Transcript Document

Luke Erickson
Adapted from Dollar Decisions by Marsha
Lockard, Marilyn Bischoff & Linda Gossett
College of Agricultural and Life Sciences
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What is A Budget?
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A budget is a financial document used to project
future income and expenses.
A budget is an itemized summary of probable
expenses and income for a given period.
A budget is a spending plan that you decide upon.
A budget is a plan expressed in dollar amounts
that acts as a road map to carry out an person’s
objectives, strategies and assumptions.
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What is a budget?
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Spending less than you earn, but still
having fun!!
A good way to reach your financial
goals!
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Building a financial plan around your goals, is
a way to get and stay motivated.
A good way to “get on the same
page” with spouse and family
members.
Is your budget in bad shape?
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Start by tracking expenses!
Write everything down.
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Use bank statements
Receipts
A notebook
Website or software tracking
Find out where the money
actually went, before you
worry about where it
should go.
Tracking vs Budgeting
What is the difference?
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Tracking = Record of past expenses
Budgeting = Plans for future expenses
Budgeting
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Set target amounts
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“I would like to spend $50 on gas this
month”
“I don’t want to spend any more than $30
on eating out this month.
“I want to give $25 to charitable causes this
month”
Budgeting
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Target amounts cannot exceed
expected income!!
Gas - $50
Income: $1,400
Food - $200
Rent - $600
Insurance - $200
Car Payment - $300
Entertainment - $100
TOTAL: $1,450
Budgeting
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Target amounts cannot exceed
expected income!!
Gas - $50
Income: $1,400
Food - $200
Rent - $600
Insurance - $200
Car Payment - $300
Entertainment - $50
TOTAL: $1,400
Tools
Notebook
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Write down
expenses and
income as they
happen.
Add up each month.
Set target spending
amounts for
upcoming month
Pros and Cons?
Receipts
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Keep all receipts;
if you do not get a
receipt, write it on
scrap paper
Put receipts in a
box, envelope, or
other container
Add up at the end
of the month
Pros and cons?
Envelopes
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Label envelopes with
category, amount and
date due
Divide cash into
envelopes
Save unused money
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Pros and Cons?
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Calendar
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List income on the
date received
List expense on
dates made
Write in due dates
for bills
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Mark when paid
Pros and cons?
Checkbook/Statements
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Use check register or similar ledger
forms to record expenses
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Use statements from debit/credit card
accounts
Also record cash expenses
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Pros and Cons?
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Not just checks
Paper budget
form
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Pre-made
categories
Compare goals
with actual
expenses
Still need to track
individual
expenses
Pros and cons?
Computer Software
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Software
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Microsoft Money ( support discontinued,
2009)
Quicken
FPU Personal Finance Software
You Need a Budget (YNAB)
Others?
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Pros and Cons
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Spreadsheets
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Microsoft excel spreadsheets
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Free budgeting templates
Make your own – customized spreadsheet
CALC – Free Open Office spreadsheet
software.
Pros and Cons
Internet
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Websites
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Mint.com
Wesabe.com
Geezeo.com
Buxfer.com
Yodlee.com
Others?
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Pros and Cons?
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Accountability Partner
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Set a dollar amount
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Cannot spend over that dollar amount
without discussing first with
accountability partner.
Who can be an accountability partner
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$30, $50, $100, etc.
Spouse, parent, trusted friend
When should you stop
tracking/budgeting?
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The majority of millionaires track their
expenses every month and use
spending goals.
Do you want to join the club?
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If so, that’s a pretty small price to pay.
Millionaire Next Door
Thomas J. Stanley & William D. Danko
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The majority of America’s Millionaires
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Tracking and spending plan.
Drive used cars.
Own modest homes, but are completely
paid for.
Have savings for emergencies.
So, you’ve tracked and budgeting,
but keep coming up short.
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What can you do?
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There’s really only two choices.
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Decrease expenses
Increase income
Decrease Expenses
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Pay bills on time
Buy generic or store brands
Combine shopping trips to
save time and money
What else can you think of?
EXPENSES
Unnecessary Fees & Extras?
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Checking and Savings Accounts
Phone bill
Internet Services
Cable or Satellite Services
Tax Preparation
Buying a Car
Unnecessary Insurances
Seperate Needs and Wants
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Needs are necessary to live
 Without them we may jeopardize our health,
safety or well being.
Wants are the things that make our lives more
comfortable and more enjoyable.
 Wants are limitless!!!
Before making a purchase ask yourself:
 Do I need it?
 Is it my #1 want?
N&W Activity
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Polarity activity
What would you do with:
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But many of us already spend
this way.
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Spending leaks:
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Giving up what you REALLY want, for
something you just sort of want right now.
Spending Leak: Example
Spending leak:
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Cupcake twin pack $.95
Bag of potato chips $.70
Can of pop $.60
Every day $2.25
Every five days $11.25
Every four weeks $45.00
Every year $585.00!
Step Down!
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Increase Income
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Volunteer to work overtime
Rent an unused bedroom or
garage
Have a yard sale
Sell stuff online
Get a second job
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What else can you do?
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INCOME
Maximize Non-Money
Income
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Fringe Benefits
from Employers
Do-It-Yourself
Projects
Barter &
Exchange
Other ideas?
Website
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www.idahostwocenttips.com
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