Upload
jennoa-graham
View
100
Download
2
Embed Size (px)
DESCRIPTION
Tips and information on managing household budgets
Citation preview
1
HEAVEN’S HARVEST
MINISTRIES – FINANCE NIGHT
Created by: Jennoa R. Graham, Ph.D.
Managing Household Budgets
Presented by: Pastor Thomas Pulliam, Sr.
2
KEY TERMINOLOGY Income – Money that is received in
exchange for a product, service or contract agreement
Expense – Money that is paid out in exchange for a product, service or contract agreement
Budget – A document used to estimate current or future income and expenses for the purpose of managing money to avoid deficits and achieve specific financial goalsIncome – Expenses = Surplus
(Deficit)
3
OVERVIEW Set a financial goal
Short Term - Do not overdraw checking accountLong Term - Save for special occasion or trip
Determine income and expenses for budget
Create a plan to meet financial goal
Track and analyze budget activity
Review and modify plan as needed
4
INCOME - TYPES “Any income, from whatever source, is
presumed to be income under section 61, unless the taxpayer can establish that it is specifically exempted or excluded” (IRS, 2012)
Payroll Check
Tips* (all denominations)
Retirement Distribution*
Grants/ Scholarships*
Social Security
Child/ Spousal Support
Legacy/ Endowment*
Veteran's Assistance
*See financial or tax advisor
Taxable
Non-Taxable
5
INCOME – GROSS VS. NET Gross Pay – The amount of money
earned BEFORE taxes and withholdingsFederal
Withholdings Medical Social Security (OASDI)
StateLocal (not applicable for GA)401K/IRA/ROTH/PensionGarnishments
Net Pay – The amount of money received AFTER taxes and withholdings
6
EXAMPLE Blended family with three children
Child #1 – Outside of home; Spouse #1 pays child support Child #2 – Inside of home; Spouse #2 receives child support Child # 3 – Inside of home; product of union
Summary of income Spouse # 1 earns $50,000 annually Spouse # 2 earns $35,000 annually
Modest standard of living expenses
Goal: Eliminate overdraft fees on bank account
Plan: Pay expenses only when income is received & reconcile bank account to receipts weekly
7
INCOME - SOURCES Determine frequency of income sources
Daily Weekly Monthly Annually
Create a spreadsheet that identifies the days each source of income is expected and the estimated amount to be received (Net Pay)
8
NET PAY
Base Pay - Spouse #1 Base Pay - Spouse #2
Current Gross 4,166.67 Current Gross 2,916.67
Taxes (25%) (1,059.35) Taxes (25%)
(741.55)
Deductions (8%) (334.71) Deductions (6%) (175.97)
Child Support (350.00)
Net Pay 2,422.60 Monthly Net Pay 1,999.15 Monthly
Net Pay 1,211.30 Bi-Monthly Net Pay 999.58 Bi-Monthly
9
9/1/2012 9/16/2012 10/1/2012 10/16/2012
Income
Spouse # 1 Payroll Check 1,211 1,211 1,211 1,211
Spouse # 2 Payroll Check 1,000 1,000 1,000 1,000
Child Support 150 150 150 150
Total Income 2,361 2,361 2,361 2,361
Model Budget Income
10
EXPENSE Monthly expenses can be grouped and
estimated as a percentage of income
HHM Recommendation USA Visa Recommendation**
Percentage of Income Household Expense Percentage of Income Household Expense
20% Housing 30% Housing
18% Transportation 18% Transportation
15% Food 15% Food
10% Tithe/Offering * 8% Miscellaneous
10% Savings 5% Clothing
5% Clothing 5% Medical
5% Medical 5% Recreation
5% Recreation 5% Utilities
5% Utilities 5% Savings
7% Other Debts 4% Other Debts
* “…he which soweth bountifully shall reap also bountifully… for God loveth a cheerful giver”
(2 Corinthians 9:6-7)
** http://usa.visa.com/personal/using_visa/personal_finance/budgeting.html
11
Model Budget Expenses
9/1/20129/16/201
210/1/201
210/16/201
2 Expenses Transfer to Savings 236 236 236 236 Tithe/Offering 236 236 236 236 Mortgage/Rent 350 350 350 350 Lights 115 115 - Water 80 - 80 Child Care 180 180 180 180 Food/Clothing/Materials 225 225 225 225 Life Insurance 100 - 100 - Homowners/Rent Insurance 75 - 75 - Car Note - 630 - 630 Car Insurance 375 375 - Car Gas 125 125 125 125 Cell Phone 125 125 - Cable 100 - 100 - Student Loans 100 100 100 100 Recreation 150 150
Unexpected Expenses Medical Copays - - - - Car Water Pump - - - - Total Expenses 2,342 2,312 2,342 2,312
12
EXAMPLE - RECAP Set a financial goal
Eliminate overdraft fees on bank account
Determine income and expenses for budget
Model Budget Income & Expenses
Create a plan to meet financial goalPay expenses only when income is receivedReconcile bank account to receipts weekly
13
SURPLUS (DEFICIT) Modifying payment of expenses to coincide
with dates of income received and monitoring bank account activity regularly, can help to eliminate overdraft fees
9/1/2012 9/16/201210/1/201210/16/201
2
Total Income 2,361 2,361 2,361 2,361
Total Expenses 2,342 2,312 2,342
2,312
Net Balance 19 49 19 49
Success!!!
14
WHAT WOULD YOU DO? Track and analyze budget activity
____________________________________________________________________________________________________________________________
Review and modify plan as needed _____________________________________________________________________________________________
15
16
REFERENCES IRS (2012). The Meaning of Income:
Taxable Income and Gross Income. Internal Revenue Code, Retrieved August 30, 2012, from http://www.irs.gov
Visa (2012). Budget Overview. USA Visa, Retrieved September 1, 2012, from http://usa.visa.com
Holy bible: King James Version. (1995). Michigan: The Zondervan Corporation