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Budgeting
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What is a Budget?

A plan for spending

and saving money

Most people think

udgets are:
! "igid and infle#ile
! $ainful ! %ho %ants to
eat Top "amen every
night&
! 'o fun&
A udget takes the fun out of
money ! Mason (ooley
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Why Budgets Make )ense

Budgets help you:

! )et priorities
! Achieve %hat*s
important to you

A good udget is:

! "ealistic
! +ngoing
! (lear and easy to
use
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Budget (ategories

Income
!
,ross
!
'et

)avings
!
-mergencies
!
.ong/Term
!
"etirement
!
)hort/Term

-#penses
!
0i#ed
!
1ariale
!
2iscretionary
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Income: Money -arned

,ross income: An
individual*s income
efore ta#es.

'et income: Income

after ta#es are paid.

Ta#es can range

from 345 to 635.
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Ta#es and 2eductions
0irst 7o pays 869:999;year.
<our salary is your gross income. Take off at least =45 for ta#es
and other deductions. That*s %hat*s left for you to spend.
-#ample:
,ross salary > 869:999
Minus =45 ta#es and deductions / ?:499
'et income 8==:499
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)avings: $ay <ourself 0irst

)avings: unspent income

Types
! -mergencies: $lan to set
aside three months living
expenses
! .ong/term: .arge ticket
items @house: car: collegeA
! "etirement: It*s never to
early to start
! )hort/term: 1acation:
clothes: ne% skis
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$ersonal )avings "ate 2eclining

3B?C to 3BDC
! 395

3BD4/3BBC
! 0ell to C.D5

=99C
! 3.D5

=994
! /9.45

=99E
! /9.?5

Fasn*t een negative

since the ,reat
2epression
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)tart )aving <oung&

)ave 8=:999 per year

from age 3B ! =E
!
83:964:3CD y age E4

)ave 8=:999 per year

from age =? ! E4
!
8D94:3D4 y age E4

Time value of money

!
Invest fe%er dollars at
a younger age ut
have =45 more
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-#penses

-#pense: A cost to
meet a need or pay a
det

Types of e#penses
!
0i#ed
!
1ariale
!
2iscretionary
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'eeds vs. Wants

Needs are essentials

!
0ood
!
)helter
!
(lothing
!
Transportation

Wants are e#tras

!
-ating out
!
Big: e#pensive house
!
)hop till you drop
!
Brand/ne% or
e#pensive car
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0i#ed -#penses
A cost that occurs regularly
and doesn*t vary in amount
!
"ent
!
Mortgage
!
(ar payment
!
Insurance premium
!
)chool loans
!
+thers?
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1ariale -#penses
A cost that occurs regularly
ut may vary in amount:
!
-lectricity
!
Water and ,arage
!
Telephone
!
,asoline
!
,roceries
!
+thers?
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Ways to "educe your ,rocery Bill

Make a shopping list

)tudy grocery ads

Buy store/rand products

Avoid impulse purchases

.earn the asic prices of

your favorite foods.
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2iscretionary -#penses
A cost determined y
personal %ants that may e
controlled
!
Movies: videos: (2s
!
)ports
!
-ating out
!
,rooming and clothes
!
(oncerts and plays
!
1acations
!
+thers?
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Budget )ummary

-stalish a udget:
!
Income
!
)avings
!
-#penses
0i#ed
1ariale

2iscretionary

-nd up %ith a udget

surplus and you*re a
success&
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