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Introduction To Budgeting

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Introduction To Budgeting

Uploaded by

Pulasthi Rasanga
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Introduction to Budgeting

Planning a budget (and sticking to it) can help you live on modest means without going into debt.
Following a realistic budget can help you meet your saving goals, plan for emergencies or
unexpected costs, and reduce stress. Budgeting allows you to control your money instead of
letting your money control you.

Saying you will budget and sticking to it can be challenging. Many people plan great budgets
and give up as soon as something does not go as planned. But, the major reason people fail at
budgeting is a poor attitude. If you think of budgeting and being financially responsible as a
chore or a sacrifice, you are sure to fail. However, if you change your attitude, you can be
successful. Think of it as a ‘plan’ instead of a budget. Like all other plans, it will need to be
custom-made to your situation and long-term financial goals. Don’t worry about fitting into a
‘one-size-fits-all’ category, but instead focus on what works for you. Start out small if you must!

How to Plan a Budget

• Start with some sort of a budgeting tool. This can be a worksheet, a piece of paper or
computer software.
• Go through your checkbook and put your expenses into categories.
• Look at pay stubs to determine how much money you bring in each month.
• For each category, try to make a budget that realistically reflects your actual expenses.
Don’t forget to make a category for SAVINGS.
• Keep track of your expenses throughout the month.
• If you are spending more than you are bringing in, you have a problem! Your spending
habits will need to change.
• If you have extra money left over each month, put a portion of it into your savings
account. You can use the rest to pay off a high interest credit card.
• Keep tracking your expenses monthly to see where you can make changes.

Remember the following tips when planning your budget:

• You must be committed.


• Be realistic and keep it simple. Planning on saving $200/month when you only make
$800 may not be realistic. Focus on what is important and necessary and try to make
small, effective and realistic changes.
• Budgeting money = Saving money. Think about why you are budgeting your money.
Do you want to save for retirement? What about a new car? Budgeting helps you save!
• Track your spending. This is very important!! Don’t do all the hard work of preparing a
budget just to ignore it. Tracking your money will help you see where you need to curb
spending. Whether you do it daily, weekly or monthly…TRACK YOUR SPENDING!
• Look for Free stuff! Check out local newspapers. Go to the park. Attend that free
concert. Volunteer. Be creative.
• Correct bad spending habits now. This will take discipline, but you can do it!
• Plan for the unexpected. It never fails. You have a little money saved up for a trip and
your car breaks down. Make sure you put aside a little money each month to avoid added
stress.

Field-vetted resource contributed by Indiana Campus Compact, IN. Please retain the original program attribution when adapting or
using this resource.
• Don’t panic. You are going to make mistakes. It’s okay. Just get back on track as soon as
possible.
• Reward yourself. Do something for yourself if you stick to your budget for an entire
month. Just don’t go crazy!
• Stick with simple budgeting tools. You can use Excel or a piece of paper to track your
budget. There is no need to invest in high-tech, high cost tracking tools.
• Don’t let money rule your life. You have enough stress in your life. Do the best you can
when it comes to your budget. Learn from your mistakes and try to do better next time.

Tips for sticking to your budget:


• Pay as much as you can on your credit card bill monthly without overspending your
budget. This may mean one less dinner out or movie rental, but it is worth it.
• Keep a ‘penny jar’ at work and at home. Put your spare change in everyday or after doing
laundry. Go once a month to the bank and deposit it into a savings account or use to make
an additional credit card payment.
• Are you getting a tax refund? No matter what the amount, make an oath to put it in your
savings or use it to pay off a bill.
• Be careful when considering transferring one credit card to a lower rate card. Read the
fine print! Credit card companies may offer a low or 0% transfer rate but could hike that
up after 6 months.
• Create bank account errors IN YOUR FAVOR. Round up your purchases to the nearest
dollar or higher. For example, if something costs $7.30 write it down as $8 or $10! You
will end up with more money at the end of the month.
• Look at your budget and take out cash for the week. Leave your credit cards and debit
card AT HOME. For example, if you spend $80/week, take that exact amount out of your
account IN CASH. Make it last!
• You only need one credit card! Say it with me…. "I only need one credit card and it is for
emergencies only.”
• Only take money from a bank branch during business hours. Avoid ATMs.
• If you have to use an ATM, try to use your bank to avoid fees.
• Always review your monthly bills. Sometimes there are added fees or ‘adjustments’ that
should be questioned.
• If you don’t like to keep cash in your wallet, put everything on a debit card. This means
leaving your credit card at home! This way you can track everything you spend.
• Remember: If you use your credit card for that ‘night out’ at $50, it will turn into $60 on
your monthly credit card statement due to interest rates!
• You can always give plasma! You will receive about $20 for your 1 ½ hour donation.
You can go to www.biolifeplasma.com to read frequently asked questions.
• You should not be paying more than 12% interest on your credit cards. Call your creditor
to negotiate a lower rate or go to www.bankrate.com for a list of the lowest rate credit
cards.
• If you must get a credit card, make sure they are ‘no fee’.

2
SAVINGS

It is recommended that you have three to six months of your monthly bills in a savings account
to avoid unexpected layoffs or job losses. However, if you are in serious debt, you may need to
hold off on building up your savings. You can always rebuild your savings with the money you
were spending on credit card bills. You can also use a credit card for REAL emergencies if you
have too. Unfortunately, going to a new club and buying a new outfit or CD are not emergencies.

There is no magic way to save your money. It is the basic principle in financial planning. Now,
more than ever, we must be prepared for our future. People are living longer, healthcare and
social security are changing, and attending college is more expensive. But, don’t stress. Small
changes can go a long way toward building your savings.

1) Set up a savings account if you do not already have one.


2) Automatically deduct from your checking account monthly (this can be a set amount or a
percentage of your paycheck) and DO NOT TOUCH THAT MONEY!
3) Set a goal. Why are you saving? Is there a trip you want to go on? Do you want a new
car?
4) Write SAVINGS into your monthly budget.
5) Whenever unexpected money comes your way, put it into your savings account (if you do
not have a lot of debt).

Sources:
The information gathered for this paper was given by the Indiana Reading Corps AmeriCorps
members, Indiana Campus Compact staff as well as from numerous articles from the below
sources.

Money Saving Tips and Budgeting Energy Saving Tips


www.cnnmoney.com www.consumerenergycenter.org
www.financialplan.about.com
www.betterbudgeting.com Car Care Tips
www.moneycentral.msn.com www.meineke.com
www.moneyadvise.com www.rollinghillspublishing.com
www.fueleconomy.gov
Water Saving Tips
www.sydneywater.com.au
www.watersavingtips.org

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