Planning Your Financial Endgame

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Budgeting Money

 

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A budget is a plan you write down to decide how you’ll spend your money each month. Use it to help pay your bills and expense as well as save for goals or emergencies.

A budget shows you:

·         How much money you make

·         How you spend your money

You might see that you can spend less money on some things and more money on other things. You also might see ways to save money.

Creating a budget

Start to make a budget by gathering your bills and pay stubs (or bank deposits). Use the Budget Worksheet below to help you.

Step 1

Make a list of your bills and other expenses and the amounts. Bills include things like rent, electricity, water, or telephone service. Expenses are things you spend money on, like food, gas, clothes, and entertainment.

Step 2

Use your pay stubs (or bank deposits) to write down how much money you make each month. This is called income. Also include any other money you get, like child support.

Some people don’t get paid every month. If you don’t get paid every month, use your income from last year to estimate your monthly income. Add all your income last year. Then divide that number by 12 to find a monthly income estimate.

Step 3

Subtract your monthly bills and expenses from how much money you make in a month. This number should be more than zero. If the number is less than zero, you’re spending more money than you make. Look for things in your budget you can change.

A budget is something you use every month. At the beginning of the month, make a plan for how you’ll spend your money that month. Then each day, write down what you spent. At the end of the month, see if you spent what you planned.

Use this information to help you plan next month’s budget. Are there things you want to spend less money on next month? Be mindful of Wants vs. Needs discussed earlier in this book.

You can put leftover money into savings every month -- maybe an account at a bank or credit union. Saving money can help you during an emergency, or if you need to pay for something bigger, like a car or trip. You can even make savings one of the expenses you include in your budget.

There are software programs that can help you manage money and even create and manage a budget. Keep in mind that technology does not solve issues, it can only make managing them easier.

Use the worksheet below to make a budget. Fill in how much money you make. Then fill in your expenses. Subtract your expenses from how much money you make.

If your income is more than your expenses, then you have money left to save or spend. On the other hand, if your expenses are more than your income, look at your budget to find expenses to cut.

Budget Worksheet

My income this month

My expenses this month

 

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Wants vs. Needs < Chapter Index > Debt Management