budgeting: using your money wisely
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Budgeting: Using Your Money Wisely. Megan Hunley. What You Will Learn. Be Able to: Identify Sources of Income Identify Types of Expenses Understand the Importance of Saving Construct a Budget. Using the PowerPoint. - PowerPoint PPT PresentationTRANSCRIPT
Budgeting: Using Your Money WiselyMegan Hunley
What You Will Learn Be Able to:
Identify Sources of Income Identify Types of Expenses Understand the Importance of Saving Construct a Budget
Using the PowerPoint To answer the questions during the quiz, just click on the answer. It
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Income Expenses
Savings
Budget
Income Cash Flow: Refers to the money you have coming in
as well as the money you have going out.
Income: Any money you receive
Examples of Income: Money earned from a job, allowance, birthday money, money from selling your things, or the interest earned on a savings account
Skip to QuizQuestion 1 Question 2
Income cont. If you already work, you
may have been surprised when you received your first paycheck because it was less than you expected! This is because of deductions.
Why do you need to know about income and all the different types of income especially when it comes to a paycheck? So you will know how much money you have to get the things you need and want. Also, so you will not end up like Rachel in the clip.
Example Paycheck
Gross Income Gross Income or Earnings: Total
amount of income from your
wages before deductions.
Ex: If you worked 10 hours and were paid $10 an hour your gross income
would be $10010x10=100
Question 3
DeductionsDeductions: When an employer subtracts
money for a number of items before writing
you thecheck. For most
people, taxes are the biggest deductions. Taxes are fees that
support government programs and are
required by law to be applied to
income, property, or goods.
Question 4
Examples of DeductionsExample of
Tax Deductions
Examples of DeductionsOther
Deductions: When your
older you may request to
have money from your
paycheck go directly towards
savings or insurance.
Net Income
Net Income/Net Pay: “Take-home pay.”
Income after deductions.
Question 5
Quiz1. What is cash flow? A. Any money you receive
B. Total amount of income from your wages before deductions
C. Refers to the money you have coming in as well as the money you have going out.
D.“Take-home pay.”
Quiz2. What is income? A. When an employer subtracts money for a number of items before writing you the check.
B. Refers to the money you have coming in as well as the money you have going out.
C. Total amount of income from your wages before deductions
D. Any money you receive
Quiz3. What is gross income? A. Total amount of income from your wages before deductions B. When an employer subtracts money for a number of items before writing you the check. C. “Take-home pay.” D. Any money you receive
Quiz4. What are deductions? A. Any money you receive B. When an employer subtracts money for a number of items before writing you the check. C. Refers to the money you have coming in as well as the money you have going out. D. “Take-home pay.”
Quiz5. What is net income? A. Any money you receive B. Total amount of income from your wages before deductions C.“Take-home pay.” D. When an employer subtracts money for a number of items before writing you the check.
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Expenses Why do you need to learn about expenses?
So you know how to budget for changing expenses. To start thinking about what expenses are important so
you do not end up like Kevin. He used money on expenses he did not need and could not pay off.
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Fixed Expense Cost the same amount every time. You
typically know what you need to pay each month.
Examples:
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Car Payment
Mortgage
Variable Expense Changes in amount, so you will usually
have control over how much they will be.
Examples:Groceries Gas
Occasional Expense Ones you do not pay every month and
can be either fixed or variable Examples:
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Car InsuranceCar Repairs
Unnecessary Expense Something you do not need. Something you want less than another
item Examples of Unnecessary Expenses: Take-Out
Music Going to the Movies
Going to a Coffee Shop
Make a list of all the things you bought this past week on a sheet of paper then fill out this table. Write each of your expenses underneath the correct title. If one of your expenses is fixed then write it under fixed. If it is also unnecessary then write it there as well. Have a teacher check your work when you are done.
Fixed Variable Occasional Unnecessary
Savings Why do you need to save?
You need to save in order to get the items and experiences that are the most important to you.
You really want a car, so instead of spending money everyday on buying a latte from Starbucks, you should put the money aside for buying a car.
You also need savings for occasional needed expenses like car repairs after you buy your car.
You do not want to end up like Rebecca. She would have been able to purchase her scarf if she had savings.
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Pay Yourself First (P.Y.F) Set aside a certain amount of money
from your paycheck into an account to meet a short-term or long-term financial goal.
Save your money to be able to purchase something you really need or want later.
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This is how you figure out how much to save each month to meet a financial goal.The Simpson family wants to buy a new refrigerator for the kitchen. Mr. Simpson has visited several stores and estimates that it will cost around $700 to buy and install the type of refrigerator the family wants. If their goal is to buy it in six months, how much do they need to save each month?
