Financial Ratings Series Financial Literacy Basics: How to Make and Stick to a Budget to Make and Stick Basics: How Literacy Financial Financial Literacy Basics: How to Make and Stick to a Budget 2019/20 2019/20 Box Set: 978-1-64265-269-7 4919 Route 22, Amenia, NY 12501 518-789-8700 • 800-562-2139 • FAX 845-373-6360 www.greyhouse.com • e-mail: [email protected] GREY HOUSE PUBLISHING basics_budget_19.indd 1 7/26/19 12:07 PM Financial Literacy Basics: How to Make and Stick to a Budget Financial Literacy Basics: How to Make and Stick to a Budget 2019/20 Edition GREY HOUSE PUBLISHING Grey House Publishing Weiss Ratings 4919 Route 22, PO Box 56 4400 Northcorp Parkway Amenia, NY 12501-0056 Palm Beach Gardens, FL 33410 (800) 562-2139 (561) 627-3300 Copyright © Grey House Publishing. This publication contains original and creative work and is fully protected by all applicable copyright laws, as well as by laws covering misappropriation, trade secrets and unfair competition. 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Grey House Publishing accepts no payment for listing; inclusion in the publication of any organization, agency, institution, publication, service or individual does not imply endorsement of the publisher. 2019/20 Edition ISBN: 978-1-64265-269-7 Table of Contents How to Make and Stick to a Budget .................................................... 1 Benefits of Having a Budget ................................................................ 1 How to Make a Budget ........................................................................ 4 Needs & Wants ..................................................................................... 5 Sample Budget ..................................................................................... 6 Budget Worksheet ............................................................................... 7 Other Budgeting Strategies ................................................................. 9 Budgeting & Savings Apps ................................................................... 9 Ways to Cut Back ................................................................................. 10 Credit Cards & Debt ............................................................................. 14 Set Goals .............................................................................................. 16 SMART .................................................................................................. 17 Do the Math ......................................................................................... 17 Budget Methods .................................................................................. 18 Budgeting Software & Apps ................................................................ 19 Sticking to Your Budget ....................................................................... 19 Creating a Budget with your Partner or Spouse .................................. 20 Banking Tips ......................................................................................... 21 Student Loans ....................................................................................... 22 Appendices ........................................................................................... 25 Sample Budget for High School Students .................................. 26 Sample Budget for College Students ......................................... 27 Sample Budget for a Single-Person Household .......................... 28 Sample Budget for a Two-Person Household ............................. 29 Sample Budget for a Household with Children .......................... 30 Create Your Own Budget Worksheet ......................................... 31 Consumer Expenditure Survey 2017-2018 ................................. 32 Average Hourly Wage & Annual Income by State ...................... 38 National Occupational Employment & Wage Estimates ............ 40 The 50/30/20 Rule ....................................................................... 52 Budgeting Software .................................................................... 53 Glossary ....................................................................................... 55 Sources ........................................................................................ 57 Welcome! Grey House Publishing and Weiss Ratings are proud to announce the third edition of Financial Literacy Basics. Each volume in this series provides readers with easy- to-understand guidance on how to manage their finances. Designed for those who are just starting out and for those who may need help handling their finances, volumes in this series outline, step-by-step, how to make the most of your money, which pitfalls to avoid, and what to watch out for, and give you the necessary tools to make sure you are fully equipped to manage your finances. Volumes in this series take the guesswork out of financial planning—how to manage a checking account, how to stick to a budget, how to pay back student loans quickly—information necessary to get started on your financial future. Each volume is devoted to a specific topic. Combined, they provide you with a full range of helpful information on how to best manage your money. Individual volumes are: How to Make and Stick to a Budget How to Manage Debt Starting a 401(k) Understanding Health Insurance Plans Renting an Apartment & Understanding Renters Insurance Understanding the Cost of College, Student Loans & How to Pay Them Back Buying a Car & Understanding Auto Insurance What to Know About Checking Accounts Filled with valuable information alongside helpful worksheets and planners, these volumes are designed to point you in the right direction toward a solid financial future, and give you helpful guidance along the way. How to Make and Stick to a Budget 1 Financial Literacy Basics: How to Make and Stick to a Budget How to Make and such as rent, student loans, utilities, Stick to a Budget and groceries. It also includes money spent on fun, such as movies and What’s the first thing meals at restaurants. A budget can you think of when you help you see how much money you hear the word budget? have left after paying for necessities. If you’re like most people, you think Then you can decide what you should of saving money—and this means do with this money. making sacrifices. This is why the Living without a budget is stressful. word budget makes people cringe. You might just pay your bills and Making a budget will make you aware spend the leftover money however of all the things you spend money on. you like, without thinking ahead, but It can also help you identify the things what happens if you run out of money that are worth spending on, and those in between paychecks and need gas that are not. Your budget doesn’t in your car or you need to pay for have to totally restrictive. public transportation? How will you get to work? Credit cards can be a It may not always be a pleasant temporary solution, but you’ll have to experience, but it’s really important to pay that bill next month, or over time, make and stick to a budget. Many with interest. This is a problem you people live from paycheck to can usually avoid if you stick to a paycheck and struggle to get by. They budget. don’t have a budget—but they should, and you should, too. A Benefits of budget will help you save money for Having a emergencies, major events and, Budget eventually, retirement. And it doesn’t mean you can’t splurge once in a A budget is while on a designer jacket or an beneficial for many extravagant dinner. reasons. It gives you the information you need about where your money A budget is a roadmap for spending. goes each month, so you can be sure It includes how much you earn and you can pay your bills on time and how much you spend on necessities 2 How to Make and Stick to a Budget don't run out of money before your so you should include an amount of next paycheck. money to save in your budget right away and stick with it. Your goal This is especially helpful if you use should be to build an emergency fund credit and debit cards because then that will cover from three to six you are not handling cash and seeing months of living expenses. exactly how much money you have left. A budget helps you avoid late Once you’ve reached this goal, keep fees and interest charges, which can adding a small amount of money to take a big bite out of finances. It lets the emergency fund regularly. Keep you control your finances, rather than your emergency fund in a savings letting your finances control you. account or a different account. Don’t mix this money with the money you A budget can help you stick to a use for living expenses. After you savings plan. Tempting