Unit Three

1
Unit Three

• Budget Dont Go Broke

2
Questions to Answer

• What is a Budget, how does it work, and how can
  it help you?
  
• How do taxes and other payroll deductions affect
  your paycheck?
  
• What does P.Y.F mean, and how can I benefit
  you?
  
• How can you make the best use of your cash?

3
What is a Budget?

• Cash is the lifeblood of any business. Cash is to
  personal financial planning as gas is your car.
  Without either, youre not going very far.
  
• Tracking money just for the sake of tracking is
  pretty meaningless. It make more sense to track
  money when you have a plan for it.
  
• That is the purpose of a budget (sometimes called
  a spending/savings plan.)
  
• A BUDGET is a plan for managing your money during
  a given period of time.

4
Money Going Out

• Expenses the money you spend on your needs and
  wants usually falls into one of two categories
  
• Fixed have set dollar amounts and are the exact
  amount every time. i.e. Mortgage, car payments,
  etc.
  
• Variable can change, which means you usually
  have more control over them. i.e. gas for your
  car, movies, video rentals, eating out, etc.
  

5
Cash Management

• How you handle money coming in and money going
  out sometimes referred to as cash flow.
  
• One of the best tools to help manage your money
  is a budget. Basically, a budget is your roadmap
  to achieving your goals when you are in control
  of your spending you are able to make clear,
  planned decisions on the best way to spend your
  money and make you money work for you.

6

• Like most people, with a job, your money is
  limited. One can work only so many hours a week
  at a job which limits your income. Must be
  thoughtful about how you spend your take-home
  pay.
• With the help of a budget, you have the
  opportunity to use your decision-making skills
  and choose how to spend your money.

7

• Budget is simple and has two parts
• Income and Expenses
• The trick is simply to balance the two. When
  theyre in balance, you are on your way to
  meeting your financial goals. When they are not
  in balance, you have more money going out then
  coming in, which often results in debit.

8
P.Y.F

• Pay yourself first
• You dont have a choice about paying taxes, you
  can control the amount to some degree
  government still gets its taxes.
  
• P.Y.F is the secret to getting what you want and
  becoming a disciplined saver.
  
• Is a simple trick almost every self-made wealthy
  person uses, follow the same principle dont
  give yourself a choice. Make it a regular part of
  you budget. Think of it as a bill you owe
  yourself! It is the P.Y.F. money in your plan
  that helps you reach your goals.

9
Making the Most of your Dollars

• Ways to make your dollars go father
• Shop for items on sale.
• Buying and selling items through online
  auctions.
  
• Using coupons when purchasing items.
• Bargains at garage sales and thrift stores.
• Learn how to evaluate products and services
  Consumer Reports.
  
• Using cost/benefit analysis where you weigh the
  cost of a product or service against the benefit
  it provides.
  

10
Other Tools to Help You Handle Your Cash

• Transaction Services
• Checking accounts
• ATM card
• Debit card electronic check

11
Checking Accounts

• Banks or Credit Unions
• Can have charges, fees and other cost added on
• Minimum balances
• Annual or monthly fees
• Overdraft protection
• Insufficient funds charges
• ATM fees

12
The Envelope System

• Simple system used to help manage your cash.
• Label an envelope for each spending category of
  your budget ( savings, food, gas, etc.)
  
• Record the planned amount on each envelope.
• When you get income put the planned amount in
  each envelope.
  
• When you need to spend money take it out of
  each respective envelope and write the date,
  amount and reason on the envelope.
  

13
Record Keeping

• As one gains more financial experience will
  have more accounts and obligations.
  
• One needs to develop the habit of staying
  financially organized. A small stack off manila
  folders makes a neat and organized filing system.
  
• Here are some records one will want to keep

14

• Checking Account Statements
• Savings and Investment Statements
• Insurance declarations page
• Tax documents
• Pay Stubs
• Loan papers
• Big-ticket item receipts and warranties

15
What You Have Learned

• The benefits of a budget, what it is , and how it
  works.
  
• The difference between income and expenses.
• How taxes and other payroll deductions affect
  your paycheck.
  
• The importance of P.Y.F
• How basic tools like a checking account or the
  envelope system can help your budget work for
  you.