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02.06 Why Budget

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by

kelly juste

on 11 February 2014

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Transcript of 02.06 Why Budget

WHAT IS BUDGETING?
Budgeting is a process used to develop:
An outline of income and expenditures.
A guide for spending and saving.
An organizational plan that begins with monitoring personal expenses.
AVERAGE MEDIAN HOUSEHOLD INCOME IN ILLINOIS
1 Earner = $46,355
BENEFITS OF BUDGETING..
Develop a spending plan.
- Determines where your money goes.
- Defines your financial goals.
- Helps you live within your means.
- Clarifies your

Wants

vs. your

Needs.
GOAL SETTING
Be disciplined and develop a clear path for your money.
Short Term Goal: (0-6 months)
- Save for new appliances.
Medium Term Goal: (6-12 months)
- Save for a different automobile.
Long Term Goal: (up to 5 years)
- Save for retirement.
PREPARING A BUDGET
FIRST: INCOME
Gross Pay
is the total amount of money earned before any deductions.
Net pay
is the actual amount of money received after deductions (take home pay).
Record your net pay in a 30 day period!
SECOND: EXPENSES
Variable expenses may be different each month: Food, clothing, entertainment, power.
Fixed expenses remain the same from month to month: Mortgage, rent, car payment.
List all your fixed expenses for a 30 day period and estimate your variable expenses for a 30 day period.
THIRD: NET INCOME
Subtract all your expenses from your net pay..and this is your
Net Income.
If the result is
positive
, start tracking, maintaining, and saving.
If the result is
negative
, start identifying areas to cut costs.
2 Earners = $60,073
EXAMPLE BUDGET
OLD vs. NEW Budget
Credit Score Ranges
Calculating Your Budget..
Budgeting Expenses...
Welcome
Budget Overview
Preparing a Monthly Budget
Cutting Expenses
Credit / Credit Scores
Maintaining your Budget
Kelly Juste

Economics
Full transcript