Personal Finance Co-Pilot: Achieve Your Financial Goals | Brett Romero | Skillshare

Personal Finance Co-Pilot: Achieve Your Financial Goals

Brett Romero, Bitesize Business School

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14 Lessons (55m)
    • 1. Introduction

      1:52
    • 2. The Setup

      0:18
    • 3. The Setup Hands On

      8:17
    • 4. Course Project

      0:51
    • 5. Projecting Expenses

      0:22
    • 6. How To See Into The Future

      5:44
    • 7. Additional Monthly Expenses

      0:18
    • 8. Additional Monthly Expenses Hands On

      5:55
    • 9. Quarterly Monthly Expenses

      0:54
    • 10. Quarterly Monthly Expenses Hands On

      4:00
    • 11. How To Define Goals

      11:29
    • 12. Known Expenses

      13:40
    • 13. Summary

      1:04
    • 14. Goals

      0:25

About This Class

Do you find that making a purchase now some how puts your bank account negative a few months later? Does creating a savings plan seem impossible?

What if you could have a financial advisor constantly monitoring your finances, letting you know if a purchase is a good or bad idea, how much you should save and how to plan for unexpected events?

You don't need to pay a full-time adviser to get all of their professional benefits. All you need is a co-pilot. In this course, you'll learn how to create a financial co-pilot that will set you finances up to absorb expense shocks and plan savings goal based on what you can actually save.

This course will make you look at budget and financial planning in a whole new light.

