... utilities, loan payments, car payments, credit car

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BUDGETING

• The Basics of Financing for Students

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Overview

• What is A Budget?
• What is A Spending Plan?
• Why Do I Need One?
• The Truth About Credit Cards
• Checking vs. Savings Accounts
• Debit Cards
• Balancing Your Checkbook
• Annual Overview
• Back-up Plans
• Long-term Financial Goals
• Final Overview

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What is a spending plan?

• A spending plan is developed by collecting all
  the data necessary to create your budget.
• You will need to write down a list of your
  monthly expenditures, including rent, insurance,
  utilities, loan payments, car payments, credit
  card bills, cell phone bill, etc.
• Next, determine the amount of spend-able income
  you receive each month. (Calculate income minus
  taxes spend-able income)
• Calculate the total of the monthly expenditures
  from above and subtract that number from the
  spend-able income you have each month.
• If you have a positive number as a result, you
  can use this as you desire, whether it be to save
  the extra funds for future expenses or rainy
  days!
• If you have a negative number as a result, you
  need to re-evaluate the amount of expenditures
  you have, and determine where the spend-able
  income is going. Then re-work your spending plan
  to make a positive result.

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What is a budget?

• According to dictionary.com a budget is An
  itemized summary of estimated or intended
  expenditures for a given period along with
  proposals for financing them.
• A budget, simply stated, is a way to monitor the
  amount of money that comes into and out of your
  bank account.

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Why do I need one?

• Its important to budget your money so that you
  dont run out, overdraw your account, get charged
  late fees, or get stuck owing money when you have
  none!
• It helps keep in perspective a healthy budget to
  work with each month.
• Making a budget helps you become more responsible
  in handling your expenses.
• The skills you gain from completing one can be
  transferred to your companys budgets and
  expenditures as well!

6
The truth about credit cards

• Credit card companies will offer introductory
  rates to entice applicants, but will jump to
  higher rates immediately after that introductory
  period.
• They expect the applicants to pay only the
  minimum payments so the company can charge the
  high interest rates to each consecutive amount
  due.
• It is better to pay off the total amount due at
  once rather than paying the minimum balance each
  time. If you continue to pay only the minimum
  balance, it can easily take years to pay off the
  entire balance due.
• If you are not careful with your spending habits,
  you can easily max out a credit card. By
  maxing out a card, you have reached your
  spending limit.

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Checking vs. Savings Accounts

• A checking account does not accrue interest.
• A checking account allows you to deposit,
  withdraw, write checks, use debit/ ATM cards, and
  have a varying balance.
• A savings account accrues interest over time.
• With a savings account, there is usually an
  opening deposit required (there are a few
  exceptions- check with the individual banks).
• You can only withdraw from a savings account a
  limited number of times per month.

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Debit Cards

• A debit card is directly connected to your
  checking account, and has the option of using
  savings for overdraft protection.
• Each use is deducted from your checking account.
• You can withdraw cash from an ATM with a debit
  card.
• You can use your debit card anywhere you can use
  a credit card it works the same way a credit
  card does, but it draws money from your bank
  account.
• When all the money is depleted from your checking
  account, unless you deposit more funds, there
  will be no more money to withdraw.

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Balancing Your Checkbook

• Balancing your check book is as easy as addition
  and subtraction.
• Gather all of the receipts from purchases made
  with checks and or your debit card and all
  deposit slips from bank transactions.
• Write each of these deposits and withdrawals in
  order according to the date that they took place.
  
• Calculate the total amount according to whether
  you withdrew or deposited funds from the total
  amount currently available.
• Example Current Balance 3,027.14
• Withdrawal 24.12
• New Total 3,003.02
• Deposit 22.05
• New Total 3,025.07

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Annual Overview

• This is an easy way to see the BIG PICTURE!
• Estimate your total annual income.
• Estimate your total expenses per month (rent,
  utilities, insurance, car payments, credit cards,
  etc.) and multiply by 12.
• Add up all the total expenses and subtract from
  your annual income.
• The amount left should be positive and can be
  perceived as money allocated to other funds.
• By putting your total income and total annual
  expenses into perspective, it is easier to see
  how much money you can put towards emergencies,
  fun money, savings, etc.

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Back-up Plans

• A back-up plan is an easy way to save a certain
  amount of money each month for emergencies-
  whether it be health related, car-related, or
  nature-related.
• Specify a certain amount to put aside each month
  to put into a separate savings account for
  emergencies only.
• Do not use this money for any other purpose than
  an emergency basis.
• Example 1 Vacation Trip to Beach
• Set aside 40 from each paycheck
• 40 x 12 months 480 for the entire trip!
• Example 2 Auto Repairs
• Set aside 35 from each paycheck
• 35 x 12 months 420

12
Long-Term Financial Goals

• Is there something you are interested in saving
  for that costs a tremendous amount of money?
• Are you interested in saving for a car, a house,
  a trip to Europe?
• Again, this is where a budget is crucial.
• Use the same skills you learned from making your
  monthly and annual budgets to make a long-term
  goal.
• The positive amount of spend-able money left over
  can be divided between emergencies and this new
  long-term financial goals.
• You can determine other ways to bring in extra
  income to help achieve this long-term goal as
  well, such as having a yard sale, babysitting,
  taking another part-time job, saving gift money,
  etc.

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Final Overview

• Budgeting can help you keep track of your funds
  on a regular schedule.
• You can learn responsible money-handling skills
  by budgeting and saving money for future
  financial goals!
• These skills are valuable in that they can be
  transferable to other opportunities within your
  life that deal with finances.
• To learn more about checking and savings
  accounts, and other budgeting options- talk to
  your local bank for further options.