Personal Finance Management With A True Budget

Personal Finance Management with a TRUE BUDGET Budget is NOT looking back on what's already spent is defining how much of your income will be going to each expense category is being pro-active by telling your money where to go How much does the average American save Over 50% of US Consumers don't have a budget, and more than 1 in 5 dont have a good idea of their spending (WallStreet Journal) 61% of Americans could only live 3 months or less on their savings with 38% stating they don't have enough saved to cover one month's expenses (Sept. 2009 - HSBC Bank Survey) 22% 2010 Top Savings Priority by Americans 21% 11% 5% 11% 8% General Savings Retirement College for Child(ren) House Emergencies Other I American families rank saving for college a top priority, second only to saving for retirement I 60% of parents have saved for their child's college education despite the difficult economic environment and are on track to save $48,367 on average by the time their child turns 18 How the average American can save Transportation Parking Riding public transportation saves individuals an average of $9,656 annually and up to $805 a month (Jan. 5, 2011). National average for monthly unreserved parking space (busy downtown business district) is $161.56. Over the course of a year, parking costs for a vehicle can amount to an average of $1,939. Food Groceries Stop eating your way into debt. If you only go out once a week you will spend only $3,000 a year. If you stopped eating out, you will save $22,000 a year. Minimize buying junk foods. The average family spends $500 - $900 a month not including what they spend eating out. Clothes Starbucks Too much stuff, stop shopping. While you do need clothes, off-brands are more budget friendly. You don't need Starbucks everyday. That $4 cup of coffee twice week amounts to $416 a year. Cars Electronics Stop buying cars you cannot afford. Buying a 1 year old CPO instead of brand new can save you $2,100! Don't forget interest, insurance and taxes as well! Unless you make a livelihood out of them, you don't need too many electronics. Share a laptop across the family instead of everyone having their own. Activities Housing Avoid too many activities. It's not abnormal now for people to have kids in 2-3 activities per week. The average family will spend $300 - $500 on activities just for one child. Do you really need 3,000 square feet for a family of four? Get something cozier and cheaper that doesn't cost as much to heat or cool. Reasons to make a budget & keep track of expenses To SAVE MONEY %24 Budget Plan Builds discipline and organization 123456789 Stress Reliever SGreat tool to start family discussions Crisis prevention S Quantifiable way of making progress Knowledge is power Forces you to think about money and build your wealth How to create a budget Fixed expenses Gather financial information Those that stay relatively the same from month to month and are Record all sources of income required elements of daily living. examples: mortgage, car, internet, and insurance payments Create a list of monthly expenses Variable expenses Break expenses into 2 categories Those that change every month examples: groceries, gasoline, entertainment and eating out Tally monthly iíncome & expenses Make adjustments to expenses if: • income Review your monthly budget expenses then prioritize the excess to areas of your budget like retirement savings or paying more towards credit cards to eliminate any debt faster income then you need to cut back spending where possible or get a second job expenses CardNanny" www.cardnanny.com References: http://www.lvingonadime.com/average-american-save-money/ http://www.edmunds.com/car-news/new-S-used-car-buying.html http://ecolocalizer.com/2011/01/26/save-9656-a-year-ride-public-transit/ http://financlalplan.about.com/od/budgetingyourmoney/ht/createbudget.htm http://www.ehow.com/facts_6777245_average-american-savings-account.html https://www.salliemae.com/about/news_info/research/how_america_saves_for_college_2010/default.aspx