800 ($ 600) $ 100
Bus 12 – Money Matters R. Okumoto

29. How to Budget
(Example)
INCOME / EXPENSE ITEMS JAN FEB MAR
Income – Student Aid
Income – Part time Job (net pay)
$ 1,200
1,400
$ 1,200
1,200
$ 1,200
900
Net Income $ 2,600 $ 2,400 $ 1,900
Expenses: Fixed – Rent
Expenses: Fixed – Car Payment
Expenses: Fixed – SJSU Tuition
$ 500
300
0
$ 500
300
1,200
$ 500
300
0
Expenses: Variable – Food
Expenses: Variable – Cell Phone
Expenses: Variable – Utilities
Expenses: Variable – Credit Card
Expenses: Variable – Gas
Expenses: Variable - Entertainment
Expenses: Variable – Pay yourself
200
50
50
300
100
200
100
200
50
50
300
100
200
100
200
50
50
300
100
200
100
Total Expenses $ 1,800 $ 3, 000 $ 1,800
Surplus / (Deficit) $ 800 ($ 600) $ 100
Bus 12 – Money Matters R. Okumoto

30.  What is Savings or Cash Surplus?
(BMM – When Income is greater than Expenses)
Savings
Bus 12 – Money Matters R. Okumoto

31.  Start with a Goal
 Build the Plan
 Track Spending – start with Major items
 Categorize Spending
 Pay yourself First
 Be Flexible
 Use free tools and assistance
 Review and improve: trial & error
How to Budget
(Process Review)
Bus 12 – Money Matters R. Okumoto

32.  The Equation of Personal Net Worth: (BMM)
(Assets – Debt = Personal Net Worth)
How to Measure your Financial
Health
(Personal Wealth)
Bus 12 – Money Matters R. Okumoto
4

33. How to Measure your Wealth
Assets Value
Checking Account
Savings Account
Bonds
Car ( 2009 – Ferrari Modena – RED )
House ( 3,000 SF custom home in the Los Altos Hills)
$ 1,000
500
300
175,000
4,000,000
Total Assets $ 4,176,800
Debts
Credit Cards
Car Loan
Mortgage
$ 96,000
170,000
3,900,000
Total Debt $ 4,166,000
Net Worth $ 10,800
Net Worth
Mr. “All for Show”
Bus 12 – Money Matters R. Okumoto

34. How to Measure your Wealth
Assets Value
Checking Account
Money Market Account
Stocks & Bonds
Car ( 2006 Toyota Prius - RED )
House ( 1,700 SF City Condo – with a view)
$ 1,000
30,000
450,000
28,000
600,000
Total Assets $ 1,109,000
Debts
Credit Cards
Car Loan
Mortgage
$ 0
0
63,000
Total Debt $ 63,000
Net Worth $ 1,046,000
Net Worth
Ms. “Millionaire”
Bus 12 – Money Matters R. Okumoto

35. Topics TodayTopics Today
Bus 12 – Money Matters R. Okumoto
 What is Budgeting ?
 What is Financial Planning ?
 How do you Measure your Financial Health ?
 How do you keep track of Paperwork ?
 What are the Basic Money Math Formulas ?