Budgeting and Planning by Ian Miller

managing your income

Making a plan for your income is a smart way to manage your money. There are two elements to consider - your income and your expenses.

Disposable Income - the money you have left to spend or save after your taxes and other required deductions are taken.

Disposable income

Financial Plan - a set of goals for spending, saving, and investing the money you receive.

Learn more about financial plans here.

developing a budget

The next step toward achieving your financial goals is to prepare a budget.

Budget - Spending and saving plan based on your expected income and expenses.

Budgeting notes

Preparing a Budget

To prepare a budget, you should estimate your income and expenses and set a savings goal. If expenses plus savings exceed income, you should adjust your saving or spending accordingly.


There are two types of expenses, fixed expenses and variable expenses. You are required to pay these regardless of income change.

Fixed Expenses - expenses where the cost does not change monthly.

Variable Expenses - Expenses where the cost does change monthly.

Personal Records

There are four types of personal records you should keep. These include income and expense records, a net worth statement, a personal property inventory, and tax records.

Net Worth Statement - shows a person's net worth based on his or her assets and liabilities.

Net Worth

Liabilities - Money or debts you owe to others.

Personal Property Inventory - a list of the valuable items you own, along with their purchase prices and approximate current values.

Tax Records usually include the tax return itself, W-2 forms, and other receipts verifying income and expenses listed on each return.

Legally Binding Agreements

Once you grow older and your finances become more intricate, you will likely enter a various amount of legally binding agreements. Learn more about legally binding agreements here.

Contract - a legally enforceable agreement between two are more people.

Other common legal agreements will include;

  • Credit accounts
  • Mortage loans
  • Rental agreements

Enforceable Contracts - a contract that has agreement (offer and acceptance), consideration (an exchange or something of value), contractual capacity (legal ability), and legality (lawful purpose).

Created By
Ian Miller

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