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Mastering Your Budget: A Guide to Effective Savings and Goal Setting

Discover how to take control of your finances with our comprehensive budgeting guide. Led by CPA Anne Marie Anderson, this resource emphasizes the importance of setting realistic financial goals for the short, intermediate, and long term. Whether you're saving for a video game, an iPad, or your dream car, creating a structured budget is essential. Learn how to effectively track your spending and develop the discipline needed to achieve your financial aspirations. Embrace your budget and set yourself up for success!

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Mastering Your Budget: A Guide to Effective Savings and Goal Setting

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  1. Budgeting and Savings

    Anne Marie Anderson, CPA & SIFE
  2. Embrace your budget! Goal setting Short-term (< 3 months) Present for boy/girl friend Duke Nukem video game Intermediate (3 months – 1 year) iPad Phone Long-term (> 1 year) Car 4 year college
  3. Construct your budget Determine your time frame Income Gross vs net pay Who is FICA and why does he take all my money? Understand all items being taken out of your paycheck
  4. Construct your budget (cont’d) Expenses Fixed Variable Out of pattern Goals as expenses Savings Fun! Needs vs. wants
  5. Budget - Next steps Evaluate your budget (positive/negative cash flow) Monitor over time Make adjustments as needed Be flexible
  6. NJ Hypothetical Budget Income - ?????? --Expenses: $400,000 NJ home, 30 year mortgage, $10K taxes
  7. NJ Hypothetical Budget - Month Income - ?????? --Expenses: $2,800 Mortgage/Real estate tax $300 Utilities $150 Phone/Cable/Internet $250 Car/Home Insurance $200 Gas $75 Clothes $200 Food/Groceries Total Expenses = $3,975
  8. NJ Hypothetical Budget – Month (cont’d) Breakeven: Net pay = Expenses, so you must bring home $3,975 per month or $47,700 per year to breakeven $47,700 net pay is ≈ $70,000 gross pay after Federal, state, and FICA taxes What did I leave out?
  9. How to Stick to the Budget Goals on index cards – put them in the cash or credit card slot of your wallet Make a picture of your goal the backdrop of your computer Tell friends/relatives of your goals so they can help reign you in Envelope system…..
  10. Savings/Financial Planning Where to put what you save…. 401K Roth accounts CD’s Some places are better than others, but starting to save early is the key
  11. You Can Never Catch Up Person A: Saves $2000 per year from age 22 to age 35 and then stops Person B: Starts saving $2000 per year beginning at age 35 and never stops Both earn 8% on their investments. At age 75: Person A has $1M in savings Person B has $561K in savings
  12. How to Save College students – I don’t have money to save! Where can you cut? Break your habits! Include savings as an expense item in your budget - out of sight/out of mind Direct deposit – split a portion into savings Coins count - $15 billion in loose change
  13. Pitfalls…… Credit cards…….. Be wary, credit card companies prey on college students. Rule of thumb – if you don’t have the cash to buy something, wait until you do! Pay more than the minimum payments – ALWAYS! Debt consolidation companies…..more harm than good? Call credit card companies directly
  14. Did you know? The average person spends money 3 times a day. Putting aside every coin you touch results in saving about $50 a month. A $5 sandwich usually has less than $1 of ingredients. Some 40% of American families annually spend more than they earn. Americans spend more than 40% of their food dollars each year eating out. One out of every four Americans believe their best chance of getting rich is by playing the lottery. The average interest rate on credit cards is 18.9%.
  15. Some helpful resources College Money Insider http://www.overturemarketplace.com/insider Managing your money while in college http://moneyfor20s.about.com/od/makethemostofyourmoney/tp/collegemoney.htm 360 degrees of Financial Literacy http://www.360financialliteracy.org/Life-Stages/College-Students Debt consolidators (reputable ones…) http://www.360financialliteracy.org/Topics/Credit-and-Debt/Credit-Cards/I-m-one-of-those Student budget calculator http://www.360financialliteracy.org/Topics/Budgeting-Spending/Budgeting-and-Saving/Student-Budget Feed the Pig http://www.feedthepig.org
  16. A final thought….. http://www.youtube.com/watch?v=gZkuWLdSpuk
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