Budgeting Strategies
Envelope Method
It is never too early to start budgeting.
True; tracking your expenses, budgeting your money and saving should start as soon as you begin earning money.
Work more hours, request a raise, find a side gig, change jobs
Because they can be easy to forget about, you need to keep these organized when budgeting.
Bills! Keep a folder or tracking system for when bills are due and how much you owe.
Budgeting gives you________of your spending habits.
Control and understanding of you spending habits
This budgeting method accounts for every dollar spent.
Zero-Based Budget
Most people don't make enough money to save.
This is false in most situations. Money management correlates more with the choices one makes as opposed to how much money you make.
According to the 50-30-20 rule, what percentage of your income should go to wants.
30%
You need to differentiate between these when you are budgeting.
Needs and Wants
A benefit of budgeting is so you can always have money for_______.
Emergencies, fun or unexpected expenses
This budget strategy determines exactly what percentage of your income goes to needs.
50-30-20
True! Long terms savings are meant for things you will not be spending for a long time or for a one-time purchase of something that requires a large sum of money.
Are groceries/food a fixed or variable expense?
Variable: groceries/food are a need, but you can choose what you purchase by looking for coupons, eating out less often or buying generic brands.
Compounding
When creating a budget you need to be_______________.
Realistic! Some budgeting strategies do not always fit into your situation. Find one that does or combine parts of several strategies.
Your budget will look the same every month.
This is false. Expenses can change from month to month due to unplanned events, emergencies and even increase in bills that are typically fixed.
How much do you want in an emergency fund (when you are first starting out)?
$500-$1000; However, the general rule is to have 3-6 months of living expenses saved for an emergency.
You need to make sure that you do this weekly or monthly.
Compare your budget to your actual spending
Budgeting can help you stay focused when you are______________________.
What is spending recklessly. (Retail therapy, on vacation, etc)
Name 2 different types of budgeting systems.
Paper, Spreadsheet, Digital App
Someone says they break-even each month, so they must be doing okay with their finances
False. You can't know for sure if you are doing okay with your finances without tracking. Tracking for 30 days will help find more money to save.
What percentage of my income should I pay down each month on my debt each month?
(hint...it's more than 10 but less than 50)
Ideally, 36% of your monthly income should go to debt. (this includes mortgage, car loan, credit card debt, school loans and other private loans)
Budgeting can feel empowering because it helps you focus on your......
Financial Goals
It is essential to have a budget and spending within your means will help keep you out of .......