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This is how you figure out how much to save each month to meet a financial goal.The Simpson family wants to buy a new refrigerator for the kitchen. Mr. Simpson has visited several stores and estimates that it will cost around $700 to buy and install the type of refrigerator the family wants. If their goal is to buy it in six months, how much do they need to save each month?
The equation: Cost of the item/when you want to buy the item=how much you should save each month
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This is how you figure out how much to save each month to meet a financial goal.The Simpson family wants to buy a new refrigerator for the kitchen. Mr. Simpson has visited several stores and estimates that it will cost around $700 to buy and install the type of refrigerator the family wants. If their goal is to buy it in six months, how much do they need to save each month?$700-cost of item6 months-when they want to buy the item
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This is how you figure out how much to save each month to meet a financial goal.The Simpson family wants to buy a new refrigerator for the kitchen. Mr. Simpson has visited several stores and estimates that it will cost around $700 to buy and install the type of refrigerator the family wants. If their goal is to buy it in six months, how much do they need to save each month?
700/6= 116.67
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Now it’s your turn. Type the answer into the white box and have a teacher check it before you move forward.The Mencias want to buy their oldest daughter acomputer to take to college next year. They’veshopped around and think they can get a gooddesktop computer with all the software and aprinter for about $1,100. With 15 months tosave, how much do they need to set aside eachmonth?$1,100 ÷ 15 =
Budget A plan for
managing your money during a given period of time.
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Now the fun part…Making a Budget!
Why make a budget? You need to make a budget to make sure
you pay what you need to pay and spend money on things you really want.
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Step 1 First, decide the
time frame for tracking your income and expenses.
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Jackson's Monthly Budget
Estimated Income:Paycheck (after taxes) $2,100Interest Earned 50Total Estimated Income: $2,150
Fixed Expenses:Savings (P.Y.F.) $500Car Payment 325Rent 750Cable TV/Internet 75
Estimated Variable Expenses:Utilities 150Food 200Gas 100
Periodic Expenses:Car Insurance ($300/6 months) 50
Total Expenses $2,150
Total Income $2,150 – Total Expenses 2,150 $ 0
Step 2 List all the money
you have coming in. It’s helpful to break it down into categories—such as work, allowance, and “other” for gifts of money, or money you make from selling your stuff. Then total all your income.
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Jackson's Monthly Budget
Estimated Income:Paycheck (after taxes) $2,100Interest Earned 50Total Estimated Income: $2,150
Fixed Expenses:Savings (P.Y.F.) $500Car Payment 325Rent 750Cable TV/Internet 75Estimated Variable Expenses:Utilities 150Food 200Gas 100Periodic Expenses:Car Insurance ($300/6 months) 50
Total Expenses $2,150
Total Income $2,150 – Total Expenses 2,150 $ 0
Step 3 You need to make
categories for each ofyour expenses. Don’t forget to include P.Y.F.! If you divide your expense categories into fixed and variable, it’ll be easier to see which ones you can adjust, if necessary.Remember, you should have a category foreverything you regularly spend money on.Then total your expenses.
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Jackson's Monthly Budget
Estimated Income:Paycheck (after taxes) $2,100Interest Earned 50Total Estimated Income: $2,150
Fixed Expenses:Savings (P.Y.F.) $500Car Payment 325Rent 750Cable TV/Internet 75
Estimated Variable Expenses:Utilities 150Food 200Gas 100
Periodic Expenses:Car Insurance ($300/6 months) 50
Total Expenses $2,150
Total Income $2,150 – Total Expenses 2,150 $ 0
Step 4Subtract your total expenses from your totalincome. If the number is negative, you need to go back and adjust some of your variable expenses until the number is a zero.If it’s a positive number, you may want to think about adding some to your P.Y.F. line so you can reach your goals a little faster!
Jackson's Monthly Budget
Estimated Income:Paycheck (after taxes) $2,100Interest Earned 50Total Estimated Income: $2,150
Fixed Expenses:Savings (P.Y.F.) $500Car Payment 325Rent 750Cable TV/Internet 75
Estimated Variable Expenses:Utilities 150Food 200Gas 100
Periodic Expenses:Car Insurance ($300/6 months) 50
Total Expenses $2,150
Total Income $2,150 – Total Expenses 2,150 $ 0
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Build Your Own BudgetTake your own income and expenses and make a monthly budget. Make sure your total expenses do not exceed your total income. Use the table to make your budget and remember to have a teacher check it when you are done.
Monthly BudgetEstimated Income
Total Income
Fixed Expenses
Variable Expenses
Occasional Expenses
Total Expenses
Total Income-Total Expenses
Yay You’re Done!