Transcripts

1. Introduction: Hi, My name is Brett. And in this course, what we're going to do is establish a personal financial plan and a budget, and this is gonna be unlike any kind of budgeting systems that you've worked with before and that we're going to start off looking at scenarios that people commonly get caught up in that it gets their account into a negative balance. And then it basically doesn't allow them to set aside savings. It doesn't really allow them to pay down credit cards. We're going to start off by setting up a budget. Then we're gonna use that that foundation to help us set up a financial plan that will allow savings and also paying down credit card is going to allow us to put money aside for the unexpected. That really isn't part of our savings. So we're gonna be able to see things coming months away. And we're going to do that by say, for example, we have a car repair. We know that's coming up. Maybe it's months, all right, I'm able to see that and how it impacts our entire financial plan. So is it bringing us into a negative is how is it impacting our savings. So once you have a budget, when she had that foundation, you can been set up the financial plan, which allows you to establish goals. These goals are your savings goals, paying down credit cards, putting money aside for unexpected events. So we're gonna use quick in two. Put all this together because it's very commonly used. But all you need is this is any kind of software that has a register that you can enter in transactions and that will work just fine because basically, that's all I'm using Quicken for. But just Quicken is so popular. That's the one that's gonna be used here. So let's go ahead and get into the course and start setting up your personal financial plan . 2. The Setup: The first thing we're gonna do is talk about the common setups that people have and why that doesn't work so well and how they can get caught off guard very easily. And we're going to see then from that, how can we improve upon it? So let's go ahead and get into this first lesson. 3. The Setup Hands On: I'm in Quicken now, and I want to go over the current set up that I have in place here. And this is actually gonna be the minimum kind of set up you want to strive for and you'll be in pretty good shape even with just this a little bit of set up. So let's take a look at what we have here. Basically, this is a person that has tracked their income and expenses very detailed, um, up into the current date. So if I scroll down, they attracted up to mid May. So everything is tracked pretty well and they have an income of $2000 every two weeks. That's their take home pay. You can see here, entered in every two weeks. And so that's net. Their health insurance, their IRA contributions, their employment taxes. Then you can see as far as expenses they've got their home mortgage. That's track. That's intern in the same amount every month. They've got Valley Power Company. That may fluctuate a little bit. Um, they got the gas utilities here, government loans that's going to stay the same. They enter the same amount every month on the same day they've got their car payment. $300. Same amount every month. Um, on the same day, Now you can see this American Express. So this is a credit card they're trying to pay down there, sending $300 to it every month. In this scenario, the card is actually on, like a balance transfer where there's not interest accumulating at this point. They they have, like, a one year promo that there's no interest accumulating. And then down here, you can see this credit card as well. This is a payment to a Citibank card. Now this city main card, what they've done is compressed ah, lot of other expenses and put them on a card on this card here rather than just paying directly out of their bank account. And so what that does is it puts everything in one place so that you don't have multiple payments coming due from several sources, and there's less opportunity to miss a payment date. So it consolidates all that. Additionally, they're earning points ah towards something that they have an interest in. So maybe it's gift cards at a restaurant. Gift cards at some kind of store. Maybe it's some kind of cash back, and what this does is creates a cash flow for them. So if it's a gift card, it's still a cash flow because they can go and use it. And they're paying this credit card off every month. So it's not a balance that's carrying over there, not accumulating interest. That's a key factor here. This card can't carry a balance. I mean, technically, it can if they just let it roll over. But the key is that they're not doing that. They're putting it again for the benefits of consolidating all these sources so that there's not an opportunity to miss a payment date or at least the sources that they can. They can't do their car payments. That's gonna come directly out of the checking account. They can't do their mortgage. That's gonna come directly on the checking account, and then the the gas company, the power company, the student loans. They all have to come out of the checking account. So what is it that's going on to the city card? Well, let's take a look at the particular expenses, so there's gonna be an itemization of what they're putting on their All right, so here the expenses, you could see the have auto insurance, mobile phone. They're eating out the groceries, books that they by any kind of entertainment movies, um, golfing, whatever it might be. How so? This is just different things around the house. Maybe furniture, declarative accents, whatever it might be. It might be things for the yard, even and in the cable and Internet is also going on here, so it's going to come out to something approximately like $1150. It could fluctuate a little bit either way, but they've got it narrowed down to something pretty close. So let's go back into the register now. So now this is that's given us an understanding of what's being dawn here. They've taken their income, and they're tracking it very closely. So every time the income comes in, they're entering it in. Some software will automatically download certain things for you, so that's another way to get it in on their expenses, that tracking that very closely every time they're making these payments, those go in as well. So everything's being tracked really well again, this is the minimum kind of set up. You should strive for so put go into February. Everything kind of goes off a little bit smoothly, but you can see here they go down a little bit to a negative 90. And that happens because, let's see, we