Tips and information on managing household budgets

1. Created by: Jennoa R. Graham, Ph.D.
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Managing Household Budgets
Presented by: Pastor Thomas Pulliam, Sr.

2.  Income – Money that is received in exchange
for a product, service or contract agreement
 Expense – Money that is paid out in exchange
for a product, service or contract agreement
 Budget – A document used to estimate
current or future income and expenses for
the purpose of managing money to avoid
deficits and achieve specific financial goals
Income – Expenses = Surplus (Deficit)
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3.  Set a financial goal
 Short Term - Do not overdraw checking account
 Long Term - Save for special occasion or trip
 Determine income and expenses for budget
 Create a plan to meet financial goal
 Track and analyze budget activity
 Review and modify plan as needed
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4.  “Any income, from whatever source, is
presumed to be income under section 61, unless
the taxpayer can establish that it is specifically
exempted or excluded” (IRS, 2012)
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Payroll
Check
Tips* (all
denominations)
Retirement
Distribution*
Grants/
Scholarships*
Social
Security
Child/ Spousal
Support
Legacy/
Endowment*
Veteran's
Assistance
*See financial or tax advisor
Taxable
Non-Taxable

5.  Gross Pay – The amount of money earned
BEFORE taxes and withholdings
 Federal
 Withholdings
 Medical
 Social Security (OASDI)
 State
 Local (not applicable for GA)
 401K/IRA/ROTH/Pension
 Garnishments
 Net Pay – The amount of money received
AFTER taxes and withholdings
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6.  Blended family with three children
 Child #1 – Outside of home; Spouse #1 pays child support
 Child #2 – Inside of home; Spouse #2 receives child support
 Child # 3 – Inside of home; product of union
 Summary of income
 Spouse # 1 earns $50,000 annually
 Spouse # 2 earns $35,000 annually
 Modest standard of living expenses
 Goal: Eliminate overdraft fees on bank account
 Plan: Pay expenses only when income is received &
reconcile bank account to receipts weekly
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7.  Determine frequency of income sources
 Daily
 Weekly
 Monthly
 Annually
 Create a spreadsheet that identifies the days
each source of income is expected and the
estimated amount to be received (Net Pay)
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8. 8
Base Pay - Spouse #1 Base Pay - Spouse #2
Current Gross 4,166.67 Current Gross 2,916.67
Taxes (25%) (1,059.35) Taxes (25%) (741.55)
Deductions (8%) (334.71) Deductions (6%) (175.97)
Child Support (350.00)
Net Pay 2,422.60 Monthly Net Pay 1,999.15 Monthly
Net Pay 1,211.30 Bi-Monthly Net Pay 999.58 Bi-Monthly

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9/1/2012 9/16/2012 10/1/2012 10/16/2012
Income
Spouse # 1
Payroll Check 1,211 1,211 1,211 1,211
Spouse # 2
Payroll Check 1,000 1,000 1,000 1,000
Child Support 150 150 150 150
Total Income 2,361 2,361 2,361 2,361
Model Budget Income

10.  Monthly expenses can be grouped and estimated
as a percentage of income
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HHM Recommendation USA Visa Recommendation**
Percentage of Income Household Expense Percentage of Income Household Expense
20% Housing 30% Housing
18% Transportation 18% Transportation
15% Food 15% Food
10% Tithe/Offering * 8% Miscellaneous
10% Savings 5% Clothing
5% Clothing 5% Medical
5% Medical 5% Recreation
5% Recreation 5% Utilities
5% Utilities 5% Savings
7% Other Debts 4% Other Debts
* “…he which soweth bountifully shall reap also
bountifully… for God loveth a cheerful giver”
(2 Corinthians 9:6-7)
** http://usa.visa.com/personal/using_visa/personal_finance/budgeting.html

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Model Budget Expenses
9/1/2012 9/16/2012 10/1/2012 10/16/2012
Expenses
Transfer to Savings 236 236 236 236
Tithe/Offering 236 236 236 236
Mortgage/Rent 350 350 350 350
Lights 115 115 -
Water 80 - 80
Child Care 180 180 180 180
Food/Clothing/Materials 225 225 225 225
Life Insurance 100 - 100 -
Homowners/Rent Insurance 75 - 75 -
Car Note - 630 - 630
Car Insurance 375 375 -
Car Gas 125 125 125 125
Cell Phone 125 125 -
Cable 100 - 100 -
Student Loans 100 100 100 100
Recreation 150 150
Unexpected Expenses
Medical Copays - - - -
Car Water Pump - - - -
Total Expenses 2,342 2,312 2,342 2,312

12.  Set a financial goal
Eliminate overdraft fees on bank account
 Determine income and expenses for budget
Model Budget Income & Expenses
 Create a plan to meet financial goal
Pay expenses only when income is received
Reconcile bank account to receipts weekly
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13.  Modifying payment of expenses to coincide with
dates of income received and monitoring bank
account activity regularly, can help to eliminate
overdraft fees
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9/1/2012 9/16/2012 10/1/2012 10/16/2012
Total Income 2,361 2,361 2,361 2,361
Total Expenses 2,342 2,312 2,342 2,312
Net Balance 19 49 19 49
Success!!!

14.  Track and analyze budget activity
 _______________________________
 _______________________________
 _______________________________
 _______________________________
 Review and modify plan as needed
 _______________________________
 _______________________________
 _______________________________
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16.  IRS (2012). The Meaning of Income: Taxable
Income and Gross Income. Internal Revenue
Code, Retrieved August 30, 2012, from
http://www.irs.gov
 Visa (2012). Budget Overview. USA Visa,
Retrieved September 1, 2012, from
http://usa.visa.com
 Holy bible: King James Version. (1995).
Michigan: The Zondervan Corporation
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