ABudget:Whatisit?ABudget:1ABudget:

Whatisit?Abudgetisafinancialdocumentusedtoprojectfutureincomeandexpenses.Thebudgetingprocessmaybecarriedoutbyindividualsorbycompaniestoestimatewhethertheperson/companycancontinuetooperatewithitsprojectedincomeandexpenses.ABudgetisatooltohelpyouunderstandwhereyourmoneygoesABudgetallowsyoutodecidehowmuchandwhenyouspendyourincome.ABudgetallowsyoutomakeandreachyourfinancialgoalsABudgetisthecornerstoneofasolidfinancialfuture.ABudget:Whatisit?Abudget2ABudget:

Whatisit?“Budgetsareallaboutfinancialfreedom.Withoutaplanforsavingandspending,you’llnevermakethemostofyourincome–nomatterhowmuchmoneyyouearn.”“Budgetsareveryempowering.”“Budgetscreatefinancialsecurity.”“Budgetingdoesn’tleadyouawayfromsomethingitleadsyoutowardsafinancialgoal.”“Abudgetcanhelpyoureachafinancialgoalbecauseitcontrolshowmuchyouspendandhowmuchyousave.”“Budgetscanhelpeliminatemanymoneysurprisesbecauseyou’veplannedaheadandknowwhattoexpect.”“Agoodbudgetcanhelpkeepyourspendingontrackandevenuncoversomehiddencashflowproblemsthatmightfreeupevenmoremoneytoputtowardyourotherfinancialgoals.”ABudget:Whatisit?“Budgets3ABudget:

Whatisit?WhatdoIneedtoprepareabudget?IncomedetailsListofexpenses,includingdebtpaymentsWhatarethetypesofExpenses?Fixedexpenses:RemainthesameeachmonthVariableexpenses:VaryfrommonthtomonthPeriodicexpenses:Occuronlyonceortwiceayear.ABudget:Whatisit?Whatdo4ABudget:

Whatisit?CreatingaBudgetIdentifyyourmonthlyincomeIdentifyyourmonthlyexpensesRuleofThumb:Ifyourmonthlyincomeisgreaterthanyourmonthlyexpensesthenyouareabletosave$$$$$$MI>ME=$avingsIfyourmonthlyexpensesaregreaterthanyourmonthlyincomethenyouaregoingintodebt.ME>MI=DebtABudget:Whatisit?Creating5ABudget:

Whatisit?SettingFinancialGoals“Peopledon’tplantofail;theyfailtoplan”Thinkfirst:Budgeteachpaypacket.Whatneedstobepaidfirst?Remember:Whenitisgone;itisgone!Don’tbetemptedbycredit/debitcards!Rethink:Isthisexpenseabsolutelynecessary?Isita‘need’ora‘want’?ABudget:Whatisit?Setting6ABudget:

Whatisit?SettingFinancialGoals“Goalsettingisaterrificmotivator!”ShortTermGoals:12monthsorlessMidTermGoals:Within1-3yearsLongTermGoals:Within3-5yearsExamples:Buildan‘EmergencyFund’GetyourdebtundercontrolSaveforadepositonacarorhomeSavemoreforretirementSaveforaholiday.SaveforanythingyouwantABudget:Whatisit?Setting7ABudget:

Whatisit?Keepinmind“SMART”S=SPECIFIC=whatisityouwanttoachieveandwhyM=MEASURABLE=amounttobesavedeachmonth/intervalA=ATTAINABLE=whenistheduedateforthegoalR=REALISTIC=haveyougivenenoughtimetosaveT=TRACKABLE=specifictimeframeABudget:Whatisit?Keepin8ABudget:

Whatisit?SimpleInterest*“InterestRate”:thestatedrateofinterestpaideachyearPrincipalamounttobesaved:$1,000InterestRate@6%perannum/year:6%of$1,000 i.e.6/100[.06]x1,000=$60perannumValueaftertwoyears: $120interest+Principal[$1,000]=$1,120Valueafterfiveyears: $300interest+Principal[$1,000]=$1,300Valueaftertenyears: $600interest+Principal[$1,000]=$1,600Valueafter12years: $720interest+Principal[$1,000]=$1,720Note*:SimpleInterestdoesnottakeintoconsiderationbankfees,changesininterestrateoranyothermatterthatmayinfluencetheinterestgained.“SimpleInterest”calculationistogiveyouageneralideawherethe‘value’ofyourinitial“Principalamount”willbeinasettimeframe.ABudget:Whatisit?SimpleI9ABudget:

Whatisit?‘Ruleof72’isasimplifiedwaytodeterminehowlonganinvestmentwilltaketodouble,givenafixedannualrateofinterest.Formula:Howmanyyearstodoubleis:72/’fixedannualrateofinterest’=‘Yearstodoubleyourmoney’Itworkslikethis:Take72dividedbytheinterestrateyouwillearnonyourmoney.Theanswerequalsthenumberofyearsitwilltakeyourfundstodoubleinvalue.

