Last Categories

First we need to open your budget.  It is in your computer's h: drive.  Get it by opening "my computer" in the upper left, and clicking the drive marked with your student number and h: (for example: 900182745on h:), find your budget and open it.  You will be recording the following information on your budget.  Your budget is a word document, so go below the table with the categories and just type the information you collect today right in it...

The categories we have left for your budget are:

Savings:

Spending money:

Everything else:

But we are going to switch up the order because savings is always last.  First let’s do spending money because it is the easiest.  Decide what percent (between 10-15%) you will use for spending money.  Figure how much money that is (multiply the percent by your net income) and divide by 52 (the number of weeks in a year).  Simple.  Record the amount of spending money per week on your budget.

Now, for “everything else”.  This category includes all yearly purchases, for example: furniture, clothes, hobbies, travel, etc.  Will you have a studio in your basement?  Will you have season tickets to Shea’s?  Will you have a membership to a gym?  Spend the “everything else” section by listing what you will buy and the cost of each these items on your budget.  Make sure the total cost of your items is between your high and low numbers for “everything else”.

Finally we have savings.  Add all the real numbers in the budget together (not the projected costs of a house, car etc. but the ACTUAL costs that you calculated).  Then subtract this total from your net income.  The remainder is your savings.  You learned the different risks and rewards for each of the different investment strategies.  Consider your long term financial goals as you decide what to do with the money you save.  Consider, Savings Accounts, CDs, Money Market Accounts, Real Estate, Bonds and Stocks and the decide which will meet your goals.  (remember that you also can use Mutual Funds for stocks and bonds).  Whatever your decision for your savings, you should know the details.  For example, if you use a savings account, what is the interest rate?  If you use CDs, how long until they mature?  Are your bonds government bonds or corporate bonds?  If you buy stock what types of stock are you invested in?  If you are investing in a stock mutual fund, what was the return rate over the last 5 years?  Record all this information on your budget.

When you have all this information recorded on your budget you are done!  Congratulations!  You have selected a job, figured taxes and net pay, budgeted for housing, a car, spending money, savings and everything else for an entire year.  Making a budget and sticking to is a long process but in the end it will meet all your financial goals.