Budgeting 101:

Developing and Maintaining a Personal Budget

Lillian Hallstrand, Director of Stewardship and Vocational Planning

BUDGET!!!!
 Learning Objectives
 In this session, we will set you on a path to:
 Identify/Develop your financial goals
 Examine how financial values come into play
 Discuss basic budgeting terminology and principles
 Explore tools to develop your personal budget
 Talk about challenges and barriers to budgeting
 Discuss ways for you to track your financial health and
progress
 Trigger Warning
 Money Management can stir up “stuff” within us:

 Anger
 Guilt
 Frustration
 Sense of Hopelessness
 Anxiety/Fear
 Avoidance
 Why Budget?
 Budgets are a necessity to take control of personal spending, saving, and
debt.

 The loudest voices in finance come from corporations that do not have
your best interest in mind.

 Living beyond your means is a dangerous practice.

 Many individuals don’t realize they are overspending until they are
deeply in debt.

 Credit cards and easy access to funds make it easier to be mindless about
spending.

 The absence of a budget is one of the greatest contributors to stress about

money matters.
 Health and $$
 A 2013 study by Northwestern’s Feinberg School of
Medicine showed that young adults (24-32 years old) in
debt had higher blood pressure levels and exhibited more
depressive symptoms than their debt-free counterparts.

 The same study showed the higher the debt-to-asset ratio,

the higher perceived stress and depression and worse
self-reported general health.

(Sweet, McDade, Adam & Nandi, 2003)

 Start From Scratch
 Whether you have a budget that is giving you challenges
or have never created one – let’s wipe the slate clean!

 Have a healthy dose of skepticism toward information

available on finances; choose websites, books, and
magazines wisely

 Empower yourself to become an expert on your personal

finances. (No ostriches allowed!)
 Financial Decision-Making
 Whether we are conscious of it or not, our values
determine how we use our money.

 Any financial goals you create are an extension of your

values.

 Financial hardship often comes when we stop paying

attention to the connection between our values and our
money.

 Take a moment and write down 5 of the values that you

hold to be central to your identity.
 Where to Begin?
 Your Financial Snapshot: The Net Worth Statement

 Your personal net worth is the difference between all of

your assets (things you own) and liabilities (debts you
owe).

 Your net worth statement is a complete list of all of these

items and their current values.

 Having concrete knowledge (not a “guesstimate”) of

your net worth allows for the best starting point for the
budgeting process.
 Assets
 Cash Equivalents  Savings bonds

 Bank and money market  Stock options

accounts
 Retirement Funds
 CDs
 401K/Pension Funds
 Cash on Hand
 IRAs
 Investments  Small-business plans
 Stocks, bonds, mutual
funds
 Assets
 Real Estate
 House
 Land  Household Goods
 Rental Property  Furnishings
 Jewelry/Furs
 Electronics
 Personal Property
 Vehicles  Money Owed to
 Campers/RVs/Boats You
 Rental Deposits/Utility
Deposits

 Other Assets
 Liabilities
 Loans  Taxes Owed
 Mortgages  Real Estate Taxes
 Home Equity Loans  Unpaid Income Taxes
 Vehicle Loans  Quarterly Estimated
Taxes
 401(k) Loans
 Student Loans  Other Debts
 Unpaid Bills Due
 Alimony
 Credit Card Balances
 Child Support
 Miscellaneous
 Creating a Net Worth
Statement
 Start by listing everything that you own, even if you still
owe money on them, such as house, car, etc. ( ALL
ASSETS)

 List all items at their current market value today.

 Add up all assets and subtract cumulative liabilities.

 If number is positive, CONGRATS! You have a positive net

worth. Your goals will be focused on building wealth.

 If the number is negative, DO NOT DESPAIR. Your journey

beginnings with working toward a positive net worth.
 Why Financial Goals are
Important
 “Goals are like the wheels on your car; they keep you
moving in the direction you want to go, and you won’t
get very far without them.” – Davidoff

 Working toward goals brings a sense of accomplishment

and diminishes stress.

 Financial Stewardship is a theological value.

 Name Your Short-Term
Financial Goals
 Determine what your goals are for the near future  start small,
for example, for the academic year.
 Samples:
 Not accrue more than $$ in student debt this year
 Pay off my car
 Save up an emergency fund for unexpected life events

 Pick 2-3 and write these goals down…….seriously, do it!