Example@4%pa: 72/4(%) =18(yearstodoubleyourmoney)Example@10%pa: 72/10(%) =7.2(yearstodoubleyourmoney)ChoiceofRule:Thevalue72isaconvenientchoiceofnumerator,sinceithasmanysmalldivisors:1,2,3,4,6,8,9,and12.Itprovidesagoodapproximationforannualcompounding,andforcompoundingattypicalrates(from6%to10%).Theapproximationsarelessaccurateathigherinterestrates.Forcontinuouscompounding,69givesaccurateresultsforanyrate.ThisisbecauseIn(2)isabout69.3%.Sincedailycompoundingiscloseenoughtocontinuouscompounding,formostpurposes69,69.3or70arebetterthan72fordailycompounding.Forlowerannualratesthanthoseabove,69.3wouldalsobemoreaccuratethan72.ABudget:Whatisit?‘Ruleof10ABudget:

Whatisit?‘CompoundInterest’Compoundinterestispaidontheoriginalprincipalandontheaccumulatedpastinterest.Formulatofindinterestforfixedtermdeposit:A=P(1+r)tA

= istheamountofmoneyaccumulatedaftertyears,includinginterest.P = istheprincipal(theinitialamountyouborrowordeposit)r

= istheannualrateofinterest(percentage)t

= isthenumberofyearstheamountisdeposited.Youhave$1000atarateof5%paforoneyearA=1,000(1+5%)1A=1,000x(1+0.05)1A=$1,050Youhave$1000atarateof5%pafor3yearsA=1,000(1+5%)3A=1,000x(1+0.05)3A=$1,157.63ABudget:Whatisit?‘Compoun11ABudget:

Whatisit?‘ASavingsPlan’SAVE,SAVE,SAVE…Startnow!Nomatterhowsmallyoursavings!Payyourselffirst,useautomaticdeductions.PutyoursavingsintoaseparateaccountthatdoesnothaveATMaccess.Putanypayraises,bonusesortaxrefundsintosavingsafteryoucompleteyouremergencyfund.Budgeteachpaypacket.Determinewhichcategoriesyouwillpayincash.Paywithcashandkeepreceipts.Don’tbetemptedbydebitcards.Don’tpaytheminimumsoncreditcards.Don’tlivewithoutemergencysavings.Don’tspendmorethanyouearn.Setfinancialgoals.ABudget:Whatisit?‘ASavin12ABudget:

Whatisit?Assembledby:A.BallasABudget:Whatisit?Assemble13ABudget:Whatisit?ABudget:14ABudget:

Whatisit?Abudgetisafinancialdocumentusedtoprojectfutureincomeandexpenses.Thebudgetingprocessmaybecarriedoutbyindividualsorbycompaniestoestimatewhethertheperson/companycancontinuetooperatewithitsprojectedincomeandexpenses.ABudgetisatooltohelpyouunderstandwhereyourmoneygoesABudgetallowsyoutodecidehowmuchandwhenyouspendyourincome.ABudgetallowsyoutomakeandreachyourfinancialgoalsABudgetisthecornerstoneofasolidfinancialfuture.ABudget:Whatisit?Abudget15ABudget:

Whatisit?“Budgetsareallaboutfinancialfreedom.Withoutaplanforsavingandspending,you’llnevermakethemostofyourincome–nomatterhowmuchmoneyyouearn.”“Budgetsareveryempowering.”“Budgetscreatefinancialsecurity.”“Budgetingdoesn’tleadyouawayfromsomethingitleadsyoutowardsafinancialgoal.”“Abudgetcanhelpyoureachafinancialgoalbecauseitcontrolshowmuchyouspendandhowmuchyousave.”“Budgetscanhelpeliminatemanymoneysurprisesbecauseyou’veplannedaheadandknowwhattoexpect.”“Agoodbudgetcanhelpkeepyourspendingontrackandevenuncoversomehiddencashflowproblemsthatmightfreeupevenmoremoneytoputtowardyourotherfinancialgoals.”ABudget:Whatisit?“Budgets16ABudget:

