What statement can help you develop budget categories?
cash flow statement
for a budget to be _____, it must be followed
for a budget to be successful, it must be followed
Mary and Fred budgeted $340 a month for groceries. During the month, they spent $87, $93, $38, $61, and $52 at the supermarket.
- what was the total amount spent for food?
- did mary and fred have a budget deficit or surplus?
- What was the amount?
- 87+93+38+61+52 = $331
- surplus because they spent LESS than what they budgeted
- $340-331 = $9
name some examples of fixed expenses
- insurance premiums
What goes under a clothing budget category?
- dry cleaning
- clothing repairs
a good ____ should take very little of your time, but it should provide needed information on your spending and savings plans
a good budget should take very little of your time, but it should provide needed information on your spending and savings plan
spending is greater than planned spending
a ____ allows you to meet your personal goals with a system of saving and wise spending
a budget allows you to meet your personal goals with a system of saving and wise spending
What are 5 common characteristics of a successful budget?
- realistic - should reflect current income and planned spending
- flexible - when unexpected expenses arise, our spending plan should be able to adapt for these costs
- should be evaluated regularly - everye few months, evaluate the budget to determine if its still appropriate
- well planned and clearly communicated - all family members should discuss financial goals, wants and needs and plans for spending
- simple format - if its too detailed and difficult to understand, family members may not be willing to use the spending plan
the most uncertain aspect of the budgeting process involves
- estimating variable expenses
- determining net worth
- estimating fixed expenses
- setting financial goals
estimating variable expenses
Most financial advisers recommend that an amount be set aside for _____ as the first part of the budget
What goes under a household budget category?
- property taxes
- household supplies
- household repairs
What goes under a savings budget category?
- savings accounts
- government bonds
- other investments
What goes under a food budget category?
- food eaten at home
- meals eaten out / away from home
what type of expenses may not be easy to estimate?
What goes under a gifts and contributions budget category?
- charitable contributions (church, red cross, etc)
- personal gifts
name some examples of variable expenses
- medical and dental costs
the amount of money you plan to use for a certain budget category
What is the SMART approach for financial goals?
- S - specific: make the goals specific so you know exactly what you want to achieve
- M - measurable: make the goals measurable so that you know the specific amount to save
- A - action oriented: make the goals action oriented so that you know what actiosn you need to take
- R - realistic: make the goals realistic based on your income
- T- time based: make the goals time based so that you have a time frame for achieving them
What are advantages of a handwritten budget?
- it's inexpensive - all you need is pencil, paper and calculator
- can use spreadsheet to help with calculations
- this kind is good for people with a single sources of income and a few expenses
having a written _____ is a key part of successful money management
having a written budget is a key part of successful money management
money management software, cell phone ____, and financial websites offer budgeting tools
money management software, cell phone apps and financial websites offer budgeting tools
What goes under a health and personal care budget category?
- medical and dental expenses
- health insurance
- personal care costs
a major purpose of a budget is to
- assist with comparison shopping
- achiever financial goals
- reduce a person's enjoyment of life
- gather date for using credit cards
achieve financial goals
a variance in the actual amount spent and the budgetd amount ____ (does/does not) always mean a change in yrou spending plan is necessary
your budgeted amount may still be appropriate with a slight deficit or surplus occurring every few months in some categories
What goes under a transportation budget category?
- auto payments
- car insurance
- operating costs (gas, oil, etc)
- maintenance (oil change, tune up)
- repairs (dead battery, etc)
- public transportation (if they take bus or subway, etc)
What does the planned spending amount for a budget category depend on?
- family size
- ages of children
- cost of living in your area
- work related expenses
- personal values
- personal needs
- personal goals
costs that occur on a regular basis and are for the same amount each time
Why is using a checkbook register and bank statements as a budget not a good idea?
these documents allow the user to pay bills and monitor deposits and balances which is good, but there is no mechanism for financial planning which is bad
What was a once popular system for family budgeting? What was the downfall?
- envelopes marked with labels of different expenses like food, housing or automobile had the budgeted amount of money for each category in the envelope then the expenses were paid from the money in the envelope
- downfall - large amounts of cash left at home can be stolen
actual spending is less than the budgeted amount
the amount budgeted for savings and other expenditures is referred to as an ______
What goes under a recreation and education budget category?
- books and other reading materials
- theater tickets
- school expenses
- club dues
true or false
retirement planning isusually considered a short term goal
is a long term goal
What are the 8 main divisions are commonly used as budget categories?
- health and personal care
- recreation and education
- gifts and contributions
if you expect necessary higher or lower spending in a certain category, a _____ in your budget is probably needed
if you expect necessary higher or lower spending in a certain category, a change in your budget is probably needed
a category by category comparison allows you to find areas where ____ in the budget may be appropriate
a category by category comparison allows you to find areas where changes in the budget may be appropriate
What are the 4 main steps of creating and using a budget?
- set financial goals
- plan budget categories
- maintain financial records
- evaluate your budget
on a budget, any difference between the actual spending and budgeted amount
What will having a plan for saving help you do / what are the main purposes of a budget?
- live within your income
- make wise buying decisions
- avoid credit problems
- plan for financial emergencies
- develop money management skills
- achieve your financial goals
living costs that differ each time
a good budgeting system allows the user to develop a budget, track expenses, and pay _____
after planning a budget, individuals and families should record their income and expenses to find out if the plan is _____
Is keeping a budget only in your head a good idea?
- no because mistakes can happen very easily
- mistakes are greatly reduced when budget info is documented on paper or in an electronic file
After savings, what are the 2 types of living expenses that must be considered for the budget?
fixed expenses & variable expenses