Budgeting: Making the Most of Your Money

1. Budgeting:Making the Mostof Your Money

2. Only 40 percent of Americans use a budget to plan their spending… • The rest routinely spend more than they can afford. $$$ Budgeting $$$

3. In this Unit We Will… • Examine reasons to keep track of your spending • Summarize the advantages of having a spending plan • Identify various sources of income • Identify various types of expenses • Explain the purpose of paying yourself first (P.Y.F.) • Explain how to build a budget • Examine forms of record keeping involved with budget and cash management • Summarize how a budget will change throughout your life cycle

4. How Do You Manage Your Time?

5. A spending plan or budget is A plan for managing your money during a given period of time

6. Why have a budget? • Helps determine where you are spending your money currently • Helps decide where to spend your money in the future • You have an organized way to save for things that cost more • Puts you in control of your financial future, beginning NOW.

7. People without a budget… • Are less likely to know what they have • Have no plan, often coming up short before their next paycheck or allowance • Are almost certain to have no plan to save for more expensive spending goals

8. Questions? • Does it makes sense to create and live within a budget when you don’t have a lot of money? • What if you find that you are consistently spending more in one area than you had planned to? • What if you find that you can’t live within your budget?

9. A budget is made up of… • Income • Wages from jobs • Allowances • Gifts • Interests from savings or investments • Spending • Expenses for our needs and wants

10. Payroll Deductions • Taxes – government fees on business and individual income, activities, products or property. • Medical Insurance • Savings in Retirement accounts

11. 4 Common Tax Deductions • Federal Income Tax – tax on the amount of income people earn • State Income Tax - TN does not have • Social Security Tax – Provides a small income and other services to the elderly, disabled Americans, and orphaned minors. • Medicare Tax – provides medical insurance to the elderly and some disabled Americans

12. 3 Main Areas of Expenses • Fixed: cost the same amt every time Home loan, car loan, rent

13. 3 Main Areas of Expenses • Variable: fluctuate in amt, you have some control on how much they’ll be Groceries, gas, power and water

14. 3 Main Areas of Expenses • Periodic or Occasional: ones you don’t pay every month be fixed or variable also Car insurance (every six months) Car repairs, doctor visits

15. What type of Expense is it? √ √ √ √ √ √

16. Most Important Expense!!! PYF AY Putting away money for savings should be included with all your other expenses OURSELF IRST

17. Building a Budget Decide the time frame for tracking your income and expenses. • List all the money you have coming in and total all your income. • Categorize your expenses into fixed, variable and periodic. • Subtract your total expenses from your total income. It should equal zero. • Step back and look at your budget and your financial plan. Do you need to adjust it to bring your spending plan more in line with your financial goals?

18. Documents You Should Keep Track of… • Checking account statements • Savings and investments statements • Pay stubs • Tax documents • Insurance statements • Loan and credit card statements • Receipts & warranties for big-ticket items