Budgeting Essentials Masterclass - Emergency Funds, Needs vs. Wants, SMART Goals, Inputs and Outputs | Donald Fittsgill Jr | Skillshare

Budgeting Essentials Masterclass - Emergency Funds, Needs vs. Wants, SMART Goals, Inputs and Outputs

Donald Fittsgill Jr, Podcast Doc | www.podcastdoc.com

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15 Lessons (27m)
    • 1. Creating a High Octane Budget trailer

      0:43
    • 2. Financial Foundation Introduction

      1:13
    • 3. Creating a High-Octane Budget Overview

      0:53
    • 4. Emergency Funds

      2:57
    • 5. Emergency Funds Knowledge Check

      3:07
    • 6. Emergency Funds Summary

      0:36
    • 7. Needs vs Wants

      2:09
    • 8. Needs vs Wants Knowledge Check

      1:23
    • 9. Needs vs Wants Summary

      0:21
    • 10. SMART Goals

      2:11
    • 11. SMART Goals Knowledge Check

      2:20
    • 12. SMART Goals Summary

      0:21
    • 13. Inputs and Outputs

      4:26
    • 14. Inputs and Outputs Knowledge Check

      3:29
    • 15. Inputs and Outputs Summary

      0:37

About This Class

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Creating a High-Octane Budget

Creating a High-Octane Budget is one course, in a 3 course series called Financial Foundation. Financial Foundation is designed to empower you with the knowledge and confidence you need to take control of your financial life.

In Creating a High-Octane Budget you'll learn,

- Emergency Funds - Learn why an emergency fund is a necessary account for all adults. Plus, don't miss the Emergency Funds podcast.

- Needs vs. Wants - Learn the difference between needs and wants. It is paramount to understand this distinction prior to making a budget.

- Creating SMART Goals - Learn why goals should be setup in a certain way for success. Smart people make SMART goals.

- Inputs and Outputs - Learn how to put all of your budgeting principles into action. This is where the magic happens.

