Module 6: Budgeting
Managing spending is one of the most challenging and difficult skills to learn and sustain. The old saying, “Your eyes are bigger than your stomach,” applies not only to eating but spending, too. It is very easy to overspend and quickly get into financial trouble. Wants are unlimited and impulse spending is easy today because of simple access to credit. So far we have learned that it is very important to establish and maintain good credit and this can also be done from moving into a first apartment, paying utility bills, cell phone bills, etc. Paying bills on time is very important. When bills are not paid or not paid on time, poor credit is the result. It is very difficult to improve poor credit; therefore, establishing good credit from the beginning is vital. By creating a budget and sticking to it, is a discipline that encourages wise spending habits and careful attention to building and maintaining good credit which is essential for everyone.
What to consider before creating a budget:
Your Income- Looking back to module one, you will consider your monthly income when creating your budget
Identify Fixed & Variable Expenses– Fixed expenses do not change from one month to the other they include such items as: mortgage or rent payments, car payments, insurance premiums and college loan repayment. Variable expenses will change monthly, these can include: food, utilities, cell phone, medical bills, car expenses.
Set Financial Goals– Determine how much money to spend, save, budget, and invest. Also, consider lifestyle, values, and plans for the future in a budget. A chosen career/occupation has a significant impact on income and your ability to save and invest to achieve financial goals and it affects your lifestyle.
Save for Unexpected Expenses– Plan for medical emergencies, job loss, annual insurance payment, or other financial expense occurrences; if so, money will be available to cover these expenses. Included in this category, consider short-term savings goals (vacation, new television) and long-term savings goals (college fund, investment fund, down payment for a new home or a new car).
Creating a Budget
When you begin to create your budget (a plan for saving and spending your money) it is important to account for all of your income, a budget includes a list of each income source, a savings plan, and an itemized list of your expenses. You will need to be flexible and adjust your budget, as you may need such as spending more on food than you have allowed in your budget, therefore, you will need to spend less on another category. There is not a right or wrong way to create a budget, your budget should reflect you and your income, savings, and spending habits.
You will be using numbers determined throughout this project. You cannot change your college choice (i.e. loan repayment monthly amount). You can change your credit card purchase (minimum of $2000 will remain) and your car choice.
You will need an electric bill calculator in one section of this module. Use the link below to access it when you are ready to use it.
Electric Bill Calculator
Researching Costs
You cannot simply create a cost that you think you will spend. You need to research each category to come up with a legitimate cost that you can expect to pay. For instance, if you plan to rent an apartment, you should research the cost online or call the complex to find out monthly rent. Does your complex include any of your utility payments? Make sure you are detailed in your research. You will be sharing where or how you found the information and numbers you used in your table. You may have to find out the utility company for where you are living and find average cost for monthly utilities. You may not leave out any categories in the budget, but you may add extra categories you may need (for instance, pets, travel etc). Go to your project document and begin Module 6.
What to consider before creating a budget:
Your Income- Looking back to module one, you will consider your monthly income when creating your budget
Identify Fixed & Variable Expenses– Fixed expenses do not change from one month to the other they include such items as: mortgage or rent payments, car payments, insurance premiums and college loan repayment. Variable expenses will change monthly, these can include: food, utilities, cell phone, medical bills, car expenses.
Set Financial Goals– Determine how much money to spend, save, budget, and invest. Also, consider lifestyle, values, and plans for the future in a budget. A chosen career/occupation has a significant impact on income and your ability to save and invest to achieve financial goals and it affects your lifestyle.
Save for Unexpected Expenses– Plan for medical emergencies, job loss, annual insurance payment, or other financial expense occurrences; if so, money will be available to cover these expenses. Included in this category, consider short-term savings goals (vacation, new television) and long-term savings goals (college fund, investment fund, down payment for a new home or a new car).
Creating a Budget
When you begin to create your budget (a plan for saving and spending your money) it is important to account for all of your income, a budget includes a list of each income source, a savings plan, and an itemized list of your expenses. You will need to be flexible and adjust your budget, as you may need such as spending more on food than you have allowed in your budget, therefore, you will need to spend less on another category. There is not a right or wrong way to create a budget, your budget should reflect you and your income, savings, and spending habits.
You will be using numbers determined throughout this project. You cannot change your college choice (i.e. loan repayment monthly amount). You can change your credit card purchase (minimum of $2000 will remain) and your car choice.
You will need an electric bill calculator in one section of this module. Use the link below to access it when you are ready to use it.
Electric Bill Calculator
Researching Costs
You cannot simply create a cost that you think you will spend. You need to research each category to come up with a legitimate cost that you can expect to pay. For instance, if you plan to rent an apartment, you should research the cost online or call the complex to find out monthly rent. Does your complex include any of your utility payments? Make sure you are detailed in your research. You will be sharing where or how you found the information and numbers you used in your table. You may have to find out the utility company for where you are living and find average cost for monthly utilities. You may not leave out any categories in the budget, but you may add extra categories you may need (for instance, pets, travel etc). Go to your project document and begin Module 6.