 Display them in a location where you will be reminded of them

often.
 Developing Your Budget
 Once you have your net worth statement and have
created some financial goals, you are ready to create your
budget.

 Your Budget = your tool for attaining your goals

 The term “budget” can bring negative imagery to mind

(penny-pinching, stress, etc.). Choose your ‘tude!

 A budget is a spending plan. Nothing more.

 Controlling spending makes saving effortless.

 Signs of a Good Budget
 It should be Realistic

 Has some flexibility to meet the changing demands of

life

 Allows progress toward your goals

 Should be simple enough that you can manage it in the

time you allot

 Should reflect the your financial values

 Customizing Your Budget
 List and add all your sources of income for one month
(MONEY IN):
 Wages from job/s
 Student Loans (a monthly total)
 Child support/alimony
 Rental income
 Interest income/Dividend income
 Child support and/or Alimony Income
 Other sources of income (family support?)
 Customizing Your Budget
 Next, list all of your expenses for one month (MONEY OUT):
 Savings (list me first)
 Mortgage or Rent
 Utilities
 Auto Expense/Other Transportation
 Tuition
 Groceries/Eating Out
 Insurance (auto, medical, home)
 Medical Expenses (out-of-pocket)
 Entertainment/Recreation
 School Supplies (Computer, Books, etc)
 Child Care
 Credit Card Payments
 Clothing/Shoes
 Gifts and Donations (Tithes)
 Household/Personal Care Products
 Miscellaneous
 Pete the Planner
 The following are recommended guidelines for the most common financial categories
in budgets:
 Rent/Mortgage – 25%
 Utilities/Phone – 10%
 Transportation – 15%
 Groceries/Dining Out – 12%
 Savings – 10%
 Entertainment – 5%
 Medical 5%
 Gifts/Donations – 10%
 Clothing/Shoes – 5%
 Misc. – 3%

 These are guidelines, not universal laws, but try not to stray too far from these figures.
 Setting Your Budget Figures

 Set a realistic spending goal for each category

 First, figure out where you money is going now – how

much to each category and use that as a guide

 Track the small expenditures – trips to Starbucks, iTunes

downloads, snacks from across 21st Ave.
 Keep it Simple-Go Digital!
 Mint.com – use it!! (Basic edition is free)
 Links to all bank accounts, mortgage, credit cards, and
more…
 Creates a net worth statement
 Notifies you of upcoming bills and recent transactions
 Allows you to enter receipts immediately via the phone app
 Helps you set a budget and gives real-time updates on
where you are with regards to your goals
 Displays everything in pretty and easy to understand charts
and graphs
 Monitor Progress
 Monitor your progress each month

 Celebrate each victory

 Plug any “spending leaks”

 Impulse buys
 Grocery indulgences
 Over-purchasing (phone plans, cable TV, anything that
you are paying for and don’t really use/need)
 Top 10 Personal Finance Tips
 From “The Everything Personal Finance in Your 20s and
30s Book,” by Howard Davidoff, JD, CPA, LLM”

1. Make the effort to educate yourself about personal finance.

Read financial magazines and good financial books and use
well-known, reputable sites on the Internet.

2. Budget! Operating without a budget is like driving a car

without a steering wheel. You don’t have control over
where you are headed.

3. Save the pennies and dollars will save themselves. Lots of

small amounts add up to big savings.
 Top 10 Personal Finance Tips
4. Pay cash. If you can’t afford to pay cash, maybe you can’t
afford to buy.

5. Always think about opportunity costs. You may not be paying

for something directly, but giving up the opportunity to make
money is a real cost.

6. If possible, take savings out of your paycheck before you see it.
After a while you will get used to spending on the lower
amount, while your savings grow.

7. Be a smart shopper. Don’t buy cheap items that won’t last and
don’t pay for bells and whistles that you don’t need or won’t
use.
 Top 10 Personal Finance Tips
8. Know how to recognize the warning signs of too much
debt, and if you see yourself headed for trouble, act
quickly, before you ruin your credit score.

9. Don’t go without some type of medical insurance, even if

you can only afford a policy with a very high deductible.
If you become ill or are injured in an accident, the
medical bills could ruin you financially.

10. Remember, most millionaires are just average people

who practiced sound financial principles like those in this
book. You could be one of them.
Discussion