How to budget

• Gather all of your financial statements

• Record all of your sources of income

• Create a list of monthly expenses

• Break expenses into two categories: fixed and variable.

• Fixed expenses are those that stay relatively the same from month to month and usually reflect necessities required to sustain your way of living. 

• Variable expenses are those that change from month to month. 

• Total your monthly income and monthly expenses.

• Make adjustments to expenses.

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Income 

• When income for a period is greater than expenses, there is a budget surplus. An excess of available  funds created when income is greater than the expenses. 

Income can get you out of debt, and help you save for the future in order to achieve your goals. Whether you're currently receiving a fixed salary each month, or work independently and have a varied salary throughout the year, learning to budget can be crucial to your overall financial situation.

Disposable Income: income remaining after deduction of taxes and other mandatory charges, available to be spent or saved as one wishes.

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Savings

The 50-30-20 rule is to divide after-tax income and spend it on 50% needs, 30% wants and 20% to savings

• Needs are bills that must be payed and things necessary to survive (50%)

  •  mortgage payments, car payments, groceries, insurance, health care

• Wants are things you spend money on that are not essential (30%)

  • new phone, go to the movies and go on a trip

• 20% goes to savings and investments

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 Goals 

 

• Build an emergency fund

• Spend less and save more

• Save for retirement dreams

• Get out of debt