August Topic - "Budgeting 101"

In this month's newsletter we cover a variety of topics. It will show you step by step how to budget. It will also give you some money saving tips, and some examples that are sure to help you change your spending lifestyle. I challenge every one to complete the daily spending worksheet, even if you do not feel you need to budget. Hope you enjoy this month's newsletter.

01.  Why should I budget?
02.  Three reasons budgets fail
03.  Steps to Budgeting
04.  Money Saving Tips
05.  Budget, Daily Spending & Saving Money Worksheet Worksheet
06.  Example on how much you can save by cutting small things out of daily spending.

Getting started on a Budget

Twenty years ago the debt level in this country was a lot lower. Credit and debit cards were not as common as they are now. We currently live in a cashless society, which is an advantage to the creditors. Creditors and retailers take full advantage of this. Within recent years you are able to use your card almost anywhere, even fast food restaurants. Most households have an average of eight credit cards, the majority of which are at there limit. Budgeting is a tool that can help you live with in your means.

Did you know that most people spend 10% more than they make. Based on the average American's salary that is $430 a month. The majority of people know exactly how much they made last month; yet have not the faintest idea how much they spent. That is very scary when you think about it. It may explain why most households are in $8,500 debt. People tend to watch the money come in; yet cannot figure out where it all goes. It is very easy nowadays to spend money that we do not have with credit.

1. Why should I budget?

1. It is to be used as a guide to accomplish your financial goals. It is a tool that lets you know if you are headed in the financial future you desire.

2. It helps you control your money situation. You want to be in total control of what goes in and out of your accounts.

3. It gives you a forewarning if you are spending too much money. Most people today use credit, so they do not realize when they are overextended until it is too late.

4. It will help you prepare for unanticipated costs.

5. It will help you stay out of debt or help you get out of debt.

6. A budget makes it easier to figure out where you can save money.

7. You will feel more comfortable about your financial situation knowing where your money is going.

2.Three reasons budgets fail

1. Attitude: "I can not do this" is the start of you failing a budget. You have already convinced yourself that you cannot budget successfully. Once you go into a task with a negative attitude you will unconsciously lack effort. You must think of a budget as a positive lifestyle change. You must think of it as a way to accomplish your financial goals, not as a money diet.

2. Motivation: Do you want to budget to accomplish your goals? Many people budget because they feel they have to. People are often influenced by other people or situations to budget their money. In other words they may have a significant other who feels that budgeting would be a good tool for them to use. In other cases a bankruptcy or debt situation may be the cause for the new lifestyle. Whatever the case may be you, and only you, have to want to budget.

3. Expectations: Many people go into budgeting expecting to become a millionaire over night. They are obviously very disappointed after a little while. It takes time to see the benefits. However, if you stick with it you will be on your way to a secure financial future.

3. Steps to Budgeting

First Step: Organize your expenses.
It sounds simple but many people take this area too general. You want to think of everything you spend money on. Obviously most people will have food, utilities, and mortgage/rent, but you will also have personal categories. You must think of extra activities that you do such as golf, or another sport you may participate in. The purpose of doing this is to become more aware of where every dollar goes. [ Download our printable Microsoft Word Version worksheet that will assist you in this ]

Second Step: Calculate your expenses.
Now, you want to figure out your total monthly income after taxes. Remember to include all income. If you receive money from a settlement or child support don't forget to include this in your monthly income. Once you have this number put it aside for a moment.

Next, you want to collect your bills for the last three months and list all expenses in categories. Try to make it detailed enough to refer back to. Remember you want to keep budgeting as simple as possible so that you will stick with it for a while. Now that you have completed these two lists you want to compare them. Find out what you have coming in and what you have going out. Do not get disappointed if the numbers are not what you hoped for. Believe it or not even your fixed expenses (utilities) can be adjusted. See Saving Money Tips

Third Step: Record your expenses.
I am going to take a chance here and tell you to fill out the worksheet on page 6. I want you to stop budgeting for one week and bring this sheet with you and record every penny you spend. Make sure you write down everything, even if it is only a quarter for a gumball to give your child. If you do this it will give you the best picture of your spending habits. I could tell you to write down what you spend from memory, but you will forget the cup of coffee on the way to work or the pizza you had for lunch. Every penny you spend adds up and believe it or not over a year those pennies a day could pay your insurance or car payment.

