Budgeting For Dummies

Title Page
Copyright Page
Table of Contents
Introduction
About This Book
Foolish Assumptions
Icons Used in This Book
Beyond the Book
Where to Go from Here
Part 1 All about Budgeting
Chapter 1 Beginning with Budgeting Basics
Knowing What a Budget Is and Why You Should Use One
Understanding Why People Think Budgets Fail
You forget to adjust it
You don’t have an emergency fund
Your budget exceeds your income
Spending excesses exceed your income
Living expenses exceed your income
Taking Inventory of Your Finances: A Spending Analysis
Make a list of your financial assets and liabilities
Assets
Liabilities
Record-keeping systems
Review your spending for the past three months
Chapter 2 Breaking Down the Parts of a Budget
Seeing Where Your Money Goes: Your Expenses
Identifying fixed expenses
Allowing for variable expense
Needs and wants
Value-based spending
Knowing Where Your Money Comes From: Your Income
Depending on a monthly income
Identifying additional sources of income
You Gotta Have Dreams: Financial Goals
Saving for your future
Paying down your debt
Putting your financial goals in place
Part 2 Finding a Budget That Works for You
Chapter 3 Zero-Based Budgeting
Setting Up Your Zero-Based Budget
List all expenses and subtract them from your income
Assign your total income to budget categories
Having enough money to pay for your monthly expenses
Accounting for periodic or unexpected expenses: a sinking fund
Track your spending
Making sure you track as you spend
Evaluating your success at the end of the month
Explore real-life examples
Perusing the Pros of Using a Zero-Based Budget
Lets you see where every single dollar goes
Aligns your expenses with your income
Dedicates space for goal setting
Considering the Cons of Using a Zero-Based Budget
It’s a lot of work
It can be tough if your income is irregular
It may make your variable spending stressful
Asking Yourself Whether Zero-Based Budgeting Will Work If . . .
You don’t have the same expenses every month
You’re not organized
Chapter 4 The 50/30/20 Budget
Setting up the 50/30/20 Budget
Determine your income
Distinguish wants and needs
Determine your 50 percent needs
Evaluate your 30 percent wants
Save 20 percent for retirement and future expenses
Explore real-life examples
Example one
Example two
Looking at the Pros of Using a 50/30/20 Budget
It’s simple
It creates financial responsibility from the get-go
It works regardless of your income level
You can include fun in your budget
Your financial goals are a priority
Checking out the Cons of Using a 50/30/20 Budget
Your categories may not match the percentage assigned
You may use your fun budget for junk you don’t need
Finding guidance for savings is difficult
Evaluating Whether a 50/30/20 Budget Will Work If . . .
You have a variable income
You’re new to adulting
Chapter 5 The Envelope Budget
Setting Up Your Envelope Budget
Determine your expense categories
Create the cash envelopes
Spend from your cash envelopes
Make an online purchase
Analyze real-life examples
Example one
Example two
Example three
Perusing the Pros of Using an Envelope Budget
It’s easy to maintain
It helps with overspending
It helps build frugality and resourcefulness
Considering the Cons of Using an Envelope Budget
You miss out on credit card perks
You may find it too restrictive
Cash can be stolen or misplaced
Asking Yourself Whether the Envelope Budget Will Work If . . .
You struggle with planning ahead
You need to share cash with your partner
Chapter 6 The Pay-Yourself-First Budget
Setting Up the Pay-Yourself-First Budget
Figure out your financial goals
Calculate how much you need to save
Determine how much you actually can save and still cover your expenses
Explore real-life examples
Understanding the Pros of Using a Pay-Yourself-First Budget
Financial goals are easier to stick to
It helps you prioritize saving
It’s low stress
Considering the Cons of Using a Pay-Yourself-First Budget
Saving even a small percentage can strain your quality of life
You may need more structure
Evaluating Whether the Pay-Yourself-First Budget Will Work If . . .
You get overwhelmed easily
You’re organized
You have a lot of debt
Chapter 7 Tips for Creating a New Budget
Determining Your Budget Categories
Planning ahead for the month
Reflecting on fixed and variable spending
Compiling a list of budget categories
Using the Right Tools
Tracking your money with budgeting software
Looking at budgeting apps
Picking the right app for you
Taking the DIY approach
Taking advantage of your accounts’ resources
Practicing Makes Perfect
Revisit your budget
Create a cash buffer
Look for ways to make your system easier to follow
Part 3 Taking Care of Your Priorities
Chapter 8 Establishing an Emergency Fund
Understanding Why You Need an Emergency Fund
Finding the Right Place to Stash Your Cash
Hitting up high-yield saving accounts
Mulling money market accounts
Reviewing a Roth IRA
Recognizing the importance of a separate emergency fund account
Building an Emergency Fund from Scratch
Decide your target amount to save
First option: $1,000
Second option: $10,000
Third option: Three to six months of living expenses
Evaluating your circumstances
Use financial windfalls
Take advantage of credit card rewards
Consider automatic transfers into your emergency fund
Find ways to make extra money
Try out the gig economy
Sell stuff around your home
Consider renting a room
Look into other part-time employment
Learn a new skill
Chapter 9 Saving for Your Retirement
Accessing Employer-Matched Retirement
Partial matching
Dollar-for-dollar matching
Tiered matching
Making Your Money Work for You
Set a retirement savings goal
Max out your retirement contributions
Consider more than one retirement account
Keep your cost of living low
Use catch-up contributions if they’re needed
Chapter 10 Eliminating Debt
Looking at the Different Types of Debt
Student loans
Credit cards
Home and auto loans
Home loans
Auto loans
Miscellaneous debt
Government agencies
Court-ordered debt
Overdue bills turned over to collection agencies
Medical bills
Personal loans
Loans from friends or family
Paying Off Your Debt
