Monday january 30 th personal finance
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Monday January 30 th Personal Finance. Journal : 5 reasons you need to budget Which reason is most important to you and why? How can you start budgeting now? Self Assessment Net Cash Flow Activity Budgeting PowerPoint Notes. Budgeting Essential Questions.

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Monday january 30 th personal finance
Monday January 30thPersonal Finance

  • Journal: 5 reasons you need to budget

    • Which reason is most important to you and why?

    • How can you start budgeting now?

  • Self Assessment

  • Net Cash Flow Activity

  • Budgeting PowerPoint Notes


Budgeting essential questions
BudgetingEssential Questions

  • Why is it important to have a balanced budget?

  • How does evaluation play a role in the budgeting process?


Budget
Budget

  • A budget is a plan for managing your money for a given period of time

  • A successful budget is

    • Carefully planned

    • Practical

    • Flexible

    • Written


Where is the money coming from
Where is the money coming from?

  • Income: money you receive as payment for goods or services

    • Hourly

    • Salary

    • Interest

    • Capital gains

    • Commission

  • Discretionary Income: money left after paying essentials


Gross income vs net income
Gross Income vs. Net Income

Gross Income – Payroll Deductions = Net Income


Where is your money going
Where is your money going?

  • Expenses: what you spend money on (needs and wants)

    • Fixed expenses: cost the same amount every time

    • Variable expenses: fluctuate in amount

    • Periodic or occasional: don’t pay every month, can be fixed or variable

  • Cash Flow: movement of money in and out

    • Income – Expenses = Cash Flow


What type of expense is it
What type of expense is it?

  • Groceries?

  • Cable TV Bill?

  • Car loan payment?

  • Gifts?

  • Auto repair bill?


The most i mportant e xpense
The Most Important Expense

  • PYF: Pay Yourself First!

    • Immediately setting aside money into savings whenever you receive money

    • Used to meet long-term finance goals

    • Built into your budget


Net worth
Net Worth

  • Assets – Liabilities = Net Worth

  • Asset: item that has economic value

  • Market Value: price at which an asset would sell

  • Liquidity: Ability to convert an asset to cash and maintain value

  • Liability: Financial obligations (debts) that must be paid

  • Personal Balance Sheet: List of assets, liabilities, and net worth


Analyze your budget
Analyze your budget

  • 0 Balance: income is equal to expenses

  • Variance: difference between estimated and actual expenses

  • Surplus: An amount left over when requirements have been met (if you spend less than you had expected)

  • Deficit: the amount by which a sum of money is less than the required amount (spending more than expected)


Things to remember
Things to remember

  • Set SMART goals

  • Analyze information (expenses, income, etc)

  • Create a plan (realistic and flexible)

  • Implement the plan (follow your budget!)

  • Monitor and modify the plan (it is not set in stone, if it is not working then change it!)


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