Budgeting for the New Year

by Dana Zukierski

Dana is an assurance partner in theNashville practice of Ernst & Young. She focuses exclusively in the health sciences industry and serves health sciences clients who have SEC reporting responsibilities, private equity backed entities and not-for-profit clients. Dana’s experience includes providing assurance services related to the following: public and private equity and debt offerings, acquisitions and divestitures, private equity ownership matters, SEC reporting matters and the implementation and ongoing evaluation of internal controls under Section 404 of the Sarbanes-Oxley Act. She is currently on the board of directors for Life Sciences of Tennessee, Belle Meade Plantation and All About Women. She has previously served on the board of Leadership Health Care (LHC) as the Chair of the Education and Events Committee for LHC.

To start the New Year off right, look at your finances and create a budget so that you end 2013 stronger financially than when you started 2013.  First, a few questions about budgeting:

What is a budget? – A list of all planned income and expenses
Why is a budget used? – To create a plan for spending and saving. The plan allows you to better manage the happiness and future standing of your family
Who should create the budget? – Parents should lead creating the budget but you should involve the entire family
When should the budget be created? – Before the beginning on the income period (ex. Monthly, bi- weekly, weekly)

Next, how do you go about creating a budget?

• 1. Get a budget worksheet (we’ve included an example for you on the website in excel that can downloaded and changed to suit your needs).
• 2. Start with all actual income and expenses for the period before (to the best of your ability).
• 3. Understand the cash short/ extra result. If your are short, you need to cut expenses or look for additional income.
• 4. Adjust budget in the variable categories to create any necessary balances.

Follow the steps of completing your personal budget and reflect on the last month’s cash short/ extra position.  Talk through with your family any changes that can be made to balance your budget  and work on creating a balanced budget for the upcoming month.

Some thoughts on ways to save money using coupons:

• Why use coupons? – Save your money and use someone else’s!  This allows your hard earned dollars to go farther.
• Where to find coupons?  Newspapers: Examples: Tennessean, The City Paper, Nashville Scene
• Email offerings from the stores you visit frequently are also a good source for coupons.  Consider creating an email account just for offers.  You community computer labs to check your email and print coupons.
• In store offerings are very convenient.  For example, grocery stores often have in-store printed coupons or buy one get one free specials.  Buy one item for now and save the other one for later use.
• Consider coupon offers printed on your receipt.  Sometimes they are for products that you just purchased and you can save on the next purchase.
• Look for coupons or rebates in side product packaging
• Look for loyalty based savings such as ‘cards’ from the local grocery store or pharmacy (examples include Kroger and CVS).  It usually does not cost anything to sign up for these cards.

 

FREQUENTLY ASKED QUESTIONS ABOUT FINANCIAL MATTERS

1.)    How should we prioritize our money? For example, if we make $100 a month and $50 goes to rent, and we get food stamps, what should we use the rest for?

1. Pay off other bills, save for emergencies

2.)    Why is it important to pay your bills on time?

1. Credit score is destroyed, receive calls and letters in the mail from a collection agency

3.)    What are the pitfalls of emergency loans?

1. Clever lenders offer plans with free gifts, or options to make a purchase now and pay it later- these options only increase the price of your loan
2. Do your research. Use free computer lab at community center or the library to research the financial institution and other loans. Become educated on what they are actually offering you before you commit.

4.)    What are “too good to be true” items?

1. Flyers on poles that say they can get you money fast, schools that promise to get you a job.
2. If you see a commercial, flyer, or something in a magazine or newspaper that seems too good to be true, then do your research. It is important to become educated before you commit.

5.)    What are the basics of owning a credit card?

1. Know the related interest rate and all changes to the stated rate that can happen (ex. late payments increase rates and cash advances have higher rates

6.)    Why is it important to pay yourself first?

1. It is important to use what money you have left over at the end of the month on items that are not covered by food stamps, items that your children need, toiletries and other items needed to take care of the needs of your family. It’s important to not waste your money on trends and other electronics that don’t give your family what they need

7.)    Where can I find nice, gently used clothing?

1.  Salvation Army (1/2 off all clothing on Wednesdays)
2. Plato’s closet
3. Goodwill
4. Local thrift stores
5. Consignment stores

8.)    How can I involve the entire family in the financial planning?

1. Make one night a week and fun family night for talking and planning. Encourage each family member to contribute

9.)    How can my neighbors and friends be of help to each other?

1. Combine coupons
2. Buy ingredients and cook meals together
3. Rent movies together and split the cost

10.)  How can I instill in my children the importance of good financial planning?

1. Make them apart of the monthly financial discussions
2. Give them an allowance to learn about saving and spending (ex. $1 a month/ week )

Click here for a budgeting worksheet!