Budgeting

1
Budgeting Banking Basics
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Literacy Project
2
Anyone can save money

• Saving a small amount of money each day adds up
  to large amounts of money later.
• People with high incomes go bankrupt and people
  with low incomes retire with security.

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Literacy Project
3
What can happen each month.
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Literacy Project
4
Establishing a budgetwhat are your financial
goals?

• First, make a list of your short-term goals
  (e.g., new car, vacation)
• Then list long-term goals (e.g., your child's
  college education, retirement).
• Decide how important it is for you to
• achieve this goal. How much will you need to
  save?

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Literacy Project
5
Establishing a budgetadd up your income

• Regular salary and wages
• Any other types of income, such as
• -dividends
• -interest
• -child support

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Literacy Project
6
Establishing a budgetadd up your expenses

• Divide expenses into 2 categories
• fixed (e.g., housing, food, clothing,
  transportation)
• discretionary (e.g., entertainment, vacations,
  hobbies)
• Include out-of-pattern expenses (holiday gifts,
  car maintenance, home repair, etc.)
• Look through canceled checks, credit card bills,
  and other receipts from the past year to see if
  youre forgetting any kinds of expenses.
• Whenever possible, include your financial goals
  as expenses.

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Literacy Project
7
Tips for sticking to a budget

• Involve the whole family Agree on a budget up
  front and meet regularly to check your progress.
• Stay disciplined Try to make budgeting a part of
  your daily routine.
• Start your new budget at a time when it will be
  easy to follow and stick with the plan (e.g., the
  beginning of the year, as opposed to right before
  the holidays).
• Avoid using credit cards to pay for everyday
  expenses It may seem like you're spending less,
  but your credit card debt will continue to
  increase.

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Literacy Project
8
Once youre in credit card debt, its hard to get
out.
Average household debt 9,300 Average interest
rate 13.4 ABC News, 2006
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Literacy Project
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After 3 yearspaying the minimum balance
Assuming 13 interest rate
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10
After 32 and a half years??

• At this rate it would take 32.5 years to pay off
  your credit card balance
• (assuming no additional charges or debts)
• If you are 35 now, you would be over 67 years
  old.
• Total payment on that 9,300
• 19,923!!

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Literacy Project
11
More tips for sticking to a budget

• Build rewards into your budget (e.g., eat out
  every other week).
• Decide which things expenses are "wants" (e.g.,
  designer shoes) and which are "needs" (e.g.,
  groceries).
• Move next to the wants how many can you reduce,
  even by a little?

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Literacy Project
12
Save small amounts, invest it, and watch it grow.
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Literacy Project
13
Save small amounts, invest it, and watch it grow.
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Literacy Project
14
Save small amounts, invest it, and watch it grow.
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Literacy Project
15
Other ways to save

• Banks offer direct deposit designate a certain
  amount of to a savings account.
• If youve paid something off, keep putting the
  amount of that payment into a savings account.
• What do you do with raises? You dont have to
  save all, but save some.

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Literacy Project
16
For more informationon Financial Literacy

• Contact the Oregon Society of CPAs
• www.orcpa.org/FL_presentations.html
• 503-641-7200 / 1-800-255-1470,
• ext. 12 cwright_at_orcpa.org

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Literacy Project