Why Budget

Keeping Track:

• There is only so much money from month-to-month. Question: where does it all go?
• A sizeable portion pays for housing, food and basic living. Another portion pays for transportation. But where does the rest go?
• Budgeting allows you to track your monthly expenditures so that you can plan key savings strategies for important short- and long-term goals.

Limits Your Spending:

• Having a financial budget may find that about 5-10% of your total spending may be for purchases that are not needed.
• Think about it. What could you do with that extra 5-10%? Perhaps your future plans include buying your first home, going back to school, saving for your child's education, paying down debt or simply setting aside cash for a special trip.
• A budget will identify expenses that can be cut so that you can set goals on making important long-term savings.

Discipline Yourself:

• your goal is to rid yourself of instant gratification (the symptom of credit card use). The budget sets guidelines on what and when items can be purchased.

Setting Goals:

• Budgeting supports your financial goals, which may include:
  
  — saving for your first home
  — paying down debt
  — preparing to go back to school
  — planning for retirement
  
  Good budgeting skills add these goals into the budget.

Prepare for Emergencies:

• Question: if you were to lose your job, how long could you survive on available funds?
• If you had to stretch those funds, what reductions can you make in your existing monthly expenses?
• That is the key benefit of a budget. It helps prepare for emergencies with established expense reduction plans.

What's In The Budget

Income:

The budget starts with how much money you bring home on a monthly basis. Income sources include:

— employment income
— alimony received
— investment income
— social security
— support payments
— savings

How much income should be allocated for the budget?

— your goal should be around 90-98% or less
— the remaining 2-10% of your income gets allocated for    savings

(note: budget items are expressed in monthly terms)

Housing Expenses:

Housing expenses will likely be your largest expense item, especially if you own a home. Housing expenses include:

— your mortgage payment with escrow (taxes, insurance)
— monthly rental payment if you do not own
— utility services (electric, gas, water, etc.)
— telephone, internet, cable
— house repairs and maintenance

How much for the budget?

— about 32-35% of income if you own; 15-20% if you rent

(note: budget percentages can vary )