Transcripts

1. Creating a High Octane Budget trailer: 2. Financial Foundation Introduction: let me ask you a few questions. Do you want to work for the rest of your life? Do you want to pay more for a car than someone else? Do you want to live paycheck to paycheck? If you're like most people, you answered a resounding no to those questions as you should. But the real question is how? How do you give yourself the best possible chance to live the life you want Free from financial stress? The answer is simple. Make good decisions. Make the decisions. You should know that the financial decisions that you make as an adult can and will affect you for a very long time. Unfortunately, many adults have to learn these lessons the hard way. And honestly, some never learn. But here's some good news. You don't have to learn the hard way. By taking this course, you are giving yourself a financial foundation that takes many people years to learn. Now, just like most things in life, you will get out of this scores what you put into this horse. I'm going to say that again. You will get out of this course what you put into this course, so pay attention and get ready to change your life. Let's go 3. Creating a High-Octane Budget Overview: Okay, so I know that many of you, when you hear the word budget automatically think boring. But in reality, there is no more important step to jump starting your financial life. Get this right and everything else in your financial life will have the potential to run smoothly. Get this Rome and you could suffer for a long, long time. That's why this section is called creating a high octane budget. We want to help you create a budget that runs well and jump starts your financial life. In this section, you'll learn how to create an emergency fund, how toe identifying needs versus wants, how to create smart goals and inputs and outputs, which basically means how to put it all together. So do yourself a favor and pay attention and get ready to create a high octane budget. 4. Emergency Funds : meet Braxton. Braxton is 18 years old and just graduated high school in Dallas, Texas. During high school, Braxton had a part time job at Pappas Pizza, where he mainly washed dishes and bussed tables. Once he graduated, he started working full time at the pizza restaurant as a delivery driver. Now Braxton was eager to leave home and begin making his own way. So he left the comfort of his parents place and rented an apartment as he quickly adapted to paying bills each month. Everything was going great in life. That is, until calamity struck. And no. One day while delivering pizza, Braxton's clutch went out in his car. The cost of fixed the clutch was a whopping $900. Now Braxton didn't have any money saved up in case of an emergency, so we had no way to fix this car without a car. He lost his pizza delivery job without a job. He lost his apartment and had to move back in with his parents. If only he had an emergency fund, he could have avoided this whole mess. What is an emergency fund? An emergency fund is an account used to set aside funds needed in the event of a financial dilemma, such as the loss of a job, a debilitating illness or a major expense. Let's look at how an emergency fund could help you prepare for a financial disaster. You need an emergency fund in your life. An emergency fund is like money you've stashed between your mattresses. For that, just in case situation, just in case something catastrophic occurs, you can run to the money that's stashed between your mattresses and take care of this financial obligation. An emergency fund should be used only when the situation is unexpected, necessary and urgent or who knew who before you. Such the money in your emergency fund, you must ask yourself, Is it who knew unexpected, necessary and urgent? So when will an emergency occur? Oh, wait, that's right. We don't know. We have no idea when an emergency will take place, and that's why it's critical to start saving for an emergency fund right away. And that's also why the money in your emergency fund should be relatively liquid or easy to obtain in a short amount of time. A good amount for most people to initially say for emergencies is $1000. Ultimately, you should strive toe have an emergency fund that could replace at least six months of your income. But for now, let's start off with an initial amount of $1000 for your emergency fund. Now, the way that you reach this goal is by making smaller, attainable goals. Every long term goal should be marked with several short term goals along the way. For instance, to reach your goal of $1000 you can start by saving $100 a week. By doing this, you will be able to save $1000 in about 2 to 3 months. 5. Emergency Funds Knowledge Check: Okay, let's answer some questions about emergency funds. Please select the best reason below to use your emergency fund. Is it a You have a date with someone that you really like? Is it be the brakes on your car just went out and you need your car to get to work? Or is it C? The deadline to register for a marathon is today if you want to receive a 50% discount on the entry fee on bone, bone, bone, bone, bone, bone, bone, bone, bone bone bum bum bum abobo, bone, bone, bone, bone, bone, bone, bone, bone, bone, bone, bone Boehm boom, boom. This situation is unexpected, urgent and necessary. What should be the amount of your initial emergency fund? Is it a $100? Is it be $10,000 or is it C $1000? Bone bone, bone, bone, bone, bone, bone. Oh, boom, boom boom boom bom bom bo bo bo bone, bone, bone, bone, bone, bone, bone, bone, bone, bone, bone, Rome bone bow. Your specific situation may make it necessary toe have more or less than $1000. But for most people, $1000 is a good initial goal for an emergency fund. What should be your ultimate goal for an emergency fund? Is it a $14,000? Is it be two months of income or is it C six months of income Bone bone bone bone bone bone bone bone bone bone bone bone bom bom bobo bobo bone bone bone bone, bone, bone phone. Bobo bone bone Boehm bone bow. You should strive to ultimately have six months of replacement income in the event of an emergency. How long will it take to save $1000? If you save $25 a week? Is it a 25 weeks? Is it be four weeks or is it c 40 weeks? Own bone, bone, bone bone, bone, bone, bone, bone bone, bone bone Mahbub bobo bobo bone bone bone Boban boom Phone. Bobo Bone bone Boehm Bone bo. $1000 divided by $25 a week equals 40. It will take 40 weeks to save $1000 at $25 a week 6. Emergency Funds Summary: Congratulations. You have just completed the emergency fund section. Here are the takeaways who knew an emergency fund should be unexpected, necessary and urgent. Start with an initial goal of $1000 for your emergency fund. Strive for an emergency fund that could replace at least six months income. You can reach larger goals by way of smaller goals. To save $1000 you need to save $100 a week for 10 weeks. 