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10.1 Getting Your Personal Finances in Order

If you have an unexpected financial
event (such as your car breaking down),
you will need to review your budget to
see where you can adjust your spending
so you do not have a deficit at the end of
the month. Being prepared for such
things with an emergency fund or ade-
quate savings is also important if you
want to stay on budget. To that end,
Elena Maria has already put $1,000 into
her savings for her emergency fund. She
plans to continue to build up her emer-
gency savings until she can cover at least
6 months of her monthly expenses. Caia Images/SuperStock
Before creating a budget, track your spending for
Elena Maria’s monthly budget allows her at least 1 month to determine where your money
to see what she has available to spend in goes and where you can cut back.
each category. Don’t expect to achieve
the perfect budget. The point is to have Table 10.2: Elena Maria’s monthly budget
a budget that works for you so you
are able to live within your means and Expense Amount
accomplish your financial goals. Notice
Elena Maria has already incorporated Rent $317
her plan to save $167 for a car, which Health insurance $100
required her to reduce the amount she
Student loan $300
spends on clothes and dining out by
$50 each. The remainder she will cover Transportation $92
through her new part-time job.
Cell phone $50
A budget helps Elena Maria keep her Internet $58
spending on track. She can compare what
Utilities $150
she spends to her budgeted amount to
see where she is in any given category at Groceries $225
any given point in time. So if her friends
Dining out $70
ask her to join them for dinner at one
of her favorite restaurants, Elena Maria Medical expenses $25
will look at what she has spent to date
Clothing $130
before she accepts the invitation. In fact,
Elena Maria sees that she has already Books and supplies $40
spent $67 on dining out this month. She
Entertainment $63
calls her friends back to politely decline
the invitation and offers to have them Personal care $40
over for games after they are done. This Savings for car $167
way she stays within her budget, works
Emergency fund savings $83
in some needed study time, and yet still
has fun with her friends. Find more tips Retirement savings $200
for saving in Strategies for Success: Tips
Total $2,108
for Saving.

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