Compiling a list of your debt
Considering different payoff methods
The snowball method
The avalanche method
The fireball method
Applying additional strategies
Make a debt payoff settlement
Negotiate with creditors
Ask about hardship programs
Use balance transfers
Make extra payments
Use financial windfalls
Avoiding Accumulating More Debt
Look into refinancing options
Save an emergency fund
Say no to credit card offers
Invest in the right insurance
Part 4 Budgeting in Action
Chapter 11 Budgeting in a Tough Economy
Keeping Your Head through the Ups and Downs of Inflation
Comparison shop to find the best deals
Use online tools
Apps to help you find deals
Adjust spending categories and goals
Don’t forget your emergency fund
Look into additional income streams
Active income
Passive income
Portfolio income
Plan ahead as much as possible
Consider living frugally
Evaluating Your Job and Its Related Expenses
Discuss your options for alternative work environments
Analyze your compensation package
Assess work-related costs
Budgeting with Irregular Income
Calculate bare bones expenses and income
Stick with cash envelopes
Use community resources
Chapter 12 Budgeting during Different Life Stages
Taking Responsibility for Your Money as a Student
Understand your financial aid package
Need-based financial aid
Non-need-based financial aid
Apply for internships
Understanding the different types of internships
Finding a paid internship
Utilize your school’s work-study program
Maximize student discounts
Account for major and ongoing college expenses
Sharing and Agreeing on Money Management as a Couple
Get on the same page as your partner
Discover your money personality
Don’t be afraid to try out different budgeting methods
Use joint accounts in a way that works for you
Identify financial abuse and financial infidelity
Planning for Child-Related Costs
Factor in housing costs
Buy used
Create an ongoing sinking fund for school expenses
Research daycare opportunities
Look into a dependent care account through your employer
Living off the Money You’ve Saved for Retirement
Examine your saving ten years before retirement
Understand your retirement budget
Trim your expenses and take care of lingering debt
Make sure you’re signed up for senior discounts
Prioritize your needs over others’
Chapter 13 Budgeting for a Major Purchase or Life Event
Purchasing a Home
Use the 28/36 rule
Determine your down payment
Research your financing options
Consider other homeownership costs
The 1 percent rule
The square foot rule
The 10 percent rule
Remodeling or Renovating Your Home
Buying a Car
Choosing between buying new and buying used
Thinking through insurance
Purchasing a car in cash versus financing
What can I realistically afford?
Will I be approved for financing?
Does taking out a loan rather than paying cash have any benefits?
Planning for recurring costs
Paying for Life Events
Throwing a wedding
Pick three things that are important and skimp on the rest
Think outside the box
Keep the guest list small
Research your venue
Try to DIY as much as possible
Starting a family
Review your health insurance plan
Navigating your parental leave
Be prepared to budget for new expenses
Part 5 Using Your Budget for Money Management
Chapter 14 Budgeting for Major Life Changes
Losing Your Job
File for unemployment and other state benefits
Eligibility requirements
Apply for unemployment
Additional state benefits you may qualify for
Assess your overall financial situation
Focus on essentials
Communicate with financial providers if paying down debt
Look into community resources
Take care of your mental health
Having a Chronic Illness or Short-Term Disability
Assess your resources and income
Look into ways to cut healthcare costs
Make sure you have health insurance
Take advantage of tax-free accounts
Cut costs on prescriptions
Ask in advance for package deals
Anticipate the future
Figuring Out Your Estate Planning
Protect your assets
Contact an estate attorney if necessary
Use life insurance
Review proper documentation
Chapter 15 Keeping Tabs on Credit Card Spending
Making a Plan to Use Your Credit Cards Wisely
Determine how much you can spend
Be smart about which budget categories you charge
Pick a budgeting method for payoff
Avoid carrying a balance
Set card accounts for fraud protection
Improving Your Credit Score
Using Credit Cards to Your Advantage
Utilize rewards like travel and cash back
Use autopay for fixed expenses
Chapter 16 Using a Budget to Plan for the Future
Setting Financial Goals
Identify reasons to set financial goals
Organizes your finances
Clarifies your values and priorities
Improves your money mindset
Provides measurable progress
Builds confidence that extends to all areas of your life
Establish time frames
Goals for six month to three years
Goals beyond three years
Choose your savings accounts wisely
Avoid early withdrawal from your savings accounts
Investing on a Budget
Use a fee-based certified financial planner
Think small with apps and robo-advisors
Saving for College
Invest in a 529 plan
Contribute to a Coverdell education savings account
Squirreling Away Funds for Future Fun
Budgeting for travel
Cut out budget excess to put toward travel
Set up an automatic savings account transfer
Sign up for flight alerts
Budgeting for a new hobby
Try a kit first
Visit your local library
Shop at dollar stores
Budgeting for social activities
Check out happy hours
Look for free things to do
Use Groupon
Part 6 The Part of Tens
Chapter 17 Ten Creative Ways to Budget
Make a No Spending Rule
Avoid Buying New Clothing
Buy Secondhand Items
Shop Local
Reset Your Daily Habits
Allow for a 30-day Waiting Period
Look into Sustainable Living
Consider Minimalism
Practice Gratitude
Use Visualization When Goal Setting
Chapter 18 Ten Ways to Stay Motivated When Following a Budget
Define Your Why
Document Your Journey
Prepare to Deal with Burnout
Tackle a 52-week Challenge
Put Away a Dollar a Day
Automatically Transfer $20 a Week
Celebrate Paying Off Debt
Visually Represent Progress toward Major Purchases
Think about the outcome
Write a Recap of Your Accomplishments
Index
EULA