Managing Your Money:

Why it is Important to Start Young

Tracking Your Spending Habits

Make a list of all the money you spend in a month. Examine your list, and then answer the questions below:

1. What patterns do you observe in your spending habits? Do you buy a soda every day? Do you get food for the vending machine on a daily basis?
2. How do you decide what to purchase? Do you buy on impluse or do you plan out what you buy?
3. What factors influence your purchasing decisions? Availbility? Price?

The Budgeting Process

1. Assess your personal and financial situation, including your needs, values, and stage of life.
2. Set personal and financial goals.
3. Create a budget for mandatory, flexible, and optional expenses based on your projected income.

Mandtory expenses are the same each month, such as rent, loan payments, insurance premiums, car payments, etc.

Flexible expenses differ each month, based on how you choose to spend your money. Examples are grocery bills, restaurant expenses, entertainment, clothing purchases, etc.

Optional expenses are items that are not necessary for survival. If you are spending more money than you earn, you need to eliminate items from this category to cut back on expenses

4. Monitor your current spending patterns.
5. Compare your budget of how you wanted to spend your money to what you have actually spent.
6. Review your financial progress and revise your budgeted amounts.

Setting Up Your Budget

Use the forms on the following two pages to create your personal budget.

After you've completed these forms, try to stick to your budget for one month. At the end of the month, write down your actual income and your actual expenses.

Calculate the difference between what you thought you would earn and what you actually earned, and what you thought you would spend and what you actually spent.