Fourth Step: Uh-Oh!
I call this the Uh-Oh step because that is probably what you are thinking. I assume that you have recorded your daily spending and are shocked. Now it is time to make adjustments and save money. I have learned in my line of work that I cannot expect people to stop spending money on what they want. I had a client tell me one day that she was broke and to help her. After doing her budget we realized that if she did not feed her dog steak every night that she would have an extra $50 a week, but that was out of the question. I have learned to cut expenses so that you (and your dog) still get what you want, but also have extra money.

4. Money Saving Tips

Ideas on Saving Money

1. Use generic drugs. The ingredients in them are exactly the same since the FDA regulates them.

2. Use generic products such as soap, laundry detergent, juices, etc. Often times they are half the price.

3. Join a wholesale club such as Sam's Club or Costco. Often they offer items in bulk at cheaper prices. You can save even more by splitting the bulk cost with a friend or neighbor.

4. Never go grocery shopping without a list because then you tend to buy more than you need.

5. Buy fruits and vegetables that are in season.

6. See movies in the afternoon when they offer a discounted price.

How To Save Money On Electric

1. Cool your home at 78 degrees with the thermostat switched to auto.

2. Heat your home at 68 degrees with the thermostat switched to auto.

3. Install a programmable thermostat to adjust the temperature automatically and maximize your energy savings. It also helps to maintain a comfortable. temperature when you wake up or return home.

4. Replace or clean your air filter every month.

5. Turn off the ceiling fan when you leave it can save you $7 a month.

How To Save Money On Water

1. Avoid pre-rinsing dishes prior to putting in dishwasher. This alone can save you $70 a year.

2. Limit time you run the pool pump. In the summer it should run six hours and winter for four hours.

*Some energy and water tips taken from FPL.com

5. Saving Money Worksheet

[ Download our printable Microsoft Word Sample Budget Worksheet ]

Monthly Expenses-Housing
1st Mortgage or Rent	$
2nd Mortgage or Equity Loan	$
Property Taxes (monthly)	$
Heat/Electricity/Water	$
Telephone (home and cell)/Internet/TV-Direct TV or cable	$
Total	$
Monthly Expenses-Insurance and Food
Auto Insurance	$
Home Insurance	$
Life Insurance	$
Health Insurance	$
Medical/Dental/Prescriptions	$
Total	$
Monthly Expenses-Other
Savings	$
Education	$
Children's Expenses (Child Support/Child Care)	$
Recreation/Vacations/Health Club/Sports	$
Books/Magazines	$
Cigarettes/Alcohol	$
Beauty (hair, nails, dry cleaning)	$
Car repairs and maintenance	$
Charity contributions	$
Gas	$
Total	$
Monthly Expenses-Debts
Credit Cards	$
Student Loans	$
Car Loans	$
Total	$
Grand Total	$

DAILY SPENDING

[ Download printable Microsoft Word Daily Spending Worksheet ]

MY DAILY SPENDING
Discription	Mon	Tue	Weds	Thurs	Fri	Sat	Sun	Total
Grand Total							$

6. Heres and example on how much you can save by cutting some little things out of your daily spending.

The Soda

1 can of soda = $0.65

1 can of soda per day x 5 days per week = $3.25

1 can of soda per day x 5 days per week x 50 workweeks = $162.50

Total soda savings: $162.50 a year

The Donut and Coffee

1 cup of coffee and a donut = $1.90

1 cup of coffee and a donut per day x 5 days per week = $9.50

1 cup of coffee and a donut per day x 5 days per week x 50 workweeks = $475.00

Total donut and coffee savings: $475.00 a year

Total saving per year $ 637.50

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Got a question? Then contact our Education Team on 561-883-2398 Ex.310 United conducts regular seminars on financial education, including "How to Budget", come along and join us - to reserve your seat contact our Education Team on 561-883-2398 Ex.310

Newsletter 08
Rev.1
Aug, 2005