have an issue here with ah, Citibank. There's an extra $1000. What happened there is there is a repair on the car that cost $2000 and they had to then to avoid paying interest or anything they sent in $1000 and that calls the account to go negative briefly. So they got paid the next day that brought their count back up. So all is well, but they're definitely kind of skirting on a thin margin here. Um, in fact, they had $500 from their parents. Or maybe it comes from friends or whatever that was deposited into the account here to help them out a little bit to give them a little bit more cushion. So then everything goes off as usual. You got the car payment, you've got the student loans. You can see here a little bit more on checking. Maybe it was a little bit more that month, and then we get back into the same set up, so they just kind of click along at the same rate. And let's see here. So here's our Here's our Citibank again. Um, so here's something else again. Another payment for the car, maybe more repairs, tires or whatever it might be. But again, everything is being tracked and they're not going negative. So everything's working out well, there even sending a little bit of money into a savings account with, um, the little bit that they've got left over. And as we move forward to the present day, this is the current balance. So that's all well and good. It's a really it's an above average kind of tracking. So this is again the minimum that you would want to do of tracking these income in these expenses. What we're gonna do nice does look it. How do you project some of this into the future? So you can really start determining how certain expenses are gonna begin impacting your account, and then we're also going to set it up so that there's a pretty good padding each month to handle unexpected events, and then if we want to buy something that's not really planned. We can figure out when's a good date to actually make that purchase and not cause our account to go negative. So that's where the budgeting part of this comes in. Is setting up this projection into the future and really seeing how everything impacts months from now? And with that foundation we can build off of it, start setting up goals like savings goes, paying down the credit card goals where we can have specific dates of when something can be paid off when we can. Maybe me of $5000 savings go so things get very specific and they're not just abstract. And with them being very specific, it helps us to really reach that. Go cause it's not just some kind of vague, abstract go that we can't strife or we see a date we can see. Okay, it's very feasible cause we know how it's impacting our finances. So that's what we're going to get into next 4. Course Project: I just like to talk a little bit about what can you do for your personal project? So after you completed the course, what would help other people get the most out of this? And I think you as well by writing it up for your personal project. That's just talk about OK, here's what I've learned that is really just standing out to me as a great piece of information I'm gonna use now to get my finances moving forward and get everything in order . Talk about that. Talk about what your plan is gonna be. And as other people contribute, it's going to really be a lot of great learning into how we can all improve our personal finances and get moving forward. And as other people post their personal projects, their personal plans, there's great things. I believe you'll learn from that as well. So is everyone contributes. Everyone learns. Thank you 5. Projecting Expenses: So now we've seen the common pitfalls we're gonna look at. How do we improve this and basically be able to see what's coming down the road? And this is going to allow us to then really start establishing a good foundation because we'll have our balance of income and expenses each month. So let's go ahead and get into this lesson and see how that's done. 6. How To See Into The Future: Okay, so now what we're going to do is take everything we have here and projected into the future . And that basically builds our budget, and we're going to look at it to the end of the year. So this way, anything we do we can see months from now. Does that put us negative? How does that impact our overall finances? So one way to do this is to, for example, take your salary and just re enter it every two weeks and take your expenses and just manually enter them in. So, for example, state gas, you would entering the same $100 on 6 15 But there is a better way to do it. And quick in, at least you can create a reminder. So, for example, I'm gonna go appear to this clock, and I want to add a reminder this is gonna be an income reminder. So I'm just gonna do Acme and then I'll click next. What I want is every two weeks on a Friday. So the last time this person was paid was 56 And if we go in here and we look though so there's 56 We want 5 20 and it's gonna be 2000 the account as Bank of America. I'm just gonna let it go, um, until whenever. So there's no end time on it. I'll click done. And then if I go back to the clock so you can see there's nothing visible. Now I want to go ahead and show reminders for the next 12 months, and there they are. So here I've got Congar all the way down there's gonna scroll up to the end of the year. I've got all my salary in there. So what I want to do next is had the same kind of thing for these transfers into the credit card and for these expenses. So, for an expense, for example, I can do add reminder. It's a bill reminder, and I'm going to do Valley Car. So there's Valley Car. All click next. This is on the 25th of every month. I know the next one is gonna be on 5 25 all right, that it's gonna be every month. So if you want to change that, you can hear so monthly or whatever it might be, and I'll click. OK, I'll click. Done and So there's let's see you scroll down a little bit. So there is the impact of the car note on things all the way up until into next year. But it was just gonna look it to the end of the year, so you can see here the impact. So I'm not gonna enter these all an I've actually created another file that has them all entered in before we do that. Let's talk a little bit about how you can figure out how these values with the numbers, the amounts should be. So there's some things that are gonna be fixed. They're gonna have the same date every month in the same amount. So those air simple. So you have mortgage, you have car note. Those are always gonna be the same. Your government loans were gonna be the same. If you're paying