Budgeting Budgeting The first step in budgeting is
Budgeting
Budgeting • The first step in budgeting is to evaluate your present and future goals. – What do you need and want now, in the next year or in the next 10 years?
Experts recommend that people budget their money as follows: Item Percentage Spent Food 15 -20% Housing 23 -35% Transportation 10% Clothing 10% Savings 10% Miscellaneous 15 -20%
Budgeting • A budget is not useful if you do not use it. • Budgeting is an ongoing process that must be revised and updated often.
Vocabulary Word Definition Budget (Spending Plan) A plan for managing income and expenses. Income Any money you receive. Opportunity Costs The value of what is given up when you choose one option over another. Trade Offs An exchange of one thing in return for another.
Vocabulary Cont. Vocabulary Word Definition Envelope System Label envelops with each of your expense categories. When you get money, distribute it among the envelopes based on the expense amounts in your budget. Computer Program Software program that helps you monitor your budget. Paper Tracking Using a checking account register to track all your income and expenses.
Vocabulary Continued Vocabulary Word Definition Expense An amount of money spent to buy something or do something. Fixed Expenses which usually do not vary in amount and must be paid on a regular basis. Flexible (Variable) Expenses Gross Income Expenses which vary from week to week or month to month. Net Income Amount of income left after deductions are taken. The total amount of income earned before deductions are made.
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