Transcript Building a Better Budget

Building a
Better Budget
© 2005 BALANCE FINANCIAL FITNESS PROGRAM
Why Budget?
• Achieve goals
• Use money efficiently
• Become financially secure
Obstacles to Getting Started
• Feeling there is never enough money
• Easy to postpone saving
• Hard to confront past decisions
• Goals are overwhelming
• Don’t want to make lifestyle changes
Your Lifetime Earnings
$30K
$60K
$90K
10 years
$ 395,400
$ 790,800
$1,186,300
20 years
$1,103,600
$2,207,100
$3,310,700
30 years
$2,371,700
$4,743,500
$7,115,200
It’s not the size of your paycheck… it’s how you use it.
(NOTE: Figures assume 6% annual increase)
Characteristics of Goals
• Specific
• Cost
• Date
• Measurable
• Reasonable and realistic
Make a Priority List
• Set short-, intermediate-, and long-term
goals:
Emergency
Repay debt
Retirement
1 year
3 years
30 years
$1800
$150
$5000
$200
$1,000,000 $350
Financial Goal Chart
Establish an
Emergency Account
• 3-6 months x living expenses
• Liquid account
Repay Debt While
Saving for Other Goals
• Promote good habits
• Won’t rely on credit for emergencies
• Reduce taxable income
Visa Card Example
• Balance
• Interest rate
• Annual fee
$2000
$19.8%
$40
Making only the minimum payments…
• It will take
31 years
• It will cost
$10,200
Start Saving Now
• Don’t wait until after bills are paid
• Consider yourself an essential expense
Track Where It Goes
• Write it all down
• Keep receipts
• Use checks or debit cards
• Monitor ATM use
• Computer tracking programs
Tracking Expenses
Construct the Budget
• Paper budget form
• Spreadsheet
Income
• Withholding
• Non-guaranteed income
• Overtime
• Bonuses
• Fluctuating income
• Commissions
• Seasonal
Income
Expenses
• Evaluate cash-flow
• Essential expenses
• Fixed and variable
• Discretionary expenses
• Periodic
Expense Form
Action Item List
• Increase income
• Overtime, part-time, better pay, sell things
• Decrease spending
• Reduce, substitute,postpone, forego
Budget Busters - Debt
• Stop charging – close accounts
• Seek lower interest rates
• Consolidate payments
Budget Busters - Spending
• Need vs. Wants Test
• Do I need it?
• Do I need it now?
• What would happen if I didn’t have it?
Stay Motivated
• Visualize success
• Stay organized
• Be realistic
• Monitor progress
• Expect setbacks
• Reward yourself along the way
What Are You
Going to Do Now?
• What can you do today?
• What can you do in the next 3 months?
• What can you do this year?
Duke Credit Union
Financial Education Center
• Contact:
• Scottie Dowdy, CCUFC
• Cassandra Taylor
• Financial Counselors
• Call: 684-6704
• www.dukefcu.org