Budgeting

Everyone needs to spend a certain amount of money each month to pay for the
basic necessities of life (rent/mortgage, transportation, insurance, food, bills,
etc.). We call these things we spend money on expenses.

Some expenses stay the same amount every month. We call these fixed expenses.
Some examples of fixed expenses are: car payments, insurance payments,
rent/mortgage, etc.

Other expenses change amounts from month to month. We call these variable
expenses. Some examples of variable expenses are: food costs, utilities (power
bill, water bill), gas costs, clothing costs, etc.

A budget is a way of tracking our expenses (fixed and variable) and making sure
that we are not spending more than we are earning.
The difference between the monthly income and the total expenses is called the
balance. If the balance is positive you have some disposable income money
available to save or spend as you like. If the balance is negative you have spent
more money than you earned. Your balance should always be positive or zero.
Its always a good idea to save some money in case of emergency expenses.

Making a Budget:
1. Determine your total monthly income
2. Separate your expenses into fixed and variable
3. Determine your total expenses
4. Calculate your balance (Income Expenses)
Remember your balance should be zero or positive

Write a budget separating expenses into fixed and variable expenses

for each of the following:

1. Toms planned expenses were: $550 for rent; $235 for car
payments; $85 for car insurance; $340 for food; $65 for
utilities; $75 for clothing; $50 for entertainment; $100 for
savings; $40 for gas; $40 for personal and household items; $60
for phone; $25 for cable and $120 for student loan payments. He
earns $1026 biweekly (net income).
Does he have any disposable income?

2. Marcias planned expenses were: $325 for rent; $45 for bus
fare; $380 for food; $70 for entertainment; $75 for clothing;
$40 for personal items; $25 for household items; $75 for
savings; $45 for utilities and $75 for phone. Marcia earns a
monthly net income of $1349.
Does she have any disposable income?

3. Calculate what percent of their monthly income Tom and Marcia

spend on each expense. (expense income x 100%)

Toms Budget
INCOME

AMOUNT ($)

PERCENT OF INCOME

EXPENSES (Fixed)

EXPENSES (Variable)

TOTAL EXPENSES

BALANCE
INCOME

Marcias Budget
AMOUNT ($)

PERCENT OF INCOME

EXPENSES (Fixed)

EXPENSES (Variable)

TOTAL EXPENSES

BALANCE