BVS Performance Solutions FinancialGuru - Developing A Budget Description: Opening slide of a desk with the words Developing a Budget appearing over top, as if being entered into a search field. The narrator appears on a white background with the words: "What is a credit score?" Description: The screen changes to and image of a man loading a van for a trip. Narator: Developing a budget is sort of like planning a road trip. Narrator: It can be as complicated or as simple as you want, but if you plan it right, you're sure to make it to your destination you may even have a little "gas" left over. Description: The screen changes to an animatin of a fuel gauge slowing changing from full to empty. Narrator: Make a few wrong turns, though, and before you know it, your tank will be running dry. Description: The screen changes to show the narrator speaking. Narrator: That's why it's so important to create, and stick to, a personal budget. Narrator: So let's get started. Narrator: The first thing you need to do is figure out two things: Narrator: How much you make, and how much you spend. Description: The screen changes to an animation of a paystub and a series of calendars. Narrator: Finding out how much you make each month can be as easy as looking at your last paystub, but if your income changes from month to month, you can get your average monthly income by adding up all of your paystubs for the year - not counting bonuses - and dividing by twelve. Description: The screen changes to show the narrator speaking. Narrator: Now, unfortunately, finding out how much you spend, and what you're spending that money on, takes a little more work, but we'll walk you through it. Description: The screen changes to show a video of a man working at his desk. Narrator: First, gather up all the bills and receipts you have from the last 12 months. Narrator: If you tend to pay for things by check or credit card, you can use your monthly statements instead, but you'll also need to include items you might regularly buy with cash, such as a daily coffee or lunches. Description: The screen changes to a list of possible expenses broken down into categories. Narrator: Next, go through all of your expenses and separate them into categories. Narrator: You'll want to make a category just for savings, which should include an emergency fund capable of covering all of your expenses for at least six months. Description: The screen changes to show the narrator speaking. Narrator: You'll also need categories for your fixed expenses - bills that don't change month-to-month - like mortgage, rent or car payments. Description: The screen changes back to the list of expenses as new ones are added to it. Narrator: These would then be your starting point when you create your budget. Description: The screen changes to show the narrator speaking. Narrator: In the end, you can make as many or as few categories as you'd like - so long as they make sense for your lifestyle. Description: The screen changes back to the list of categories with the expenses tallied for each. Narrator: Now, just like with your paystubs, add up each category separately and divide by twelve (or however many months' worth of expenses you were able to use). Description: The screen changes to a couple sitting at a desk working on their budget together. Narrator: This is, on average, how much you've been spending each month in these categories. Narrator: How do things look? Narrator: Are you spending more than you make, or putting a lot more into some categories than you thought - or in the case of savings, a lot less? Description: The screen changes to show the narrator speaking. Narrator: If you are, it's time to examine your spending habits and start setting limits - both of which we'll go over in the next video.