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Budgeting: Making the Most of Your Money. Only 40 percent of Americans use a budget to plan their spending…. The rest routinely spend more than they can afford. $$$ Budgeting $$$. In this Unit We Will…. Examine reasons to keep track of your spending

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Presentation Transcript
slide2

Only 40 percent of Americans use a budget to plan their spending…

  • The rest routinely spend more than they can afford.

$$$ Budgeting $$$

in this unit we will
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
a spending plan or budget is
A spending plan or budget is

A plan for managing your money during a given period of time

why have a budget
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.
people without a budget
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
questions
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?
a budget is made up of
A budget is made up of…
  • Income
    • Wages from jobs
    • Allowances
    • Gifts
    • Interests from savings or investments
  • Spending
    • Expenses for our needs and wants
payroll deductions
Payroll Deductions
  • Taxes – government fees on business and individual income, activities, products or property.
  • Medical Insurance
  • Savings in Retirement accounts
4 common tax deductions
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
slide12

3 Main Areas of Expenses

  • Fixed: cost the same amt every time

Home loan, car loan, rent

3 main areas of expenses
3 Main Areas of Expenses
  • Variable: fluctuate in amt, you have some control on how much they’ll be

Groceries, gas, power and water

3 main areas of expenses1
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

what type of expense is it
What type of Expense is it?

most important expense
Most Important Expense!!!

PYF

AY

Putting away money for savings should be included with all your other expenses

OURSELF

IRST

slide17

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?
documents you should keep track of
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