Budgeting 101

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The Resource Center content, including all videos and other media, is for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial or other advice. The advice and information contained in the Resource Center is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation


This video from Advancial's Budgeting 101 provides insights into financial success strategies, emphasizing budgeting in today's society. It addresses the impact of social media, a cashless society, changing employment trends, and outsized expenses. The video presents a straightforward budgeting method, zero-based budgeting, which allocates every dollar from income to expenses and savings. It emphasizes tracking and monitoring spending, distinguishing between wants and needs, and making adjustments to achieve a balanced budget. Additionally, the video highlights the importance of savings and offers practical tips to cut costs, including utilizing budgeting apps and taking advantage of rewards programs.


Hello, and welcome to Advancial's Budgeting 101.

Whether it was in high school, or college, or even as an adult, you probably learned time management and study skills for academic success.

Did you learn any budgeting strategies for financial success?

As you transition here to the US and spend some time learning the US banking system, it's a great time to learn how to manage your finances and build habits to help set the stage for future financial success.

That said, today we'll outline some very basic budgeting skills, highlight a few budgeting apps, and share some very easy ways to save money. We'll also discuss why budgeting is so important and how to incorporate these strategies into your everyday life. Let's get started.

Please note the information provided today is intended for informational purposes only. If you have specific personal financial questions, Please note the contact information at the end of this presentation.

So why has budgeting become so important? Well, there's a few trends in today's society that have impacted our freedom and our flexibility when it comes to making personal financial choices. I think we've probably all felt the impact of the majority of these.

Toping the charts at number one is social media. A modern wealth survey was completed recently that tells us more than a third of Americans admit their spending habits have been influenced by images and experiences shared by their friends on social media and they confess that they spend more than they can afford to avoid missing out on the fun.

Number two, our society has also converted to more of a cashless society in many industries. It creates a disconnect between purchases made and money that actually leaves our wallet.

Number three, the shift from full time employment with full time benefits to temporary part time and contract work can make it tough. Sometimes a negative impact on both of our pay and benefits, leaving employees burdened with funding a greater portion of health care, and retirement costs on their own.

Also, outsized expenses. Those big ticket items like home and college are going faster than our income, leading many to assume more debt, which just reduces their discretionary income.

And then we talk about goals, life changes, getting married, having children, preparing for retirement, and external factors, including world events, like pandemics, economic changes, and employment trends.

Budgeting is an absolute must for reaching our financial goals. But the most important motivation for budgeting is to increase your savings because savings equals a peace of mind. And it expands options for decision making when it comes to retirement to big ticket items and emergencies.

And it's never too early to start.

There's so many ways that you can set up a budget and I'll be sharing a super simple budgeting plan here in just a minute. But I wanna take note of some general steps that overview the budgeting process as a whole. First, you need to identify your income. Some questions to consider: Are you a dual income family with you and your spouse both working, or are you a one income family or single? Do you have a side job that brings an extra income per month?

Number two, to better understand where you're spending your money, you really need to carefully track your expenses.

Have you ever used a food diary or maybe tracked your steps on your Apple Watch? You can't get a true picture of your intake without careful tracking. Tracking those expenses is an integral part of any budget because again, you can't see the real picture unless you track every dollar that you spend. And when it comes to spending, it's not enough to just track your expenses.

You have to also monitor your spending, which is idea number three. You look at the categories of your spending. How much of it is going to eating out versus buying your groceries and planning your meals? Are you spending more on Uber or Lyft? Or gas?

Is that daily Starbucks streak adding up? This brings us to number four which is wants versus needs.

We learned this lesson pretty early in life. Before you spend outside of your budget, just take a minute to clarify if that purchase is really a want, or is it a need? But remember, after you do figure out those needs, you can still get some of those wants. You just have to allocate your funds appropriately to cover them. And finally, by taking time to analyze your expenses, you can better work to live within your means as you track your expenses and monitor your spending and make those tough choices to stay within your budget.

Now that we have the basic idea of budgeting, I wanna dive into a specific method to tie all of this in. Today, I'm gonna offer a detailed look at zero based budgeting. Now there are so many budgeting options out there, so I encourage you to find what works best for you and your family, but this particular method is extremely simple. It's an easy transition into the concept of budgeting.

