How to budget your income in better way.

1. Budget
How to budget your money?

2. What is a budget?
►A tool to manage your money
►For a specific period of time – usually
monthly
►Budget due to our limited resources
►Helps us meet our responsibilities and our
financial goals

3. Reasons for a Budget
 Track spending
Money toward expenses/bills
Avoid careless spending
Eliminates stress
Live within your means/income
 Meet financial goals
Save
Invest
 …Puts you in control of your financial future,
beginning NOW.

4. Without a Budget…
 Have no plan
Paycheck-to-paycheck
Come up short
Plan for emergencies
No savings/investing plans
 Less likely to know what $ you have

5. How to Build a Budget
1. Decide on a time frame for tracking expenses
(monthly)
2. List all money you have coming in (income)
A. Disposable income
B. Discretionary income
3. PYF (Pay yourself first) = Savings
4. Make categories for all expenses
5. Subtract total expenses from income
6. Study budget and make changes

6. PAY YOURSELF FIRST!
Every time you PYF, you are developing a
saving habit that leaves you with more
money to spend later on for things that are
really important to you!
Save 10% of your disposable income each
time you get paid

7. Budgeting Terms
►Budget – tool for
money management
►Disposable income –
after taxes
► Discretionary income –
after all expenses paid
►Expenses:
 Fixed expenses –
monthly contractual
 Variable expenses –
not contractual, vary
each month
 Periodic fixed
expenses

8. What is included in a budget for a
family in a given month?
The typical family spends their money on:
►Housing - 30%
►Transportation - 20%
►Food -15%
►Utilities, Home Improvements - 14%
►Saving - 10%
►Insurance - 7%
►Other - 4%

9. What does it look like?
Budget Template
Income Amount
Wages Rs.
Total Income Rs.
Expenses Amount
Fixed Expenses
PYF (10%) Rs.
Variable Expenses Rs.
Periodic Expenses Rs.
Total Expenses Rs.
Net Gain or Net Loss Rs.

10. Allocate money to each category
► Net gain – Rs. remaining to either save, spend or invest
► Net loss - spending more money than earning and has to
use credit (borrowed money) to meet their financial
obligations
Income Expenses
Net gain
or loss

11. Implement and Control
► There is not one correct control system.
Depends upon the individual/family
 Envelope systems – individuals place the actual
budget amount of cash from a paycheck into a
specific envelope system for the expense
 Check register system – helps consumers to track
all expenditures in a checkbook register which has
been divided into spending plan categories
 Electronic spending plan systems – multiple
types of software are available for consumers to use
to help keep track of their financial records like
www.mint.com

12. Net worth statement
► A net worth statement describes an individual or
family’s overall financial condition on a specified date
► The components include:
 Assets – Everything a person owns with monetary value
 Liabilities – Debts or what is owed to others
 Net worth - The amount of money left when liabilities are
subtracted from assets (indicates wealth)
Assets Liabilities
Net
Worth

13. ANY QUESTIONS?

14. THANK
YOU…
BY:-TUSHAR KANDPAL