Let's Talk About It...Budgeting 101

We have been dropping precious jewels and equipping you with different savings plans. Let's take a step back and discuss all things about a budget. A budget is a plan for adjusting expenses during a certain time frame to meet the income for that period. Some people budget according to how they are paid bi-weekly, weekly, or monthly. You have to decide what works best for you.

Why should I budget?

• Helps with saving

• To understand your financial condition

• To give you and/or your family control over your financial situation

• Reduce stress/anxiety over money

• Helps improve your financial situation one goal at a time

Budgets allow you to plan for the future and you choose how to use your money.

It also allows you to build assets and save for (retirement, a new home, a child’s college, or vacation).

We provided a spending plan in the previous post, let's break it down below.

My Expenses:

Your expenses are broken down into fixed and variable expenses. Fixed expenses are consistent monthly expenses such as rent, phone, loan payments, etc. Variable expenses are your non-consistent monthly expenses such as car maintenance, recreation, shopping, etc. Add all of those together to get your total expenses. Always budget more than the actual amount to give yourself some wiggle room.

When listing out your expenses, be sure to include everything you spend money on. A good overview of your expenses would be what you spent money on the last 3 months. Look for patterns and estimate the 3 months to create a projected budget for your variable expenses. For example, I added up all the fast food restaurants I spent money at for 3 months and spent $150, $200, and $175. So my projected "eating out" budget is $175 once I add them all up and divide by 3.

My Income:

Your income is any money you have coming in, for example, salary, child support, social security benefits, allowances, etc. Add all of those together and get a total income. Do not estimate these numbers. These numbers must be precise! These numbers may fluctuate month to month or week to week depending on allowances or gifted money. If any of your income is not consistent, do not add it to your monthly budget. For example, a child's father may pay a mom $200 one month and $0 another month. That will throw off all of your calculations. It's best practice to only include steady income.

Once you have your total income calculated, deduct your total expenses and that will be what you have left over. We will dive more into how to calculate your savings based on money left over in future posts. Stay tuned!!

We will be creating real budgets for real people in the upcoming posts. If this is something you are interested in, please email us at ugaextens2@gmail.com!

Also, email us with any questions regarding our posts. We will be more than willing to offer support and/or assistance.