The idea behind it simply put is that it's a system where you allocate your money so that every dollar has a job. You use every dollar from your income with zero dollars leftover. And when I say you'll have zero leftover, don't worry. That doesn't mean what you think.

It just means that there should be zero dollars left unaccounted for.

This budgeting method is based on a monthly timeframe, meaning by looking at your budget monthly, you can make more timely changes and see patterns a lot easier. Maybe you realized last month's budget didn't allocate enough for food or for gas and you came up needing to regroup on those categories or maybe borrow from different categories. You can just readjust and reserve differently for the next month. Maybe reduce that entertainment category a little or organize and plan your meals differently. We'll take a look at a few examples today. One in particular that will have to do just that. They'll have to readjust.

To start a budget, you have to do what first? Well, you kinda need to know how much money you bring in, right? You wanna start by outlining your sources of income, and gauging your monthly expenses.

Now notice I said gauge your expense. This is because no two months will be the same here, but you have to at least start with a base. Remember, you can update it monthly if need be.

To really wrap your head around your monthly spending, these monthly expenses can be allocated, if you'd like, to four main categories.

There's fixed, variable, annual, and irregular.

A trick that we've uncovered is to go through all of your spending for the past few months, usually found on your bank statements, and get a highlighter for each of those categories that we just mentioned. You can then add them up and get an average. That will usually give you a good starting figure for your budget. For example, maybe all of your fixed expenses could be in blue, and all variable expenses might be in yellow. And in each category, you get your average. Kind of make it your own here. Whatever works best for you, there's no set standard here.

Now, we'll look at the categories that all of those highlighted expenses need to be put into. The first two categories are fixed and variable.

A fixed expense is an expense that doesn't change from period to period. It's the same amount each month. An example might be your mortgage or your rent, your insurance, your childcare, or any loan payments.

And then there's variable expenses.

These expenses vary each month like groceries, gas, utilities, and entertainment.

The last two expenses are annual and irregular expenses.

Annual expenses are expenses that don't necessarily occur every month but they might occur or reoccur throughout the year. Your registration renewals, your check ups, maybe a vehicle inspection, and taxes. These are all good examples of an annual expense.

Irregular expenses, or you could call this the unexpected expense category, might be things like gifts, donations, school tuition, unexpected expenses like household repairs, or car repairs, maybe medical emergencies.

Now that you've understood the four expense categories, it's important to also know that you need to try and have a savings category as well. On the next slide, we're going to look at an example of all of these categories, including the savings, put together.

Alright. So like I mentioned before, you'll need to assign all income to an expense, which you can see expenses are seen here in the light blue circle. And also put some funds into a savings category. That's the green circle. Remember from earlier when I said that every dollar needs to have a job? This is what it's gonna look like. Every dollar from your income, which is that dark blue circle, needs to be accounted for in one of these categories.

And obviously, each household's categories will look different, but this image gives you a basic look. So in a nutshell, I'm taking all the money in that dark blue circle and plugging it into a category, whether that falls into that light blue circle there of expenses or the green circle of savings.

For this particular example, you see that it shows a total monthly income of three thousand dollars. Again, that's the dark blue circle.

Their total expenses in that light blue circle include their mortgage, their utilities, bills, groceries, entertainment. This is those four main categories I was telling you about. They added all of those up to two thousand three hundred and fifty dollars. And in their savings in that green circle, they included an emergency fund, a vacation fund, retirement, and so on. Which added up to six hundred and fifty dollars.

So now if you will, follow the calculation on the right hand side Once you subtract your expenses of twenty three fifty and your savings of six fifty from the monthly income of three thousand, Then this person was left with a final number of zero.

So when you're looking over your past few months spending, whether it's from your bank statements or other places, You could try to figure out an average so that when you set your budget for the allotted amounts in each categories, you allocate enough.

Whatever your categories look like when you're done, that total income minus total expenses and savings should equal zero.

See, I told you that zero dollars leftover would make sense. Well, hopefully it does. It means that you've put enough money aside for all of your bills, including your savings. Every dollar did its job.

Alright. So let's look at a second example here, one where they didn't equal out at zero. Maybe they didn't allocate enough for their groceries. And they allocated too much toward a savings fund.

