Elearning.daremightythings.com



Make Your Money Matter: Use a Spending PlanWorksheetUse this worksheet, handouts, and the slides to complete the Make Your Money Matter: Use a Spending Plan module.Slide 1: Your personal spending plan sets the foundation for financial success. If I asked you how do you spend your money, would you be able to tell me? Not just that you spent money this month on groceries, housing, gas, and clothes. Do you know how much was spent per category? Do you keep records of what you spend? Do you have a spending plan?Slide 2: Before you can figure out how to budget your money, you need to identify what you want your money to do. To focus your spending, you must set goals. Goals are what you want to achieve. Goals should be the driving force behind your spending. To be useful in helping you achieve what you want, goals should have 5 characteristics or be SMART… specific, measurable, attainable, realistic and time bound.Look at Handout 1 and the washing machine example. Let’s see how it meets the SMART principle. For the washer and dryer, a specific item identified costing $1,000, so it’s measurable; there’s a plan to reach or attain that goal in 12 months by saving $83.35 a month which is what the spending plan could realistically handle; and they know they can replaced their appliances by next year (time). You will likely have several financial goals at once. Some will be short term or achievable in a year or less and others may be mid or long term, perhaps spanning a couple of years before they are attained. You need goals in all three categories.Slide 3: A spending plan is a guide for spending money. Think of a spending plan as your GPS for your finances. Most people would not take a trip to a new place without a map or, today, a GPS to guide them. Why? The GPS will get them to their destination. The same is true with a spending plan. It guides you on how to spend available income so the benefit of the money is maximized and waste or useless spending is minimized. You may have goals and dreams, but if you don’t set up guidelines for reaching them and you don’t keep track or measure your progress, you may end up going so far in the wrong direction that you may not get back on track or can never make it back.Slide 4: Step 1 is to track your income and expenses. You can use a small notebook or a cell phone notepad to record expenses. Another method is to keep every receipt for a month and then categorize it at the end of the month, or use some other system that works for you to keep track of daily spending as it occurs.Slide 5: Step 2 involves listing your income sources and the expense categories. Don’t forget to include your goals.Slide 6: Handout 2 has an example of a spending plan worksheet. Box 1 is where you put your income. Once you have a total of your monthly income, the amount is carried over in Section 3 on the top line.Boxes 2A, 2B, and 2C on Handout 2 capture these three types of expenses – fixed, variable, and periodic. Each expense total is carried over in Section 3 to its appropriate line.Note that the first fixed expense is pay yourself first. What does that mean? It means you set aside an amount of money each pay period that you save for yourself and long term needs.Once you have box 3 complete, you subtract your expenses from the income, and you have your spending plan balance for the month.At the end, income minus expenses should equal zero.Slide 7: Here is a list of fixed, variable and periodic expenses.Take a minute and mark the categories of expenses on Handout 3 that you will need to include in your spending plan.Slide 8: Step 3 - Assign an amount to each expense category. How do you know how much to spend in the different expense categories, especially in variable and periodic expenses? How do you begin? There are guidelines to help you determine what a reasonable percentage to spend per category is. However, there are a number of factors that will influence spending.Slide 9: First you should determine if the expense is a “need” or a “want”. Other factors might include the cost of living where you reside, personal tastes, the general economy, and your available income.Turn to Handout 4. This handout outlines guidelines of the percentage to spend on the different expenses within a spending plan. This might assist you as you develop your spending plan. Remember, these figures are only suggestions and guidelines. You have to determine your own percentages based on your personal situation.Slide 10: Step 4 - Use and implement your plan. Track your daily spending. Look for spending leaks or changes that can be made to cut spending.Slide 11: Step 5 - Evaluate and make adjustments. It is very unlikely that the first draft of your spending plan will be perfect. Expect to make changes as you become more aware of your spending patterns. Things come up unexpectantly as well, and you need to capture this in your spending plan.It does not matter if your spending plan is on paper or electronic. As long as it works for you, that is all that matters. There are many tools that can be used for budgeting. Sometimes the simplest tools work best.Slide 12: As you manage your money, ask yourself if you are doing so responsibly. Are you maximizing the benefit for yourself and your family? ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download