7. Needs vs Wants: Samantha is 19 years old, and as a freshman in college she receives $100 a week from her parents for food. So she heads to the grocery store to get groceries. For the entire week, she has determined that the average amount that she can spend each day on food is $14.28. She loves lobster, gelato, ice cream, gourmet cheese and eating out. She quickly has a reality check when she realizes that her money won't stretch very far. If she eats the things she wants, she determines that instead of eating lobster and gelato ice cream, she could make her money last longer by buying things she needs, like eggs, bacon, rahman, vegetables and other things she can afford without realizing it. She was experiencing a common problem in economics scarcity. How do we allocate scarce resource is like money to satisfy basic needs and as many wants is possible. Let's take a look it needs versus wants. So at first glance, I know this probably sounds really easy, but this is something that a lot of people get wrong every single day. This is why it's important your actions become habits And as someone once said, successful people are simply those with success habits, determining your needs and wants. Then doing your best to reduce, eliminates or delay wants is a great success. Have it toe have. So what is the difference between a need and a want? Simply put, a need is something needed to survive, and a want is something you desire toe have but don't necessarily need to survive. Food, water, clothing, shelter and transportation or examples of needs. Ice cream, leather jackets, Manolo shoes and a Ferrari Testarossa are examples of wants. When you really think about it and you're honest with yourself, it's not difficult to determine what is the need and what is a want. And just because something is a warrant doesn't mean that you have to completely avoid this desire forever. Once you have determined what you're wants are, then it's time to determine what you can reduce, eliminates or delay 8. Needs vs Wants Knowledge Check: Okay, let's answer a few questions for needs versus wants. Select the wants from the list below a groceries Be electricity bill. See work pants d designer jeans, bone bone bone bone bone bone bone bone bone bone bone bone bum bum abobo bone bone bone bone bone bone bone bone bobo bone bone Boehm bone bo. This is considered a want because you don't need tohave designer jeans. Which one of the following actions will have the biggest effect on your budget expenses? Is it a reducing expenses? Be eliminating expenses. See delaying expenses Bone bone bone, bone bone bone bone bone bone bone bone bone bom bom bobo bobo bone bone bone bone, bone, bone phone. Bobo bone bone, Rome bone bow. Eliminating your expenses will have the biggest effect on your butt. 9. Needs vs Wants Summary: Congratulations. You have just completed the needs and wants section. Here are the takeaways. A need is something you need to survive a want to something you would like Toa have but don't need to have to survive. Determine which wants can be reduced, eliminated or delayed. 10. SMART Goals: Italy is 18 years old and has just graduated high school. Emily, just like her mother and father, has decided to enlist in the United States Air Force. Emily has been budgeting since her first job at 16 years old, so she is well aware of how to make a budget. But now that Emily has her dream career, she wants a little more out of life. She wants to buy a car within two years and not borrow any money to do so. She also wants to take a trip to Europe with some of her girlfriends from high school in five years. The question is, how do we save money for our short term and long term goals? Is it possible with a high octane budget, it is. Let's find out how you are ultimately responsible for you. So when it comes to your goals in life, you are responsible for meeting your own goals. No one else. So let's talk about goals, specifically goals that require money. Things like buying a car, getting a place of your own, going on vacation to Cancun, Mexico, giving to your church, paying for college schoolbooks, paying for wedding once you have determined what your goals are, then you can develop your smart goals by setting smart goals. You are setting goals that are specific what exactly needs to be accomplished. Measurable. How will you know when you have accomplished your goals attainable? Is this goal possible given your current resource is relevant? Is this gold meaningful to me? Time bound? What is the deadline? Let's say you were offered the chance to study abroad in Italy for a cost of $5000. You desperately want to go on the trip, and the deadline to pay is 12 months from now. This goal is specific, measurable, relevant and time bound that isn't attainable. To have $5000.12 months means that you would need to save about $417 a month. If you only have $300 of expendable cash each month, this is not an attainable goal. And if the goal is not an attainable goal than the goal is not a smart goal. 11. SMART Goals Knowledge Check: Okay, now let's hands or some questions about smart goals Is the following a smart goal. Save money for an apartment after high school yes or no bone bone bone bone bone bone bone bone bone bone bone bone bom bom abobo bone bone bone bone bone bone bone bone bone bone bone Boehm bone Boehm. This goal is not specific or measurable. Smart stands for a specific, measurable, alive, resilient Today. Be specific. Measurable, attainable, relevant, time bound. See specific monetary, actual resilience, time bound bone, bone, bone, bone, bone, bone, bone, bone, bone, bone, bone bone bom bom abobo bone, bone, bone bone Boban boom Bobo bone bone Boehm Bone bowl. Nice job Police Select The Smart Goal. Is it a buy a new computer and six months? Is it be by a new Dell computer for $1200 before I begin college in August so that I could be prepared for assignments? I will save $100 a week and be prepared to purchase the computer in three months, leaving me plenty of time before class begins or C save a lot of money before I graduate. High school bone, bone, bone, bone, bone, bone bone, bone, bone bone, bone bone bom bom bo bo bo bone, bone, bone, bone, bone, bone, bone, bone, bone, bone, bone, boom, bone bow this gold a specific, measurable, attainable, relevant and time bound. 