Budgeting and Personal Finance Management

A budget is your financial roadmap - it shows where your money comes from and where it goes.

Why Budget?

• Control spending: Know exactly where money goes

• Achieve goals: Save for important purchases

• Avoid debt: Don't spend more than you earn

• Build wealth: Systematic saving and investing

• Reduce stress: Have a clear financial plan

The 50/30/20 Budgeting Method

Simple allocation of after-tax income:

• 50% Needs: Essential expenses (rent, food, utilities, minimum debt payments)

• 30% Wants: Discretionary spending (entertainment, dining out, hobbies)

• 20% Savings & Debt: Emergency fund, retirement, extra debt payments

Steps to Create Your Budget

1. Calculate Income: Add all money coming in (salary, freelance, etc.)

2. Track Expenses: List all spending for one month

3. Categorize: Group expenses into needs, wants, and savings

4. Set Limits: Assign dollar amounts to each category

5. Monitor: Track actual spending vs. budget

6. Adjust: Modify categories as life changes

Emergency Fund Essentials

Goal: Save 3-6 months of living expenses
Start Small: Even $500 helps with minor emergencies
Keep Separate: Don't mix with checking account
Easy Access: Savings account or money market

Remember: Budgeting isn't about restricting yourself - it's about spending intentionally on what matters most.