to a credit card like this person here, that's gonna be the same amount. Things that will fluctuate. Maybe like your gas bill. Um, your electric bill complexion weight. So in that case, what you want to do is figure out an average and enter the average project the average to the end of the year So, for example, let's take the electric company that can vary from $7220 or $110 is what the variation is so higher in the summer, lower in the winter. So you would just take the average from 70 to 110 and get the $19 and enter that and to each of the future months all the way to the end of the year. Same with the gas. So let's say the gas fluctuates from 90 to $110. The average is $100. And enter that in all the way to the end of the year. And just keep doing that with all these other expenses that can vary a little bit. So what I'm gonna do now is go into a file that Scott all these expenses projected out into the future. Okay, so here we are. Now, if you go back to where we the current date, um, which be a mid May and I start scrolling down, getting into June, getting into the latter half of May, you can see all of these reminders that have gone in these air. The projections out to the end of the year. So let's go ahead and scroll down and actually see what does our account look like? A the end of the year. And I'm gonna go all the way down to December so you can see here no negative balances. And if I get down to, let's see about right here, we're looking very good. In fact, we have over $9000 in our account. The thing about this, though, is it's on Lee are set expenses that we know we're going to come in and they are going to be fairly stable. But things happen. We're not accounting for any of that. So this is this not a true indicator of what's gonna happen on December 30th. Now we're going to handle how how to protect ourselves against the unknowns. So what we're going to do next is figure out how to protect ourselves against the unknowns and always be prepared that in case something happens and that's going to set up our foundation for budge team and from there will build on our goals that we want to start setting 7. Additional Monthly Expenses: Okay, so now we have a really good foundation projected all the way to the end of the year. But there's some things that were missing, and we're gonna now see how to handle those. Basically, it's the unexpected and want to see how do we handle the unexpected, given that we've already projected out to the end of the year? 8. Additional Monthly Expenses Hands On: Okay, so we know that things were gonna happen throughout the year in this number right here is not actually what we're gonna get. So what we want to do to figure out how do we protect ourselves against that is go back to previous months and look at what happened there. So some of the unexpected events, and if we go back into, let's see February, where we had some things Go on here. So let's see, here we had. So there was a car repair that we had. So right here, we had an expense. Um, plane ticket, for example. Um, I think there was a $500 expense we had in February. That was for car repairs. So we can kind of look at that, and then we would go back even further, maybe go back, um, 12 months. If you have it, go back six months and look at everything that fell outside of your regular expenses. And each month just get a total of those particular expenses. So here we have February 500. We have March was 600 and that's kind of it right here in this little bit of sampling. So from that, we might say, Well, we have some expenses that arise every month outside of our regular expenses that maybe about $500 worth. So we would take this $500 projected into the future, and 500 might be kind of high. Um, so we didn't have anything happen in, for example, April and we didn't have anything happen in January, so we may just knock it down a little bit from 500 to maybe 3 50 or 400. So in that case, what I would do is add reminder And this would be a bill. I don't really have anyone to pay too. So I'm just gonna just do, let's see here, um, monthly additional expenses. Then I'll do next. And I want the amount to be $350. I'll do it at the end of every month. So let's see here. We don't have anything in May, but we are in May, so I want to go ahead and start this 31st of every month. I'm gonna let that run, so I'll click done. And then if I scroll down, I should start seeing this at the end of May, and then at the end of every month here it is. So I would have had $2350. But I'm adding in thes additional unknown expenses now. It doesn't mean they're totally unknown that they're going to be a surprise. I'm expecting something to happen every month that I don't know about. That can go up to $350 a month. So if I go down and look at June, let's see we have our expenses. Are would had 24 30 actually more because of the May expenses there as well. But instead I've got 2080 and then I can keep going down to December. And here's where we were. So you can see here. This is going down from 9000 Now we're down to 6500. So this is definitely having an impact on our expenses, but in a good way, because where we have that patting now inside of there, So this money can't go. It's not going out to a savings. It's not going to pay down our credit card. It's not going to buy us. You know, different kinds of goods or anything It's a padding that is there every month for us, for whatever expense we may have. So let's go ahead and go back to the current time. And so we have our 3 50 Now, what happens whenever we come along? And we didn't incur $350 of expenses in May. So what you do in that case, it just remove it. Just get it out of the way. Now, going into June 1st, your account is $350 better. And from that you can start establishing goals. But there's one more thing we need to do along the same lines as these expenses. Okay, so we've established that we've got $350 of possible expenses every month. These Aaron, let's call them known unknown. So we know we're gonna have expenses for something, but we're not quite sure. Just something out of the blue can come about. Um, maybe you see some Ah, jacket on cell. That's just a great buy. You gotta have it. Okay, so you take advantage of this great cell that you can't pass up, so that may contribute into it that maybe $100. That's where it could come from. Just who knows, it can come from anything like that. Next, we need to compensate for expenses that are basically out layers of our normal monthly, known unknown expenses. So if we have a $350 cap of expenses, sometimes during some particular month, we might get $1000 expense. The way we're gonna handle that is to break it apart into quarters. So basically three months, we're gonna look across three months and look, in a month. Was there some outlier? You don't go back six or 12 months and gather up okay for each three months. How much do I need to handle for any kind of expense? Outliers? This value might be $1000 that's what we're going to do with quarterly expenses. And that's what's gonna be in our next lesson. 