Money Management: Budgeting
Objectives: o We will learn the principles of economy and saving money for your long term future.
(Pro 13:11) Wealth gotten by vanity shall be diminished: but he that gathereth by labour shall increase.
Budgeting 101: o A budget is simply a plan for spending and saving.
o Eight to 24 year olds are ready to spend money in 2012. Two hundred eleven billion dollars, to be more precise. According to the 2012 Harris Poll YouthPulse(SM) study, the purchasing power of today's youth is something that should not be overshadowed by the spending power of adults. Over half of eight to 12 year olds will spend their own money on candy (61%) and toys (55%) while a quarter will buy books (28%) and one-in-five will purchase clothing (19%). Teens, those 13-17, still crave candy, and half (51%) will make a point of treating themselves to sweets. However, clothing (42%) and entertainment, like movie tickets (33%) have become bigger priorities for this older group. NEW YORK, Oct. 26, 2011 /PRNewswire/
Make an Assessment: (1) How much money did you spend on beverages-from coffee or water to energy drinks? (2) How much money will you spend on gas next week? (3) How long will it take you to save for the most expensive thing you would like to buy?
Make an Assessment: o A Balancing Act: Budgeting is a balancing act between income and expenses. o It also means weighing your needs against your wants.
Income and Expenses: 1. (Make a list of your earnings per month from all sources. Add these up to calculate your expected monthly income. 2. For one month keep a record of everything you spend, from chewing gum to car payments. Collect receipts or write everything in a notebook. Make sure you don t leave anything out, and that includes savings. 3. At the end of the month, organize your spending into categories such as food, entertainment, and car payments. Total amount in each category. 4. (On a sheet of paper list your income and expenses.
Income and Expenses: o If your total expenses are less than your total income, you are doing fine. o If not, you need to take a hard look at where your money is going.
Needs and Wants: o Determine what is absolutely necessary and what is absolutely unnecessary. o Live within your means and try to save a set percentage of your income. o Some budget counselors suggest allotting 80 percent for needs. o 10 percent for wants, and 10 percent for savings.
Waste not your pennies and your shillings in purchasing unnecessary things. You may think these little sums do not amount to much, but these many littles will prove a great whole. If we could, we would plead for the means that is spent in needless things, in dress and selfish indulgence. Poverty in every shape is on every hand. And God has made it our duty to relieve suffering humanity in every way possible. {AH 383.2}
Budget boosters (1) Keep a spending journal for one week. (2) Identify needs: bills, car payment, etc. (3) Downsize or eliminate impulse to buy such as coffee and soda. (4) Making saving a priority and a habit (5) Add to your savings weekly, even if just a small amount.
Budget boosters (6) Identify a long term want to start saving for it. (7) PRIORITIZE and pay down any outstanding debt. (8) Use cash for daily spending (9) During vacations or summer, pick up some extra hours at work (10) Live within your means, Spend less than you make.
Checking Account: o You want to use a bank that is insured by the Federal Deposit Insurance Corporation (FDIC), o It protects your money in case you bank fails to up to $250,000.
Pick the Right Services. o There might be hidden fees or charges per month. o Be careful. o You can keep track either by checking your account online or using a checkbook. o After writing a check make sure to subtract that amount to your balance (Your total funds in the account).
Pick the Right Services. o Online checking is convenient where you can transfer funds and make credit card payments without mailing a check. o A debit card is issued with a credit card logo but the difference is that it is deducted from your checking account balance. o It can also be used as an ATM card but if you withdraw from a bank other than your own you will be charged.
Saving for the Long Haul: o Give to God first. o Tithe 10 percent of your income to His church and He will bless you. o (Mal 3:10) Bring ye all the tithes into the storehouse, that there may be meat in mine house, and prove me now herewith, saith the LORD of hosts, if I will not open you the windows of heaven, and pour you out a blessing, that there shall not be room enough to receive it.
Saving for the Long Haul: o Then pay yourself. It means to make personal savings a regular part of your budget just like rent and food. o If you cut out the daily $2.00 for soft drinks at the vending machine, you ve just saved $14 a week. o Multiply that by 52 and you pocketed a tidy sum in just one year. o Saving is a habit and takes discipline.
Benefits of Saving Accounts: o The earlier you start saving, the faster your money will grow. o The reason: compound interest. o Compound interest is interest you earn, not only on the money you put into an account, but also on all the interest you previously built up. o Today s interest earnings will start earning interest tomorrow.
Benefits of Saving Accounts: o The more you save today, the more interest you will gain tomorrow. o And that saving will add up to a faster rate. o Other benefits: Saving your money in an Individual Retirement Account (IRA) the money may escape taxation until you retire or at least you reach 59 ½. o That cuts your tax bill. o Even better, when you withdraw your money from a special IRA, the money you make the appreciation may not be taxed at all.
Benefits of Saving Accounts: o Finally, putting money away now allows you to have a cushion in case of emergencies. o There are even circumstances, despite governments restrictions, where you can dip into retirement funds to pay for other expenses like your first house or to pay for high medical bills.
The amount daily spent in needless things, with the thought, "It is only a nickel," "It is only a dime," seems very little; but multiply these littles by the days of the year, and as the years go by, the array of figures will seem almost incredible. {AH 384.1}
Every week you should lay by in some secure place five or ten dollars not to be used up unless in case of sickness. With economy you may place something at interest. With wise management you can save something after paying your debts. {AH 396.2}
I have known a family receiving twenty dollars a week to spend every penny of this amount, while another family of the same size, receiving but twelve dollars a week, laid aside one or two dollars a week, managing to do this by refraining from purchasing things which seemed to be necessary but which could be dispensed with. {AH 396.3}
Savings Account: o Usually, saving starts with setting up a basic saving account carrying no monthly fee. o Do your research. o Make sure the bank will not charge your excessive fees just for the privilege of having your money.
Savings Account: o CDs or a certificate of deposit like a savings account but CD is insured and therefore very low risk. o But CD s generally offer higher interest than a savings account. o The catch is once you put your money in; you can t take it out for a fixed period of time.
Savings Account: o Depending on the length of the CD, you would have to part company with your money for as little as three months or as long as five years. o There are penalty fees for early with-drawls.
Savings Account: o Money Markets: What if you want higher yield, than a regular savings account without tying up your money? o Money market account. o This is a type of the savings account with a high yield that allows you to write checks as long as you maintain a high balance in the account.