Bonus

SESSION 2 BONUS

More on Budgeting!

6 Simple Steps for Creating Your Own Budget

https://bettermoneyhabits.bankofamerica.com/en/saving-budgeting/creating-a-budget

Step 1: Calculate your net income

The foundation of an efective budget is your net income. That’s your take-home pay— total wages or salary minus deductions for taxes and employer-provided programs such as retirement plans and health insurance. Focusing on your total salary instead of net income could lead to overspending because you’ll think you have more available money than you do. If you’re a freelancer, gig worker, contractor or are self-employed, make sure to keep detailed notes of your contracts and pay in order to help manage irregular income.

Step 2: Track your spending

Once you know how much money you have coming in, the next step is to fgure out where it’s going. Tracking and categorizing your expenses can help you determine what you are spending the most money on and where it might be easiest to save. Begin by listing your fxed expenses. These are regular monthly bills such as rent or mortgage, utilities and car payments. Next list your variable expenses—those that may change from month to month, such as groceries, gas and entertainment. This is an area where you might fnd opportunities to cut back. Credit card and bank statements are a good place to start since they often itemize or categorize your monthly expenditures. Record your daily spending with anything that’s handy—a pen and paper, an app or your smartphone, or budgeting spreadsheets or templates found online.

Step 3: Set realistic goals

Before you start sifting through the information you’ve tracked, make a list of your short- and long-term fnancial goals. Short-term goals should take around one to three years to achieve and might include things like setting up an emergency fund or paying down credit card debt. Long-term goals, such as saving for retirement or your child’s education, may take decades to reach. Remember, your goals don’t have to be set in stone, but identifying them can help motivate you to stick to your budget. For example, it may be easier to cut spending if you know you’re saving for a vacation.

Step 4: Make a plan

This is where everything comes together: What you’re actually spending vs. what you want to spend. Use the variable and fxed expenses you compiled to get a sense of what you’ll spend in the coming months. Then compare that to your net income and priorities. Consider setting specifc—and realistic—spending limits for each category of expenses.

You might choose to break down your expenses even further, between things you need to have and things you want to have. For instance, if you drive to work every day, gasoline counts as a need. A monthly music subscription, however, may count as a want. This diference becomes important when you’re looking for ways to redirect money to your fnancial goals.

Step 5: Adjust your spending to stay on budget

Now that you’ve documented your income and spending, you can make any necessary adjustments so that you don’t overspend and have money to put toward your goals. Look toward your “wants” as the frst area for cuts. Can you skip movie night in favor of a movie at home? If you’ve already adjusted your spending on wants, take a closer look at your spending on monthly payments. On close inspection a “need” may just be a “hard to part with.”

If the numbers still aren’t adding up, look at adjusting your fxed expenses. Could you, for instance, save more by shopping around for a better rate on auto or homeowners insurance? Such decisions come with big trade-ofs, so make sure you carefully weigh your options.

Remember, even small savings can add up to a lot of money. You might be surprised at how much extra money you accumulate by making one minor adjustment at a time.

Step 6: Review your budget regularly

Once your budget is set, it’s important to review it and your spending on a regular basis to be sure you are staying on track. Few elements of your budget are set in stone: You may get a raise, your expenses may change or you may reach a goal and want to plan for a new one. Whatever the reason, get into the habit of regularly checking in with your budget following the steps above.

BONUS ACTIVITY

Create Your Own Budget!

Use the monthly budget template below to create your own personal budget. Fill in your monthly income, savings and expenses to begin to plan for your future fnancial goals!

ESG CURRICULUM RTSWS Session 2

Welcome to RTSWS Session #3!

• Be sure you have a pen, pencil or writing utensil • Grab a snack • Get ready to share your name, grade and leader you look up to

RTSWS COHORT NORMS

Let’s review our RTSWS cohort norms. These are the expectations for our RTSWS sessions that we set during session #1.

Norms: The behavioral expectations or rules of the class. Class norms inform us how we are expected to behave towards each other and the materials we use.

• Come prepared to be a part of RTSWS with your handbook, a writing utensil and a positive attitude. • Be kind and encourage one another - we are all in this together! • Ask questions, share your opinions and let the volunteers know when you do not understand something.