Budgeting Guidelines

Why Develop A Budget?

Needs vs. Wants

A budget will help you combat the temtations of spending and take control of your moeny. There are several reason to develop a budget:

1. Planning: Developing a budget allows you to determine if your total income meets your total expenditures.
2. Motivation: A budget can help motivate you by making short-term objectives achievable.
3. Control: A budget allows you to control your finances by enabling you to see how you actually spent your income versus how you planned to spend your income. Given this information, you can alter your budget or spending habits.

What will a budget do for you?

• Help you meet monthy financial obligations.
• Know where your money goes.
• Make payments on time.
• Eliminate or reduce unnecessary debts and loan balances.
• Increase savings for emergencies.
• Determine what you can and cannot afford.
• Precent or reduce impulse spending.
• Save for education, returement or big purchases.
• Recue over-spending.

Take a few minutes to think about
your personal needs and wants.

NEEDS are items that you must have for basic survival.

WANTS are things you desire but can live without.

• Make a list of your "needs."
• Make a lits of the items that you have purchased out of "want."
• Now, estimate the cost of each of these items. In other words, what is the total cost of your "needs," such as housing, food and clothing?
• Now, consider items that you may be making payments on that were purchased to satisfy your "wants."
• Are you spending as much for your "wants" as for your "needs?"

It is important to note that these "wants" are neither good nor bad. However, you should personally balance your needs and wants so that you can successfully establish a savings plan and good budgeting principles. This will help you establish and maintain good credit and work toward achieving long-term financial security.

How To Develop A Budget

Steps for Developing a Successful Budget

The bottom line of a budget really comes down to income and expenses. There are two primary knds of expenses, fix and variable.

What are my fixed expenses?
Fixed expenses stay the same every month,
for example, your rent and your car payment.

What are my fixed expenses?
Variable expenses change from month to month,
such as groceries, clothing and doctor's visits.

There are several factors that need to be considered to establish a budget that works.

The key to successful budgeting is to be realistic and focused . Do not set yourself up to fail by setting unrealistic goals. If you do, you will only become discouraged and go back to thinking that it is impossible to live by a budget and save any money.

1. Determine your monthly income.
2. List you fixed monthly expenses
3. Know your variable expenses.
4. Track and plan for large, periodic expenses.
5. Compare income with expenses.
6. Set priorities, goals and limits.
7. Set a savings plan and make it a priority.
8. Always keep an emergency fund.
9. Plan ahead for major purchases, thus avoiding impulse decisions.