Study Strategies Developing Financial Literacy Would you start a road trip without looking at a map? Would you start cooking dinner by putting ingredients in a bowl without any idea what you were trying to make? The point is that for any project to succeed, you need a plan. When it comes to your personal fi nances, that plan is a budget. A budget will help you keep your spending under control and remain on track to meet your larger fi nancial goals. Use the strategies below to create an effective budget. • Write down your fi nancial goals. These might include paying off a car loan, saving money for a big purchase, or avoiding falling into credit card debt. • Figure out how you spend your money. For a week, write down or use a phone app to keep track of every purchase you make, large and small. This will help you understand where your money goes on a daily basis. • Make a list of everything you know you will need to spend money on in the coming year. This list should include things like tuition, insurance payments, your rent or mortgage, and so forth. • Make a list of all your income for the coming year, such as the salary you earn at your job and any fi nancial aid you might receive. • Create your budget by adding up all your sources of income and everything you spend money on, including small, daily purchases and your larger expenses. • If your spending is greater than your income, fi nd ways to reduce your costs. The emPOWERme on page 691 can help you save money. • You could also look for ways to increase your income, such as by fi nding a parttime job, assuming your schedule allows. • Review your fi nances every month, and adjust your budget to ensure that it is accurate. For example, if your rent goes up, you want to be sure your budget accounts for that. • Revisit your fi nancial goals. Are you getting closer to achieving them? If not, how can you change your budget to improve this situation? • Be on the lookout for issues that might create budget chaos, such as credit cards with interest rates that spike after a certain amount of time. 608 CHAPTER 10 Quadratic Equations and Functions www.mhhe.com/messersmith
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