12. SMART Goals Summary: Congratulations. You have just completed the Smart Goals section. Here are the takeaways set. Smart goals specific, measurable, attainable, relevant and time bound. You are ultimately responsible for you. 13. Inputs and Outputs: Jacob is 23 years old and has just graduated college man. Is he excited? He was an advertising major and has just accepted an offer at a boutique advertising firm. As an analyst now, Jacob has never had to really be responsible for anything before his parents paid for everything. Now that he has a job and is about to be on his own, he realizes that he must sit down and seriously look at all of the inputs and outputs that will affect his finances. Now that's not as easy as it sounds. He has fixed expenses and variable expenses. He has a salary and the possibility for a quarterly bonus. Then he has to put all of these things together and create a high octane budgets. Let's find out how so now what you've all been waiting for, it's time to create a high octane budget. Here are the five steps needed to create your high octane budget. Decide the time frame, list all income and expenses during that time frame. Subtract expenses from your income, put it in the action, adjust if necessary. Let's look at this a little deeper. Deciding the timeframe. Does it make sense for you to have a weekly budgets or a monthly budget every two weeks, or perhaps twice a month. Next, let's list out all of your income and expenses. Now the income should be the easier side toe list for most people. This will be your paycheck that you receive from work, but you should also include any money from gifts, allowance, state payments and mawr. Essentially, you should include any and all income that you receive for those that work. Jobs that are dependent on cash tips. Waiters, delivery drivers, bartenders You must use a little math toe. Forecast your income. Total up your income for the last 10 weeks, then calculate the average weekly amount. For example, if you may $3000 over 10 weeks than your weekly average would be $300. As for bonuses, bonuses should not be included in your budget projections until you know that you are going to receive a bonus. Typically, bonuses aren't guaranteed, and you can do yourself a lot of harm by assuming you will definitely receive a bonus. Next, let's look atyour expenses with expenses. You have fixed variable and occasional expenses. If you have used a debit or credit card to pay for everything. You should be able to look at your past few bank statements to determine what you spend money on. Fixed expenses air going to be the same amount every time things like rent, mortgage, car loans and student loans. In contrast, variable expenses are expenses where the amounts are different each time, things like your electricity bill, water, gas and groceries. Finally, we have occasional expenses. Occasional expenses are expenses that you don't have to deal with every month, but you do have to budget for every month things like your wedding, vacation school books and emergency fund. The next step is to subtract the total expenses from your total income. At this point, you can determine if you need to adjust your non fixed expenses so that you don't exceed your budget. Once everything is set, it's time to put it into action. You should know that it is extremely rare to get this right the first time you do it. It typically takes three months to get your budget correct. So definitely go into this, knowing that it takes time to develop a sound budget when building your high octane budget . We have to keep in mind the things that we have learned so far. Emergency funds are necessary to resolve those issues that are unexpected, necessary and urgent. Who knew this should be included in your budget as an occasional expense until you have saved the amount of money you have determined should be in your emergency fund? You should closely track your needs and wants always remembering that your needs must come before your wants. When looking for room in your budget, remember, you can reduce, eliminates or delay your wants. Most of these adjustable items will be found in your variable and occasional expenses. Your smart goals are your financial goals with different timelines. If you need $1200 a year from now, you will need to save $100 a month for the next 12 months to accomplish this goal. Though usually a fixed amount, they're typically listed as occasional expenses 14. Inputs and Outputs Knowledge Check: Okay, let's answer some questions on inputs and outputs. Putting it all together Which of the following is not a fixed expense A rent be groceries C student loans Bone bone bone bone bone bone bone bone bone bone bone bum bum bum abobo bone bone bone bone bone bone bone bone bobo bone bone Boehm Bone bowl groceries would be considered a variable expense. How long does it typically take to get a budget? Correct. A. One month May 2 months c three months Bone, bone, bone, bone, bone, bone, bone, bone, bone bone, bone bone, bum bum abobo bone, bone, bone, bone, bone, bone, bone, bone, bone, bone bone Boehm bone bowl. Uh huh. The following budget has total expenses that are greater than total income. Which expense can be reduced to balance the budget? Is it a rent be student loans, See entertainment bone, bone, bone, bone, bone, bone, bone, bone, bone, bone, bone bone, bum bum abobo bone bone, bone, bone, bone bone, bone bone, bobo bone bone boom bone bone. Your entertainment expense is currently $200 a month. You can reduce this line item to $90 a month to balance your budget How about that? You have the following smart goals. I need to have $600 in two months for school books. This is necessary because I would like to purchase my schoolbooks when classes begin in two months. I need to have an emergency fund of $1000 in eight months. I want to be able to pay for unexpected expenses that come my way so that I don't have to borrow money. I need to have $4400 to go on a trip to Brussels, Belgium. This is important to me, as I have always wanted to go to Europe and visit Brussels, Belgium. I need to pay for this trip in eight months. Which one of the following expenses will not accomplish the smart goal? Is it a school Books Be emergency fund or C Brussels Vacation bone bone, bone, bone, bone, bone, bone, bone, bone, bone, bone bone, bum bum abobo bone, bone, bone, bone, bone, bone, bone, bone, bone, bone bone Boehm bone Bo, setting aside $100 will not reach $1000 in eight months For your emergency fund. To reach your goal of $1000 in eight months, you would need to set aside $125 a month 15. Inputs and Outputs Summary: Congratulations. You have just completed the inputs and outputs section. Here are the takeaways. Here are the five steps needed to create your high octane budgets. Decide the time frame. List all income and expenses during that time frame. Subtract expenses from your income. Put it into action. Adjust if necessary. You can set up your budget on paper or on a spreadsheet like Microsoft Excel. It typically takes three months to get your budget right, so don't worry if it's not perfect on Day one.