9. Quarterly Monthly Expenses: all right, So what we've got now is a great personal budget, and that's our foundation. We've set up a plan that projects all the way to the end of the year, handles the unexpected events, and what we're going to do now is kind of kicking into overdrive. We're gonna add some quarterly, unexpected events scenarios. This is extra padding, which is, as you know, very important. And it's going to allow us to basically have a great cushion in our overall system or overall financial plan. And every quarter we can compensate for whatever else that we didn't see. So there's some things we kind of put is unexpected. But we know maybe they are coming. Maybe they aren't. Then there's things that we have not even considered. That's what this quarterly padding is all about. So here's how it works. 10. Quarterly Monthly Expenses Hands On: there are other expenses that are gonna occur that we don't know about. So, for example, let's say we're starting a business. There's a course that we want. It's $1000. It very much falls outside of our monthly unknown expenses or the ones we know about. They're going to cap it $350. It could be anything. It could be an extraordinary car repair. So there's those expenses that come along that are just gonna blow through this additional expense we have every month. So how do you handle that? What you can do in that case is set up a quarterly additional expense. And for that you can, For example, you can take your monthly expenses and multiply them by three. So in our case, we would have 10 53 times 3 50 or you just might want to put in $1000 each quarter or 1500 each quarter. So starting with, let's say, go out to starting in June so ago, June, July, August at the end of August, we're gonna have a quarterly expense of $1000 so I'll just call it quarterly expense or quarterly additional expense. And this is gonna be a bill. So again, if you're not using a register that has these reminders, you could just go out to August 31st and manually enter it in. This is gonna be $1000 and we're gonna go to August 31st. Change this gonna be That's simply have quarterly. Yes, we do. So that looks good. Hit. Okay, Hit. Done that expenses in. So let's grow down. See where we are. So here it is. All right. So we would have had $4590. Now we have 35 90. Let's keep on going. Because that in the next one is gonna be in November. So we go to the end of November, and here we are. So we would have 34. 80 but we actually have 24. 80 and it just keeps going on and on every three months so we can see in this case all the way to the end of the year. What are we looking like? And we're looking like 45 60. So we were down from over 9 9000 Think it was 90. Just over 90. 300 all the way down the $4500 but in a very good way. We built in ah, lot of padding for these expenses that are gonna come along. So some known expenses we don't know the specifics of them. I've got a good idea that they probably will cost up to $350 every month. And we've built in a quarterly expense that captures things that fall outside of our mostly , um, additional expenses. So our register at this point is looking really solid and weaken Go through the months and see that we're not actually going into the negative or anything. Everything is working really well all the way to the end of the year. We know we're not gonna have any kind of financial issues. And from here, what we can do is start setting up some goals and start seeing Whoa, how do different purchases impact my expenses? You know, if I plan to buy something next month, what does that do to me and say November so months down the road and my still looking OK, that's what we're gonna get into next 11. How To Define Goals: now we can get into setting up goals. So we're gonna start with savings account, um, building it up and then also paying down some of our credit card for the savings account. Let's say by the end of the year, we want to have a certain amount of money in that account. It's not just gonna be some random number. It's really gonna be based on. Well, what can we actually say even to that account given everything else that's going on. So by the end of the year, we need to go back to December 31st and figure out what can we actually save? So potentially there's $4500 that we can save now? We've done a good job of padding by month, with our average unknown expenses of $350. We've done a good job of quarterly padding of $1000. So this is kind of a catch all for these expenses that come out from nowhere that we don't really know about and haven't been accounted for in our monthly expenses. So let's look at a time that we can start saving, and if we have $4500 We don't want to bring this all the way down to negative. Um, we want to leave some padding there. Of course, now there's a one or the thing we need to do, and it's kind of along the lines of what we did with our monthly expenses and our quarterly expenses. That's going to help us with setting up these goals. So if we go through our months kind of just scrolling through, we've got a pretty good amount of padding every month in here. We need to really have a baseline that we can't go below each month. And let's say we want that to be about $1000. Maybe it just depends on your income and your expenses. Maybe it's $500 now. What that's gonna do is you're always gonna have at least that minimum amount in your bank account. So this is working with the padding that we've set up, but not completely because the padding is there. The mostly patting and the quarterly padding, or there to absorb different kinds of shocks that come in. But we then established that we want to keep a minimum amount in our checking account so as we go through. We are good with that and we're gonna keep that in mind. Let's just say $750 is where we want to be. And if all of our patting goes wrong or something, we should at least have $750 in our account is what we're saying. We want to always be there. Okay, So for our savings, we can start doing this. Let's say in July, mid July and instead of entering it into our checking account, I'm gonna enter some of that over here