planning a budget chapter 28. did anybody see borat this weekend?
TRANSCRIPT
Planning a Budget
Chapter 28
Did anybody see Borat this weekend?
Today’s Schedule
• Final Project Notes & Information
• Assignment of Homework• Chapter 28• Quiz
Final Project Notes & Information
• Progress Feedback• I need a copy of your first
assignment• Next assignment will be due
on Friday– Projected Income Statement (5
points)• Use a sample income statement
as a point of reference• List projected expenses &
projected revenue• How will you make the goal set
forth for you?• Due 11/10/06
Homework Assignment
• Final Project Assignment• Chapter 28
– Definitions for Key Words
Chapter 28 Learning Objectives• Explain how budgeting is
helpful• List the five steps in
planning a budget• Name different types of
income and expenses• Describe how a computer
is used in budgeting
Why It’s Important
• Budgeting Techniques help you keep track of where your money goes so that you can make it go further
• Do the best with what you’ve got
Average Monthly Household Expenses
17%
7%
2%
16%
12%
12%
10%
3%
21%Food
Clothing
Personal Care
Housing
HouseholdExpensesTransportation
Recreation
Contributions &GiftsOther
Based on $3,125 per month
Lifestyle Costs• Money is Limited for most• Most want more than they can
afford• Money Management
– The process of planning how to get the most from your money
• Budget – Plan for using your money in a
way that best meets your wants & needs
– Includes: Expected income, planned expenses, planned savings over a period of time
– Sample Budget on Excel
5 Steps to Planning a Budget
• Set your goals• Estimate your income• Estimate your expenses• Plan for savings• Balance and adjust as
needed (be adaptable)
Step 1: Set Goals
• What do you want to accomplish in the next month?– Next year?– Next Five years?
• What’s important to you?• How will I get there
financially
Step 2: Estimate Income
• Income – Actual amount you earn or receive in a time period
• Gross Pay• Net Pay• Other Income• Taxes
Gross Pay
• Total amount of money you earned for a specific time
Net Pay
• Gross Pay minus deductions
• Deductions– Amounts taken out of your
pay before you receive your paycheck
– Include: Taxes, health insurance, retirement, union dues
– Could include: Child Support, money owed to creditors, etc.
Other Income
• Could include:– Tips (do not include while
budgeting)– Other funds earned by
those within a household– Gifts, etc.
Taxes
• Withholding– Subtracting taxes from a
paycheck to be forwarded to the government
• Federal, State, Local• Taxes not withheld must
be budgeted– Lottery Winners, self-
employed persons
Step 3: Estimate Expenses
• Expenditures– Anything you spend money
on
• Must budget for known expenditures
• Must have money available for the unknown
• Fixed Expenses• Variable Expenses
Fixed Expenses
• Expenses that occur regularly and that are regularly paid
• Rent, Insurance, Car Payments, etc.
• Can change over time• Cannot reduce or avoid
them
Variable Expenses
• Expenses that fluctuate• Food, phone bills,
entertainment, gifts, etc.• Look at trends
Step 4: Plan for Savings
• Make it possible for future wants
• Can cover expenses for which you did not budget
Step 5: Balance & Adjust the Budget• Usually the most difficult step• Budget Variance
– The difference between how much you planned to spend and how much you actually spent
• Total expenses should always be less than total income– If not, you must make changes
Quiz
• What are the five steps of planning a budget? (5 points)
• What are the two types of expenses? (2 points)
• ______ is the process of planning how to get the most from your money. (3 points)
• Extra Credit – At present, De La Salle offers _____ bus routes. (1 point)