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Budget Management Counseling
What is a budget? Financial instrument used to plan and
monitor the receipt and use of income Lists income and expenses for a particular
period of time Primary purpose is to guide the allocation
of income so that it will meet expenses and permit other uses, such as savings and investing
Why do budgets fail?
Not really wanted Not agreed upon Not realistic Not well designed Not well supported
10 most common budget problems Too little income Too much debt Too much spending Too little discipline Too many goals Too naïve Too little knowledge Too little management Too little communication Too little agreement
Three most basic budget solutions Reduce expenses Restructure debt Increase income
More personal budget solutions Resolve personal problems Reconcile competing goals Improve management
Ways to stick to a budget Get rent out of way Stay away from the ATM Leave money at home Record credit card purchases Save automatically Keep money in large coins or bills Save your change
Ways to stick to a budget Keep checkbook balanced Set goals Consider tradeoffs Take your lunch Pay yourself first Bank your refunds Continue paying a loan Shop second-hand
Ways to stick to a budget Try crash savings – Zero based budgeting Save extra paychecks Break costly habits – consider trade-offs
Reducing your spending http://www.calcbuilder.com/cgi-bin/calcs/SAV13.cgi/uiue
Cost of smoking http://ashline.org/ASH/quit/contemplation/index.html
Budget Challenges
Cash or ATM withdrawalsVariable income Impulse buyingGiftsBookkeeping errors Attitude challenges
Budget Challenges
Credit
Limited purpose credit cardsNational credit cards
Bank credit cards Travel & entertainment charge cards
Types of credit cards
Things to look for: Annual fee Interest rate Additional perks
insurance, discounts, cash back bucks Cash advance Hidden fees
transaction fees cash advance fees over credit limit fee late fee
CAUTION! “No payment for 6 months” “Low introductory offer - 4.9%” “No fee” “Balance transfers” Loan sharks
Tips to lower costs Switch to a lower rate card No annual fee Take advantage of your grace period Ask for lower interest rate Pay more than the minimum balance If paying interest, mail check as soon as you
receive your statement Use savings to pay credit card bills
Credit Problem Signs
Not knowing how much you owe Making minimum payments Making cash advances to pay bills Working 2nd job to keep up with spending Being consistently late with bill payments Being denied credit
To obtain a credit reportMust be in writing:
full name, address, old address - (2 years)
social security number
date of birth
current employer
telephone number
$8.00
sign request
Three major credit bureaus
Equifax 1-800-556-4711Experian 1-800-353-0809
Trans Union 1-800-680-7293
Assignment: Develop a Resource Section of money-saving tips
Food Automobiles Insurance Recreation/entertainment Clothing Savings Variable household expenses