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02.06 Why Budget
Transcript of 02.06 Why Budget
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
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
is the total amount of money earned before any deductions.
is the actual amount of money received after deductions (take home pay).
Record your net pay in a 30 day period!
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
If the result is
, start tracking, maintaining, and saving.
If the result is
, start identifying areas to cut costs.
2 Earners = $60,073
OLD vs. NEW Budget
Credit Score Ranges
Calculating Your Budget..
Preparing a Monthly Budget
Credit / Credit Scores
Maintaining your Budget