BUDGETING
A budget is a tool to help you plan, prioritize, and manage your income and expenses. Review your
budget often and update it when you are experiencing a change in income and expenses.
commission – you may have to estimate, since your income may vary from month to month. List
income you receive from any source, like a part-time job, a tax refund, gifts, unemployment,
public assistance, dividends, and alimony or child support. Add the entries to determine your
actual income for that month. Keep in mind, some of these amounts may fluctuate.
mortgage, car payment, and telephone, cable, or Internet access.
every year – like groceries, clothing, haircuts, property taxes, auto and homeowners insurance, and gas and
electric.
A budget is a tool to help you plan, prioritize, and manage your income and expenses. Review your
budget often and update it when you are experiencing a change in income and expenses.
- Write down your monthly take-home pay
commission – you may have to estimate, since your income may vary from month to month. List
income you receive from any source, like a part-time job, a tax refund, gifts, unemployment,
public assistance, dividends, and alimony or child support. Add the entries to determine your
actual income for that month. Keep in mind, some of these amounts may fluctuate.
- List how much you deposit in savings each month
- List your fixed monthly expenses
mortgage, car payment, and telephone, cable, or Internet access.
- List your variable expenses
every year – like groceries, clothing, haircuts, property taxes, auto and homeowners insurance, and gas and
electric.
- List estimates for once-in-a-while expenses
- Total your fixed and variable expenses and divide by 12 to get a monthly estimate.
- If after paying your bills and putting money in savings, you still have funds, you can carry over the balance for
the next month or use it for unexpected expenses
MANAGING MONEY
SAVINGS
You know it’s important to save money, whether it’s for an emergency fund, your retirement, or to buy something special. But it’s
not always easy to stash any spare cash.
Consider yourself a creditor
When you pay your bills, write a check to yourself. Decide on a realistic amount. Deposit the money into a savings, investment,
or retirement account. Then, pay your other bills as usual. If you find that you don’t have enough money to cover all your
expenses, write down the amount you are short and look for ways to trim your budget: Borrow books from the library rather than
buying new; brew your own coffee rather than buying it; consider raising the deductible on your auto insurance; buy store
brands instead of name brands; cancel subscriptions to magazines you don’t read or can find at the library or online.
Once you establish a regular savings plan, consider increasing your monthly deposit if you get a pay raise, or when
you pay off a debt
For example, once you pay off your car loan, student loan, or other installment debt, deposit that amount into a savings account.
Once your toddler is out of diapers, deposit the amount you spent on diapers into savings. You won’t miss the money if it’s put
into savings, but more than likely, you’ll find a way to spend it if it’s in your checking account.
If you need some fast cash, consider selling items around the house you no longer use, either online, at a garage
sale, or at a local consignment shop.
When you sell online, you may use an auction or classified ad site. Check the sites for policies and procedures. When you agree
to consign items to a shop, you’re a consignor. You still own your stuff, but you give the shop the right to sell it. The shop
becomes the consignee. When the items sell, you get a percentage of the selling price that you agreed to in advance. A profit
split of 50/50 or 60/40, with the higher percentage going to the shop, is typical.
Avoid payday lenders
A payday loan is a cash advance secured by a personal check or paid by electronic transfer. It is very expensive credit. How
expensive? Say you need to borrow $100 for two weeks. You write a personal check for $115; $15 is the fee to borrow the
money. The check casher agrees to hold your check until your next payday. When that day comes around, either the lender
deposits the check and you redeem it by paying the $115 in cash, or you roll-over the loan and are charged $15 more to extend
the financing 14 more days. If you agree to electronic payments instead of a check, here’s what would happen on your next
payday: the company would debit the full amount of the loan from your checking account electronically, or extend the loan for an
additional $15. The cost of the initial $100 loan is a $15 finance charge, which works out to an annual percentage rate of 391
percent. If you roll-over the loan three times, the finance charge would climb to $60 to borrow the $100.
You know it’s important to save money, whether it’s for an emergency fund, your retirement, or to buy something special. But it’s
not always easy to stash any spare cash.
Consider yourself a creditor
When you pay your bills, write a check to yourself. Decide on a realistic amount. Deposit the money into a savings, investment,
or retirement account. Then, pay your other bills as usual. If you find that you don’t have enough money to cover all your
expenses, write down the amount you are short and look for ways to trim your budget: Borrow books from the library rather than
buying new; brew your own coffee rather than buying it; consider raising the deductible on your auto insurance; buy store
brands instead of name brands; cancel subscriptions to magazines you don’t read or can find at the library or online.
Once you establish a regular savings plan, consider increasing your monthly deposit if you get a pay raise, or when
you pay off a debt
For example, once you pay off your car loan, student loan, or other installment debt, deposit that amount into a savings account.