So the total monthly income here is four thousand.

The total spenses is three thousand four hundred and fifty, and their savings goals looks to be about six hundred and fifty dollars. So when you take the income of four thousand and you minus out the thirty four fifty expense and six fifty savings, Then you're left with a one hundred dollar deficit.

So in this case, you'll need to make an adjustment somewhere, which could come from maybe just one category or it could be a little from several categories. Maybe try to reduce entertainment by fifty dollars and decrease the vacation fund by fifty for this month. You'll have to be your own guide here, but this gives you a good idea of how to ensure that not only every dollar has a job, but that every job makes the system equal out.

Sometimes, when your budget is off more times than not, it's a good idea to figure out how to cut back. Or how to condense.

For insurance, remember that bundling your auto, your health, your home, renters, and vote insurance or whatever you have to insure, if you bundle it, it can create bigger savings.

For your utilities, try to price shop and see what options are best. I know for us here in Texas, I did a ton of research on our electric provider to ensure a plan that worked best for my household and our budget.

Transportation and housing. Always make sure you're choosing the best route in financing for the best terms, the best rates, and, of course, the best service. Advancial will be more than happy to look at your current rates and your term on whatever you have financed to make sure that we maybe can save you some money somewhere.

The truth of the matter is that money is going to go somewhere, and it's up to you to plug it into the best possible place.

Alright. So what are your habits costing you? And this one kind of hurts a little. When you attack those bank statements with those highlighters, I can almost bet you that you'll find a few expense categories that stand out and you say, oh my goodness. I did not realize I spent so much on so and so.

Take a look at that Starbucks coffee example. The five dollar spent on your daily Starbucks may not seem like much at the time, but if you do that every day, you'll be out a little over eighteen hundred dollars a year. That's a lot of money on coffee.

You can also see here what office lunch or ordering out could cost over time. Or takeout dinner. I think takeout is what really got my budget. I had no idea how much I was spending towards that.

But we're not just talking about food here. What are some other items you might wanna consider altering? Maybe your gym membership or costly entertainment.

What might you be willing to give up or to change?

The key point here is that small changes can equal large savings over time.

There are some really great budgeting apps out there I wanna share with you and we compiled a few here on the screen for you. Be sure to look for the one that tracks your spending. Some might sync to your phone and your credit card to make monitoring even easier.

Many apps offer a free version, but you might wanna look at investing into an that has features that would really help you stay on track better. And don't forget that Excel and Google both have templates you can use or you might just go back to the old fashioned paper and pencil. That route works just as well. Research does show though that seeing something helps us to understand and comprehend it better. So work to find the best way for you to see what you're spending.

Advancial has lots of ways that we can help when it comes to budgeting.

The first step if you haven't done this already is to open those sub savings accounts. To designate the emergency fund and any other savings categories you'd like to set up. Then you can set up periodic automatic transfers or direct deposit to automatically allocate funds to certain accounts.

By setting up those weekly or biweekly contributions from your checking to your savings or changing your direct deposits so that a portion of each check goes directly into that account, it gives you one less thing to think about each month and gives you even more security for a rainy day.

And the no monthly service fees, no minimum balance requirements, and unlimited free ATMs plus rewards points and dividends, you can easily track your spending without the added cost of fees. The Visa rewards plus credit card has no annual fee. No foreign transaction fee and also no cash advance fee and no balance transfer fee as well.

As part of budgeting and savings, you need to take advantage of rewards points. Well, Advancial can help there too. We combine the rewards points from our inbound USA checking and our Visa rewards plus credit card. That's right. You earn points not only when you use your credit card, but also when you use your debit card from gift cards to cashback.

What a great way to have the money you spend reward you with points to help you save even more.

If you would like to learn more about your credit union benefit, please visit advancial.org/passportUSA, or you can scan the QR code with your mobile device and click on request information.

Once you click that request information in the middle of the screen, it should direct you to an information card that looks like this one. You'll go ahead and fill out that information on this card and a member representative will be in contact with you shortly.

Thank you so much for tuning in. We'd love for you to connect with us. Or if you have any questions, please feel free to reach out via the information on your screen.

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The Resource Center content, including all videos and other media, is for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial or other advice. The advice and information contained in the Resource Center is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation