Money Management: The process of planning how to get the most from your money
So you create a budget...that's a plan for using the money you make in a way that best meets your wants and needs.
What's that you ask? Why do you need a budget?
More than likely it's because you don't have enough money to buy everything you want or you don't quite know where your money is going.
5 Step Budget Making Process
- Set your goals
- Estimate your income
- Estimate your expenses
- Plan for future savings/investments
- Balance and adjust your budget
Wait, mrs. antosh, you're speaking greek to me!
I know, you're wondering about the whole goals part. Here's what you need to keep in mind when setting goals:
- What is it you want to accomplish over a certain period of time?
- What is important to you?
- Reality check!!!
- Gross Pay: Total amount of money you earn for a specific time frame, pre-tax
- Deductions (withholdings) Taxes, Insurance, Retirement, Club Dues
- Net Pay (Take Home Pay) What you have to spend after deductions
GROSS PAY - DEDUCTIONS= NET PAY
- Two Types of Expenses:
- Fixed <--Paid regularly, generally the same over a long period of time
- Variable <--Vary month to month, you have more control over these
PLAN FOR FUTURE
SECURE YOUR FUTURE!
Have a buffer against unexpected costs
BALANCE AND ADJUST THE BUDGET
Budget Variance: The difference between how much your planned to spend and how much you actually spent