//WHAT TO DO WITH YOUR PAYCHECK

In this article we’ll learn how to make the most of your paycheck. In other words — we’re ready to talk about spending and saving money.

Anything you spend your money on is called an Expense. There are two types of expenses: Fixed and Variable.

A Fixed Expense has a set dollar amount and doesn’t change (for example: a $200 monthly car payment). A Variable Expense is not set, giving you greater control (for example: you may pay $20 for gas one week and $10 the next week).

Once you determine your income and expenses, you can develop a budget. Why do you need a budget? It’s the most effective way to take control of your money and maximize cash flow. With a budget you’ll be able to make clear decisions regarding how you spend money.

Below is an example of a balanced budget. We haven’t spent more money than we have. You’ll notice that under Fixed Expenses is “Savings.” When developing a budget, it’s recommended to make saving money a regular part of your plan. Think of it as “Paying Yourself First.” This money can be used for cash emergencies (car repairs) or to make a large purchase in the future (a computer).

You can develop your own budget by following our example. Remember to use your Net Pay (income after taxes). Feel free to add or delete categories. Now that you have a budget, the next step is to determine how to use your money.

Sample Monthly Budget
Incoming Money
	Net pay	$500
	Allowance	$100
TOTAL MONTHLY INCOME		$600
Fixed Expenses	Savings	$100
	Car Payment	$150
	Car Insurance	$100
TOTAL FIXED EXPENSES		$350
Variable Expenses
	Gas	$50
	Food	$90
	Clothes	$60
	Fun	$50
TOTAL VARIABLE EXPENSES		$250
TOTAL EXPENSES (fixed and variable)		$600
Money left over (income minus expenses)		$0