Final Finance Essentials - Master Art of Budgeting
Created on January 28, 2024
Mastering the Art of Budgeting
Preparing for Success
Managing a Budget
Building a Budget
WHAT IS BUDGETING?
WHAT BUDGETING IS NOT!
IDENTIFYING THE MYTHS REGARDING BUDGETING
- Am I feeling stressed about my current situation?
- What am I doing to manage stress levels?
- Is there someone or group that can provide support?
- Am I maintaining a healthy lifestyle as I transition?
- Am I eating, sleeping, watching what is influencing me?
Obtain wisdom and understanding.
Hold onto hope.
Don't confuse your self-worth with you net worth.
Share your journey
Schedule time with your money.
Taking control – Caring for yourself
IDENTIFY SYSTEMS AND OTHER TOOLS
BUILDING A BUDGET
- Identify a system to track all your cash and expenses on the monthly basis.
- Notebook designated for tracking budget
- Electronic spreadsheet (Excel, Google Sheets)
- App on your phone but ensure you can get printouts
- Envelope system (cash tracking)
- Customize system to your needs
- Begin entering data (monthly cash receipts, monthly expenses)
- Understand your spending habits (be honest with yourself)
- Set up checking/savings account
Building a Budget
Are there people who owe me money?
Do I need to call my Creditors?
Are there expenses I am already behind? How far behind?
What are my non-essential items?
What are the essential items?
Questions to ask when building budget
Monthly Actual Spend by category
Monthly Budget /Actual Spend
Budget building strategies
- Avoidance is not a strategy
- Control the power of rationalization
- Be honest with yourself
- Be honest with other family members including children
- Goal setting
- Cash vr Credit Card
- Setting up emergency fund
- Are there things I can temporarily reduce
Things to keep in mind when budgeting
- Credit card balances- how much should you pay?
- Identify ”Must Pay” expenses (Pay first):
- Prioritize remaining expenses (Pay according to household needs):
- Housing expenses: insurance, loans, etc
- Car note/payment
- Work expenses
Budgeting monthly expenses
What’s the purpose and why needed? This is money set aside for unexpected expenses or financial emergencies. An emergency fund can help you get through stressful financial situations and help protect your savings. Getting Started
- Set a goal (ideally, it should cover 3-5 months worth of expenses)
- Select an interest-earning account to hold your fund
- Contribute to the account! This can be from a certain percentage of income, tax returns, etc.
Setting up an Emergency Fund
Regularly view credit report to ensure proper information recorded
Pay off collections and charge-offs
Decide debt payment schedule; which to pay first, second, etc. Use the regular payments to pay off remaining balances.
Make at least the minimum payment (if you can’t make the minimum payment, call your Creditor
Create a monthly payment calendar (tie to monthly spreadsheet)
DON’T TAKE MAKE IT PERSONAL
MAKE CHILDREN PART OF SOLUTION
DON’T DELAY MAKING THE CALLS TO CREDITORS
Handling the hard conversations
Be sure to get confirmation of any agreements in writing, and routinely check your credit report to make sure they are accurate and reflect your agreements.
Be prepared to explain your situation, how much you can afford to pay, and when you’re likely to be able to restart regular payments.
Many lenders have measures in place to help borrowers impacted by various situations. They may be willing to provide forbearance, loan extensions, a reduction in interest rates, and/or other flexibilities for repayment.
Contact your creditors to let them know about your situation. Falling behind on your payments can have a lasting impact on your credit.
Speaking with Creditors
Beth previously established her monthly budget but her car stopped working and it will cost $200 to get fixed. What can she do? Total monthly cash = $3,000
Managing a Budget – Scenario 1
Joy previously established her monthly budget, but her car stopped working and it will cost $200 to get fixed. What can she do? Total monthly cash = $3,000 CC credit/points = $150
Managing a Budget – Scenario 2
Maria realized she forgot to budget for her son's birthday party at Chuck E Cheese. What can she do? Total monthly cash = $3,000 CC credit/points = $200 Gift cards = $50
Managing a Budget – Scenario 3
Don’t panic and make decisions today that will cause more heartache tomorrow.
Setup an Emergency Fund.
Have safeguards prepared for those unexpected events.
Golden Rule - Cover the basics
This Photo by Unknown Author is licensed under CC BY-NC-ND
This Photo by Unknown Author is licensed under CC BY-SA-NC
How do you prepare?
Where do you shop?
Where do you shop?
How do you prepare meals?
Get Strength and Wisdom
Use Word of God
Meditate Word of God
Study Word of God
Trust in the Lord completely, and do not rely on your own opinions. With all your heart rely on him to guide you, and he will lead you in every decision you make. Become intimate with him in whatever you do, and he will lead you wherever you go.
Proverbs 3:5 & 6 (The Passion Translation)
By the power of his Spirit the Lord God has sent me with this message: People of Israel, I am the holy Lord God, the one who rescues you. For your own good, I teach you, and I lead you along the right path.
Isaiah 48:17 (Contemporary English - CEV)
You people are robbing me, your God. And, here you are, asking, “How are we robbing you?” You are robbing me of the offerings and of the ten percent that belongs to me. That's why your whole nation is under a curse. I am the Lord All-Powerful, and I challenge you to put me to the test. Bring the entire ten percent into the storehouse, so there will be food in my house. Then I will open the windows of heaven and flood you with blessing after blessing. I will also stop locusts from destroying your crops and keeping your vineyards from producing. Everyone of every nation will talk about how I have blessed you and about your wonderful land. I, the Lord All-Powerful, have spoken!
Malachi 3: 8 -12 (Contemporary English - CEV)
What are you using to keep your mind focused?
Beth previously established her monthly budget; she gets paid bi-weekly; needs to purchase food for 2 weeks. Where can she go? Total monthly cash = $3,000 Family size: 3 (herself and children under age 5)
Shopping on a Budget – Scenario 1
Joy previously established her monthly budget but her car stopped working and it will cost $200 to get fixed. What can she do? Total monthly cash = $3,000 Family size: 4 (herself, children under age 5, and her mother dietary restrictions)
Shopping on a Budget – Scenario 2