where our savings account is. I'm just gonna go to the two lying display so we can see it a little bit better. And what I want are gonna be deposits. And let's say I'm doing $500 at a time, and that is gonna come from Bank of America. So we said mid July and is gonna put this on the 15th and let's say I want to do another $500 in September mid September, someone a copy this transaction and paste it in and it's gonna be 9 15 and then another one say November and I am just going to do 11 and say so. It looks like our goal basically is gonna be $2000. Maybe we can squeeze out that extra 50 somewhere and get us to $2000 by the end of the year . So this is great. Let's see, Know what the impact on our checking account is. And if we go to end of year, so December 31st we still have $3000 because obviously, because we had our 4500 so we can already tell just by running numbers in her head based on what was there or what it's gonna end up looking like. So let's see if we've keep kept our minimum $750 in our checking account. So we scroll through. Here's 980 so getting a little close. But we're still good, and we keep scrolling through here and go all the way back to May. We're looking really good in that regard now. Another thing we want to do is sin money to our credit card account. So that's another goal that we have. So let's think about what can we do there? Um, right now we're sending $300 to that account. Notice on here. We haven't projected out the remaining of these transfers from our bank accounts. This is something we actually left off. So we don't need to set up another goal sending a certain amount to this credit card. We actually already have that going on. We just need to project it out to the end of the year. So what? I want to dio go back into my checking account. I'm gonna create another reminder for the credit card, and I'm just doing it in a checking account. So all these reminders air in the same place, so I'll go back to the current day mid May and our last one looks like it's here. So the next one is gonna be on 6 10 and see if I scroll down. We have 6 10 here. OK, so actually, these are projected. They just don't deposit into the account, is what it is. So there are reminders. We don't need to really worry about it. There are reminders that are gonna go into this account, but I may want to do extra amounts into that account and for these are actually going to enter them in, just like I entered them in earlier when we were creating our savings entries. So what about an extra $250? Um, right around the do it like we did with our savings. So maybe July mid July the 15th I'm gonna put 250 more dollars in here, and then I'm going to do it again on the nice, and then I'm gonna do it again on the 11th. All right, so we do know because we saw that $980 that occur to think around September. We do know this is gonna put us below our minimum on that time frame. So let's kind of scroll through. Right here were good. And we can see you were staying well above our $750 minimum. So here comes the trouble spots will get into September, and we're still looking pretty good. And it's keep on scrolling through. So here's our 980. I'm thinking maybe I didn't do this right, So right. I don't have my transfer. So now we're really going to see the impact of this because we're adding our checking account. Just say that. Okay, So if I go back into our checking account, go back to May and starting mid September So here's the 1st 1 we keep on going to. Um well, that was July Will keep on going to September, and we have here is the next one still looking good on our minimums. Now we get into November where the next one is. We have our 2 50 right there. That's looking good and notice what's going on here. So obviously, this is gonna be a problem. This tells us that we need to back out of something, because when November rolls around, we're definitely going to run into an issue. So we've kind of gone overboard with our goals, is what's happening. So I'm gonna go into savings. We need to crank it down a little bit. And actually, savings is right here, and what I can do is we were down the two fifties. That means we're lacking around $700. So knowing that the credit card needs to be paid off, that that needs to happen. I mean, we do need a savings as well, but if the credit card isn't paid off, we start incurring a lot of interest, and that's gonna basically be sending us backwards on our cash flow because we're doing things with this Citibank card, for example, accumulating points that produces extra cash flow that we can use then if we allow interest to come in and just start eating that up and even will probably overall net negative on cash flow sitting us backwards cause the interest is gonna be more than the points were actually earning on the other credit card. And we just don't want that at such a high rate of interest. So we need to come up with an additional $700 and what I can do here is back all of this down to 300 like that. That should give us some good padding. So now maybe our goal is 13 or $1400 in savings by the end of the year. All right, so let's go back and we're gonna look at our trouble spot. So here we are, 100 and $30. We barely skim by on that. So our goals are in place. We have a credit card payoff that we're pushing for when we have also a 13 or $1400 savings goals what it looks like. Maybe we just get a little ambitious and say We're going to try for 1400 and that's gonna be our go. So that's in place Now what we've done, we have. We started with the baseline register, which means we have entered in all of our expenses and incomes for the last six months. For the last year, however much we could gather together, we projected out those expenses that are fixed that occur on the same day, projected them to the end of the year. Then we set up some goals that we can say that we can pay onto a credit card, projected that out to the end of the year we established a minimum that we want to keep in our checking account as well, and made sure that our goals that we have that the padding that we created, we did create the monthly, the quarterly patting as well that all of that work together and was able to keep our minimum amount in our checking account. So that's where we are now, and we're looking really good. Next, what we're gonna do and this is the critical point that comes in where budgets kind of get busted and start falling apart is to add expenses, known expenses that are coming, that kind of pop up, but they're not immediate. So they're not like these monthly expenses that just come flying in that we don't know