Copyright Goodheart-Willcox Co., Inc. 35 Section 2.1 Personal Financial Landscape It is the tool that lets you take control of your finances. Planning helps you meet daily needs and achieve your future goals as well and maintain economic self- sufficiency. You may choose to use a spreadsheet to create your budget. A spreadsheet is a software program that formats data in columns and rows and can perform calculations. Spreadsheets enable a computer to be used as a tool to enter, calculate, and analyze information. Complete the steps that follow to create a budget tailored to your income and needs. These steps can help you create a simple, workable budget. Step 1: Establish Financial Goals Well-thought-out goals can help you direct your dollars to those things you consider most important. A goal can be short term, medium term, or long term. A short-term goal is a goal that you want to reach today or next week or in two or three months. For instance, saving money for a new camera may take a month or more. A medium-term goal, such as buying a car, may take one to three years to achieve. A long-term goal, such as completing school, starting a business, getting married, or buying a house, may take several years to achieve. Make a list of your important personal financial goals. Include short-, medium-, and long-term goals, as shown in Figure 2-1. For example, having money for a movie this weekend is a fairly immediate goal. Saving for a ten-day camping trip next year is a medium-term goal. Paying for a new car or future education are long-term goals that require saving over a period of time. Step 2: Estimate and Total Your Income Determine if your budget period should be weekly, biweekly, or monthly. This will depend on when you receive most of your income. Income is any form of money received, such as an allowance, a paycheck, gifts, and gains from an investment. If you receive money weekly, it makes sense to budget on a weekly basis. If you receive a regular monthly paycheck and pay monthly bills, it may be easier to work with monthly figures. Goodheart-Willcox Publisher Figure 2-1 Organizing goals helps a person focus on spending plans. Financial Goals When Wanted Estimated Cost Short-Term Boots Holiday gifts Summer trip In 2 months In 3 months In 9 months $ 65 $ 100 $ 350 Medium-Term Laptop computer Used car In 1 year In 2 years $ 500 $ 6,000 Long-Term College expenses In 5 years $32,000