Write a “V” in the “Type” column, and estimate the amount of the expense in the third column. Write your variable expenses in the sample budget. Examples include groceries, fuel, eating out, cell phones, and entertainment. A good way to identify many of these expenses is to ask yourself, “Do I buy this from a store (or online)?” For many variable expenses, you can make the choice to spend more or less in these areas. These are directly controlled by your spending habits. When it comes to budgeting, the most important variable expenses are the ones you have the most control over. However, even though the monthly amount may vary, you can still budget for these. For example, expenses like your utility bills (water, gas, electric, and so on) fluctuate based on usage. There are some variable expenses that are not directly controlled by your spending habits. Variable expenses are not the same amount each month. As you add expenses, keep a running balance of how much income is left in the “Balance” column. Write an F in the “Type” column, and estimate the amount of the expense in the third column. Write your fixed expenses in the sample budget on the next page. While you may not pay this bill monthly, you will set aside the necessary portion each month so you can pay the bill when it is due. To convert this fixed expense to fit your budget, divide the amount you pay by the number of months between payments. For example, if you pay car insurance every 6 months or life insurance every 12 months, this is a fixed expense. There are also fixed expenses that aren’t necessarily monthly sometimes expenses occur annually, semiannually, or quarterly. A good way to identify fixed expenses is to ask, “Does this expense occur regularly, and is this expense the same amount each time?” Common examples include a mortgage, rent, a car payment, and certain expenses like internet, cable, or cell phone bills. Fixed expenses cannot directly be controlled by spending habits instead, fixed expenses are controlled by assessing your situation and making changes. Most of these expenses will be monthly, but there may be some that occur more or less frequently. Now we will split our expenses into two types: “Fixed” and “Variable.” Below are some examples.įixed expenses are for a definite amount and do not change. You have been tracking your expenses and placing them in the categories you created in chapter 1. The next step to creating a budget is to classify and estimate your expenses. In the sample budget on page 60, fill in the first cell of the “Income” column with your estimated monthly net income. To build a budget, start with your income. One of your commitments this week will be to repeat this exercise with real numbers using the table at the end of this chapter. In the following activities, we will practice creating a budget.įor today, you will estimate the asked-for amounts based on what you know and what you have learned from tracking your income and expenses. Step 2: Then go around the group and share the underlined blessing that is most meaningful to you. Underline the specific blessings of using a budget. Step 1: Take a minute to quietly review the paragraphs you just read about using a budget. If you go over budget, don’t give up! It may take several months of adjustments before you have an effective budget. When you create a budget this week, remember that it will need to be consistently reviewed and revised during your regular family councils. It is important to remember that a budget must be flexible-continually adjusted and improved. We cannot predict the future, and costs often arise unexpectedly. Budgeting can also help you to protect your family from hardship as you use it to allocate money for building an emergency fund, paying down debt, and saving for future expenses.Ĭreating and following a budget is an act of faith. Using a budget, you plan how you will use your money for a certain period of time.įollowing a budget will help you and your family take control of your temporal life, put off the natural man (see Mosiah 3:19), and invite the Spirit into your home. Today we will discuss one of the most vital tools for building financial security and becoming self-reliant: creating and effectively using a budget. Why do you think “budget” is a wall on the Financial Stewardship Success Map instead of a layer? Read: Financial Stewardship Success Map Discuss:
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