Whatisit?WhatdoIneedtoprepareabudget?IncomedetailsListofexpenses,includingdebtpaymentsWhatarethetypesofExpenses?Fixedexpenses:RemainthesameeachmonthVariableexpenses:VaryfrommonthtomonthPeriodicexpenses:Occuronlyonceortwiceayear.ABudget:Whatisit?Whatdo17ABudget:

Whatisit?CreatingaBudgetIdentifyyourmonthlyincomeIdentifyyourmonthlyexpensesRuleofThumb:Ifyourmonthlyincomeisgreaterthanyourmonthlyexpensesthenyouareabletosave$$$$$$MI>ME=$avingsIfyourmonthlyexpensesaregreaterthanyourmonthlyincomethenyouaregoingintodebt.ME>MI=DebtABudget:Whatisit?Creating18ABudget:

Whatisit?SettingFinancialGoals“Peopledon’tplantofail;theyfailtoplan”Thinkfirst:Budgeteachpaypacket.Whatneedstobepaidfirst?Remember:Whenitisgone;itisgone!Don’tbetemptedbycredit/debitcards!Rethink:Isthisexpenseabsolutelynecessary?Isita‘need’ora‘want’?ABudget:Whatisit?Setting19ABudget:

Whatisit?SettingFinancialGoals“Goalsettingisaterrificmotivator!”ShortTermGoals:12monthsorlessMidTermGoals:Within1-3yearsLongTermGoals:Within3-5yearsExamples:Buildan‘EmergencyFund’GetyourdebtundercontrolSaveforadepositonacarorhomeSavemoreforretirementSaveforaholiday.SaveforanythingyouwantABudget:Whatisit?Setting20ABudget:

Whatisit?Keepinmind“SMART”S=SPECIFIC=whatisityouwanttoachieveandwhyM=MEASURABLE=amounttobesavedeachmonth/intervalA=ATTAINABLE=whenistheduedateforthegoalR=REALISTIC=haveyougivenenoughtimetosaveT=TRACKABLE=specifictimeframeABudget:Whatisit?Keepin21ABudget:

Whatisit?SimpleInterest*“InterestRate”:thestatedrateofinterestpaideachyearPrincipalamounttobesaved:$1,000InterestRate@6%perannum/year:6%of$1,000 i.e.6/100[.06]x1,000=$60perannumValueaftertwoyears: $120interest+Principal[$1,000]=$1,120Valueafterfiveyears: $300interest+Principal[$1,000]=$1,300Valueaftertenyears: $600interest+Principal[$1,000]=$1,600Valueafter12years: $720interest+Principal[$1,000]=$1,720Note*:SimpleInterestdoesnottakeintoconsiderationbankfees,changesininterestrateoranyothermatterthatmayinfluencetheinterestgained.“SimpleInterest”calculationistogiveyouageneralideawherethe‘value’ofyourinitial“Principalamount”willbeinasettimeframe.ABudget:Whatisit?SimpleI22ABudget:

Whatisit?‘Ruleof72’isasimplifiedwaytodeterminehowlonganinvestmentwilltaketodouble,givenafixedannualrateofinterest.Formula:Howmanyyearstodoubleis:72/’fixedannualrateofinterest’=‘Yearstodoubleyourmoney’Itworkslikethis:Take72dividedbytheinterestrateyouwillearnonyourmoney.Theanswerequalsthenumberofyearsitwilltakeyourfundstodoubleinvalue.

Example@4%pa: 72/4(%) =18(yearstodoubleyourmoney)Example@10%pa: 72/10(%) =7.2(yearstodoubleyourmoney)ChoiceofRule:Thevalue72isaconvenientchoiceofnumerator,sinceithasmanysmalldivisors:1,2,3,4,6,8,9,and12.Itprovidesagoodapproximationforannualcompounding,andforcompoundingattypicalrates(from6%to10%).Theapproximationsarelessaccurateathigherinterestrates.Forcontinuouscompounding,69givesaccurateresultsforanyrate.ThisisbecauseIn(2)isabout69.3%.Sincedailycompoundingiscloseenoughtocontinuouscompounding,formostpurposes69,69.3or70arebetterthan72fordailycompounding.Forlowerannualratesthanthoseabove,69.3wouldalsobemoreaccuratethan72.ABudget:Whatisit?‘Ruleof23ABudget:

Whatisit?‘CompoundI