Budgeting 101 Know the terms
Jacob Lew
"The budget is not just a collection of numbers, but an expression of our values and aspirations."
Budget allocation
dr. kimberly Bradshaw The Accounting Guru "AGuru"
budget is very personal and is unique to YOU. Realistically, the budget of someone paying back student loan debt and working a lower income job will be very different from someone who carries low balances on their one and only credit card while earning a six figure income. Both can enjoy life and stay within budget, as long as they are realistic and know what they want out of their money. Your sister may be a serious foodie and budgets $300/month for dining out and trying new restaurants. In exchange, she has Netflix and no Cable TV so she only lists $15/month in for her budget for movie/entertainment expenses.
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Follow the 50/25/25 Rule (your after tax money is distributed in this order): 1st 50%- Basic Expenses 2nd 25%- Saving Priorities 3rd 25%- Lifestyle Choices
contributing toward your retirement; saving for emergencies and goals such as big trips or a down payment on a home; and paying off credit card payments, student loans, personal or signature loans and other debts. Lifestyle Choices Your Lifestyle Choices should add up to no more than 25% of your after tax income. These are the expenses you make with the day-to-day money you live on after your Essential Expenses and Savings Expenses are taken care of. They are often personal, voluntary, and often fun choices about how you spend your discretionary income. This includes cable, Internet and cell phone plans, charitable giving, entertainment, gym fees, hobbies, pets, personal care, restaurants and bars, shopping and other debt. expenses.
budgeting Wiifms
Dr. Bradshaw AGuru
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Basic Essential Expenses The expenses you need in order to maintain the fundamentals of your life: shelter, food, heat, etc. They include your rent or mortgage, utilities like gas, electric and water, groceries, childcare, car payments or other transportation. Basic Essential Expenses should add up to no more than 50% of your total income after taxes. Saving Expenses Yes, Saving for your future is a Bill! You should put your money toward financial priorities before you spend on your lifestyle choices. Your Savings Expenses should add up to at least 25% of your after tax income. Attending to these expenses is essential to a strong financial foundation and includes;
hats in it for me (WIIFM) Short Term: Make Valued and AWARE Purchase Decisions Know your WORTH and your Purchase Power Accountable to yourself record receipts reinvest Long Term: Make your Money work for you Prepare for the Future Travel Retirement Legacy Giving Pay off DEBT
"Budgeting gives you freedom to live by helping prioritize and plan your financial future"
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3 | BUSINESS REPORT
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Based on your monthly expenses,you are trying to determine if your spending is allocated appropriately. How did you do? Based on your new income and current expenses, you meet the 50/25/25 Rule. Now it is time to look for areas of improvement. You will now have to ask yourself: What did I miss? Is this realistic? What can I change?
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5 | BUSINESS REPORT
You just accepted a new job and you will earn a gross income of $80,500/year. You live on your own and are responsible for all expenses, including rent, car, insurance, cell phone, utilities, entertainment, food, savings, miscellaneous expenses and a travel budget. You have to pay 25% of your gross income in taxes. This leaves you with your TRUE spendable income of $60,375 ($5.031.25 per month).
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drkbbradshaw@gmail.com