that kind of run up to $350. These are gonna be things like We need new tires. Well, it's not immediate, but we need him in a few months. Maybe we need new eyeglasses again. It's not immediate, but we know it's coming. Something around the house broke. Maybe we need a new garage door opener and things like that that are not immediate, but we can plan them out and they're coming. So that's what we're gonna work with next week to see how that impacts our register and then how we can compensate for it as well 12. Known Expenses: Now what we're gonna do is set up for expenses that we can plan for. So these are expenses that aren't covered by patting, patting the monthly and the quarterly Additional expenses are unexpected. They're known unknown. So we know we're gonna have our own average X amount of expenses per month X amount of expenses per quarter. We just don't know exactly what we're going to be spending that money own. So we've taken care of that. Then we have expenses that we know we're gonna have, and we know they're amounts. So let's go back to the present day, go up here to May mid May and we know we need new tires for a car. And let's say that's gonna cost, I don't know, $700. We have to get those tires or we've actually made arrangements that we can get them in mid July. So what we want to do is create an entry for let's say, seven, 10. Um and that's gonna be where we're buying these tires. So I'm going to add 7 10 here. Gonna put the category into auto is gonna be for service and parts and payment of 700 hit. Enter. Now What happens is we go back up to where this is right here. We actually put that on the Citibank credit card. This is the credit card that we're using as basically our cash. But remember, we pay it off every month. We don't let it lapse over with the ballots to start charging us interests because we want the points, That's all. We're doing it for cash back or whatever it is, it creates additional cash flow for us, which lowers our monthly fixed expenses. So all those expenses we looked at earlier that are actually going on to the credit card we reduced those by a little bit with this additional cash flow. Now what I've done, you could see I've entered in the amount into the checking account register and not into the credit card. This is just for our planning. I'm putting it into the checking account register because I want to see how is it going to impact our balance going forward, and how's it impact their balance at the end of the year and throughout the year. So that's why it's here inside of the checking account and basically what it's gonna do when we get to this point. This category is gonna appear on our credit card because the expense is gonna be there. And this is just gonna be a $700 transfer to the credit card. So besides, our 11 50 were paying every month right here. We're gonna do another payment of $700. All that means So we've taken care of that expense coming up. So we need to now see, What is this doing to our minimum balance on our checking account? So we go through, we have 9 69 80 That's all good. We keep scrolling through. We know there's a problem area in November, so we're doing fine, and then we get into November, and here we are, so definitely running into problems here. What we need to do is weaken take off the credit card payments to savings account payments right here in November if we want. And what I'm gonna do first is just take off the savings account payment. That's going to give us a little bit of cushion. So let's see here. Actually, we stopped at 9 15 so I'm gonna remove that one. That changes our savings account goal. So as you can see now, we're at $1050 for our savings account goal. That's basically all we can do. I mean, we can wish we could do 1400 but it's just not gonna happen now. We're not at our 750 minimum balance. We're just right below it. So what we can do is, well, we're gonna go over here to where a credit card is, and we've got Let's see, go back to November. We've got $610 and we want to basically add another $140. So go back to American Express. Let's just do ah $100 there because that's all we can do. We have these other expenses coming in. So now we're at 7 60 and we're good and we're good throughout the entire year. So we're back on track now. You might say that this monthly additional expenses for 350 that we're adding these quarterly for 1000. It seems kind of overkill, you know, we're taking from one hand and putting into the other when we take from our savings account like this or when we remove these values from what we're trying to pay off on this American Express credit card now, in a way, it's true. But we've seen historically these expenses come up. So it's fairly accurate that we have this in here every month at that amount, every quarter at that amount for those additional expenses. So it's not, you know, just pie in the sky. It's not a guess. It's based on historical fact, and it's going to help us going forward that our account does it drop into some kind of negative. So we're on the right track. We're doing the right thing here, and what you'll see is sometimes you don't hit the expenses and the amount stays in your account. So one of the quarterly expenses maybe is only $500. Then, right here you have an extra $500. Basically your it $1260 that's a great gift at that point. And if it were December 15th or maybe it was, it was October you up. Your projections will go further out into 2017 and you could see what's happening. Maybe at that point, because your expenses were lower for about three months. You have this extra money now you can put it to your savings. You can put it to your credit card paid down. And that's just a nice gift. So wouldn't you rather have that kind of gift versus getting women with some huge expense that puts your account into the negative and you're scrambling and you're stressed out over it? So the padding is going to create a better scenario. You're gonna feel better about your finances. You're gonna feel more relaxed about your finances, knowing months and months from now you're in good shape. You can see exactly how anything is impacting your overall. Register your overall ballots in your checking account. So we've added that expense in Let's say that we have another expense coming up. Maybe it's eyeglasses. Maybe you were out hiking or mountain biking. You got hurt. He had to go to the emergency room. There's a big expense there or well, that's not a good example, because that's an immediate expanse would want our quarterly expense to cover that. But I glasses you can kind of see coming