Once your toddler is out of diapers, deposit the amount you spent on diapers into savings. You won’t miss the money if it’s put
into savings, but more than likely, you’ll find a way to spend it if it’s in your checking account.
If you need some fast cash, consider selling items around the house you no longer use, either online, at a garage
sale, or at a local consignment shop.
When you sell online, you may use an auction or classified ad site. Check the sites for policies and procedures. When you agree
to consign items to a shop, you’re a consignor. You still own your stuff, but you give the shop the right to sell it. The shop
becomes the consignee. When the items sell, you get a percentage of the selling price that you agreed to in advance. A profit
split of 50/50 or 60/40, with the higher percentage going to the shop, is typical.
Avoid payday lenders
A payday loan is a cash advance secured by a personal check or paid by electronic transfer. It is very expensive credit. How
expensive? Say you need to borrow $100 for two weeks. You write a personal check for $115; $15 is the fee to borrow the
money. The check casher agrees to hold your check until your next payday. When that day comes around, either the lender
deposits the check and you redeem it by paying the $115 in cash, or you roll-over the loan and are charged $15 more to extend
the financing 14 more days. If you agree to electronic payments instead of a check, here’s what would happen on your next
payday: the company would debit the full amount of the loan from your checking account electronically, or extend the loan for an
additional $15. The cost of the initial $100 loan is a $15 finance charge, which works out to an annual percentage rate of 391
percent. If you roll-over the loan three times, the finance charge would climb to $60 to borrow the $100.
SPENDING
Spending money is easy. Spending money wisely is another thing altogether. If you ever wonder where your money goes, here’s
how to find out:
If you’ve ever heard the advice, “never go to the grocery store without a list or when you’re hungry,” chances are you know why:
you’re likely to buy more than you need and spend more, too. Regardless of where you’re shopping and how you pay for your
purchases, remember to:
Shop around
A “sale” price isn’t always the “best” price. Some merchants may offer a sale price on the item you want for a limited time; other
merchants may offer items at a discount everyday. Other merchants may offer a deep discount on one item – but only if you
agree to spend a minimum that is several hundred dollars more.
Go online
Check out websites that compare prices. If you decide to buy from an online merchant, keep shipping costs and delivery time in
mind.
Look for price matching policies
Some merchants will match, or even beat, a competitor’s prices.
Clip coupons
Coupons are useful when they save you money on what you’re already planning to buy. You can find some coupons in the
Sunday paper or often, at coupon exchanges at your local library. Or you can download others – full coupons or simply codes –
from manufacturer and retailer sites online. If you are shopping online, you simply enter the code at checkout.
Use debit and credit cards sparingly
To minimize interest and other charges, try to limit credit card purchases to an amount you can pay in full at the end of the
month. If you use a debit card, don’t rely on an overdraft feature to spend money you don’t have. When you leave your house,
carry only the card you may need to use rather than all your cards “just in case.”
Keep track of your spending. Incidental and impulse purchases add up
Jotting down what you spend after every purchase helps keep you mindful of your limits. At least once a month, use credit card,
checking, and other records to review what you’ve bought. Then ask yourself if it makes sense to reallocate some of this
spending to an emergency savings account.
Spending money is easy. Spending money wisely is another thing altogether. If you ever wonder where your money goes, here’s
how to find out:
If you’ve ever heard the advice, “never go to the grocery store without a list or when you’re hungry,” chances are you know why:
you’re likely to buy more than you need and spend more, too. Regardless of where you’re shopping and how you pay for your
purchases, remember to:
Shop around
A “sale” price isn’t always the “best” price. Some merchants may offer a sale price on the item you want for a limited time; other
merchants may offer items at a discount everyday. Other merchants may offer a deep discount on one item – but only if you
agree to spend a minimum that is several hundred dollars more.
Go online
Check out websites that compare prices. If you decide to buy from an online merchant, keep shipping costs and delivery time in
mind.
Look for price matching policies
Some merchants will match, or even beat, a competitor’s prices.
Clip coupons
Coupons are useful when they save you money on what you’re already planning to buy. You can find some coupons in the
Sunday paper or often, at coupon exchanges at your local library. Or you can download others – full coupons or simply codes –
from manufacturer and retailer sites online. If you are shopping online, you simply enter the code at checkout.
Use debit and credit cards sparingly
To minimize interest and other charges, try to limit credit card purchases to an amount you can pay in full at the end of the
month. If you use a debit card, don’t rely on an overdraft feature to spend money you don’t have. When you leave your house,
carry only the card you may need to use rather than all your cards “just in case.”
Keep track of your spending. Incidental and impulse purchases add up
Jotting down what you spend after every purchase helps keep you mindful of your limits. At least once a month, use credit card,
checking, and other records to review what you’ve bought. Then ask yourself if it makes sense to reallocate some of this
spending to an emergency savings account.
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