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 1 year $1800$150

Repay debt 3 years $5000$200

Retirement 30 years $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 $2000• Interest rate $19.8%• Annual fee $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