in the future, maybe the garage door opener. You can you can schedule that out. It's not immediate kind of thing. Um, maybe the air conditioner is on the fritz, and you gotta have that. Eventually fix. It's not completely broken, but you need to have it fixed, and you know that. So let's look at we have another expense coming up for mid June. So basically a month away, we're gonna go ahead and add that in. We're gonna do the air conditioner. This time, let's say the air conditioners gonna cause to $600 gonna put that under house or home. So let's see here, Assurance Lawn Mortgage. I don't really see home improvement home Services and we're gonna do ice cold A C repair. And that's gonna be for May. June. Put that about 6 15 Enter it in. So it was scroll up to the current day or two where this expense comes in right there. Now we can see how is it impacting? And you can keep doing this as these known expenses come in that are not immediate issue can keep doing it. You know, I Maybe it's something else. Maybe you want patio furniture? Um, maybe you want a little bit of landscaping. You can put these expenses, slot them in to wherever you can schedule them wherever it makes the most sense. So if we look at this the on July 15th we're going down toe. Ashley? Yeah. $110. So maybe we want to put it after July 15. So we put it on the 16th go back up here, and we're just assuming we could make it that for with the A a c acting as it is, we might do the 16th save. Okay, so going through July, the balance is air. All looking good here. And let's see, where is our $600 coming up? There it is. And we get down the $360. So we're kind of we're below our minimum that we want. We're below it here. So we're hitting it in a few places. That's not a good sign. We're hitting it there. 7 20 and I see we're good here. 7 90 Look at this. A negative 20. So we have to start compensating. We've going over our budget, basically is what's happening here. Let's go to our savings. We're gonna have to do something there. So we're basically have to pull back a little bit with savings. I'm going to remove one of these. Now we're down the $750 so we know that's not enough either. And we have 7 15 for a payment here. I'm gonna have to remove that. So I'll just delete that out. Yes. So let's go back into our checking account and see now how everything is getting impacted. So let's see, here we have our 16th right there and scroll through. So 9 30 is good. 9 90 is good. Keep on going. So we're not below where it 8 80 right there with the end of November. That's looking good. $710 and $530. So I kind of have to make a decision. Here. Will are expenses are additional expenses each month. Can we come in under it that we can compensate for this? Basically, um, $230. Um, are $220 for this and $40 here, I would say, Yeah, I think you could do that. So it What it means is that you really need to watch your expenses for the next say two months and then you have your quarterly expense coming up in August. Can you restrain your spending Enough that you see this right here goes up because you've got the additional expenses that you didn't have to apply money to. You probably applied some, but let's say it was only 100 $50. Well, now you've got $200 that can go here, and you're at 730. And this right here is a course well over it, and you're getting in good shape. So you can see when do you need to start pulling in the reins and start pulling in your expenses and maybe not eating out as much? Maybe not spending money on different things, like clothes or something like that that maybe you don't really need that will help get you on track and not bust the minimum amount in your account at some months down the road. So now we've seen how to schedule expenses that are not immediate, that have a known amount and something we can schedule into our budget so that it doesn't bring us negative at some point. We don't want like we did with the A C where we kind of pushed it on the other side of our payday from our company. So we pushed our A c on the other side of this 2000. Put it right there. It was still breaking us below our minimum some months down the road. But you saw before, if it was on the other side over here, before we got paid from our job, we would be in bad shape. It was really starting to impact that part because we're going below our minimum quite a bit. So next what we're gonna do just kind of summarize the course will go through a checklist so that you'll have that as you're putting together your budget and in your budget, your foundation allows each about this financial plan where you can start setting up your goals and seeing how everything is impacted months out in advance. And you don't wind up into a situation where your negative on your account and you're scrambling. So hopefully this creates a basically a ah, I won't say a stress free kind of budgeting, but something that's not as complex something that's not going to be a lot of stress putting together. So here we've put together some of the known expenses that are coming up, and next we'll get into a summary and our checklist. 13. Summary: all right, that is the end of the course. And I hope that you've seen kind of a different light of how to build a budgeting system, how to put together a personal financial plan based off of that budget. The budget was really foundation that allowed us to set goals. And the goals came about because we were incorporating the unexpected events because that's what happens with a lot of budgeting systems. They get knocked down and broken because these unexpected events come in and just completely put everything out of whack. So we've really done our best to handle those. We've been very explicit about handling those unexpected events, and I think we've done a really great job of it that allowed us to get our goals going. Savings, pay down, credit cards, whatever else it might be that you want to do. So I hope that this has been very helpful. Any questions? You have police him to me. I'd love to get your feedback on the course. What do you think? Maybe you got the most out of it, How you're going to use it going forward. So again, Thank you for taking the course 14. Goals: so we're handling unexpected events at this point. Now we can start looking at some great goals. Such a savings such as, Can we pay more to our credit cards? So that's what this lesson is all about. We really got a stable, solid financial plan going on. I've got a good budgeting system in place. Now we can start looking at some of these other goals and really start taking back our personal finances.