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Your Roadmap To Success!

What´s your money personality? Are you a spender or a saver? What´s the smartest thing you ever did involving money? How about the biggest money mistake you ever made? If you work, do you sometimes wonder what happens to your take-home pay? Some people ask an even more important question each pay period. That is, where did it all go? Without a personal spending/savings plan, often called a budget, you may never be able to answer these questions. Ages 16-25


Some Money Facts

The average person spends money three times a day.

A personal SPENDING/SAVINGS PLAN, or a budget, is a plan for managing money during a given time period.

The more realistic you make your budget, the easier it will be to follow. A spending/savings plan is a tool that will help you take control of your money.
A spending/savings plan requires self-discipline in seeing that spending does not exceed income.


Income and Spending

There are two simple parts to a personal spending/savings plan: income and spending (expenses). Income and spending must balance each other. In other words, you should not spend more money than you have.

INCOME is any money coming in. It could be money from one or more jobs, or an allowance. Income is your starting point for your personal spending/savings plan. It is always a limited amount. Therefore, the amount you have for spending and saving also is a limited amount.

SPENDING(expenses) is using your money for your needs and wants. One example is paying yourself first (saving). Another is paying your bills (automobile, insurance, or rent). And yet another is providing for food and entertainment.

Fixed and Adjustable Spending (Expenses)
You will find that some of your expenses are the exact amount every time. These are called FIXED EXPENSES. An example of a fixed expense would be your car payment or rent.

The other type of expenses are called FLEXIBLE or ADJUSTABLE. In other words, you can control how much you spend. A good example of an adjustable expense is money you spend on food away from home.


First, you need to know what your income and expenses are. Then you will be able to make clear, planned decisions as to the best way to use your money.

Here are two simple budget record keeping systems that may be helpful to you to get you started.



The envelope system is useful when income is small and the individual uses cash for transactions rather than using checks or credit cards.

In this system, a separate envelope is labeled for each expense, such as savings, food, transportation, gifts, entertainment, and miscellaneous. The planned amount of money is placed in each envelope when you get paid. When money is needed from each of the planned categories, the cash is taken out of the appropriate envelope. When the envelope for the planned category is empty, spending stops for that category, or "extra" money from a category in which it is not needed is shifted into the category where money is needed.

Each time money is added to or taken from an envelope, the date, amount, and purpose can be written on a piece of paper and left in the envelope or can be written on the envelope. At the end of the spending plan period, the papers from all the envelopes, or the information written on the envelopes, can be reviewed. The amounts can be totaled and compared to the planned estimates and used for reference in preparing a spending plan for the next time period.



The notebook system is useful when the individual used a combination of cash, checks, and credit cards for transactions. In this system, a separate page in a notebook is labeled for each type of expense, such as savings, food, transportation, gifts, entertainment, and miscellaneous. The planned amount of money is entered on the page at the beginning of the period. When a transaction occurs in each of the planned categories, the amount is subtracted from the allotted amount entered on the notebook page for that category. As in the envelope system, when the amount of money allotted for the planned category is gone, the spending should stop for that category.

Each time an amount is added to or subtracted from the appropriate page in the notebook, the date, amount, and purpose can be entered on the page. At the end of the planned period the pages in the notebook can be reviewed. As in the envelope system, the amounts used in each category can be totaled and compared to the planned estimates and used for reference in preparing a spending plan for the next time period.

Most people cannot afford to go out and buy the car of their dreams. First, they need to carefully plan and manage their income and spending. Next, they will need to practice the "pay-yourself-first" (P.Y.F.) philosophy.

The secret to getting what you want is to learn to "pay-yourself-first," or in other words, learn to P.Y.F. Begin now to save 10%, or one thin dime, of all the money you earn and receive as gifts, etc. This way you will be able to make more of your dreams and goals a reality.

If your financial goals and objectives are to be met, you will need to save regularly. You may also have to wait to get some of the things you want. Source: Endowment For Financial Education (NEFE)


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