Unit two
1 / 14

Unit Two - PowerPoint PPT Presentation

  • Uploaded on

Unit Two. Budget: Don’t Go Broke!. What is a Budget?. Budget – a plan for managing money during a given period of time. A roadmap to reaching your goals. Also called – Spending/Savings Plan Must be flexible – can be adjusted Requires self-discipline – spending must not exceed income.

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
Download Presentation

PowerPoint Slideshow about ' Unit Two' - jena-sherman

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Unit two
Unit Two


Don’t Go Broke!

What is a budget
What is a Budget?

Budget – a plan for managing money during a given period of time.

  • A roadmap to reaching your goals.

  • Also called – Spending/Savings Plan

  • Must be flexible – can be adjusted

  • Requires self-discipline – spending must not exceed income


Two parts:

1. Income 2. Expenses

Income – any money coming in

Examples: job, allowance, interest, gifts

Expenses– money you spend on your needs and wants, money going out

Examples: car payment, rent, school fees, etc.

Reading your pay stub
Reading Your Pay Stub

  • Gross income – the total amount of income from your wages or salary before payroll deductions.

  • Payroll deductions – the amounts subtracted from gross income, which results in your net income.

    • Taxes, retirement savings, health insurance, etc.

    • Four common payroll deductions:

      • Federal Income Tax

      • State Income Tax

      • Social Security Tax (FICA)

      • Medicare Tax

  • Net Income – Take-home pay – the amount you receive when you cash your check or deposit it.


  • Fees placed on income, property, or goods to support governmental programs.

    • Federal Income Tax – fee for the support of federal government programs collected by the employer and paid to the IRS

    • State Income Tax – fee collected by employer and paid to the state revenue department to support state programs.


  • Federal Insurance Contribution Act (FICA) Social Security Tax – collected by employers to fund federal programs which provides old-age, survivors and disability insurance.

  • Medicare Taxes – collected by most employees to fund hospital insurance provided under this system.

    Employers match contributions:

    SS 6.2% (12.4%) Medicare 1.45% (2.9%)

W 4 form
W-4 Form

  • W-4 – Employee’s Withholding Allowance Certificate – form that tells your employer how much to withhold from your paycheck for taxes.

    • Claim 0: more taxes withheld – greater refund

    • Claim 1: less taxes withheld – smaller refund

W 2 form
W-2 Form

  • W-2: earnings summary from every employer you worked for during the previous year.

    • Needed to file taxes by April 15th



  • Fixed – expenses that are the exact same amount every time.

    -- Examples: rent, car payment, car insurance, cable, etc.

  • Flexible or Adjustable – expenses that are not fixed and you can control how much you spend.

  • -- examples: food, gas, utilities, etc.

  • Variable – expenses that are not paid every month

    • -- Can be either flexible or fixed

    • -- Examples: car insurance, magazine subscription, garbage service

Cash management
Cash Management

  • How you handle money coming in and money going out.

    • Referred to as “cash flow”

    • Best way to manage your cash: BUDGET

Trick is to balance Income with Expenses

Sample budget – page 22

PYF – pay yourself first

Don’t give yourself a choice

A bill you owe yourself

Cost benefit analysis
Cost/Benefit Analysis

Another simple tool you can use to choose between alternatives

Weigh the cost of a product or service against the benefit it will provide.

Easy to use money tools
Easy-to-Use Money Tools

  • Transactions Services

    • Checking account

    • ATM card

    • Debit card

  • The Envelope System

    • Label an envelope for each spending category of your budget.

    • Record the planned amount on the appropriate envelope

    • Place the planned amount in each envelope

    • When you spend money, take out of appropriate envelope

      • Track money by writing down the date and amount of each expenditure

    • When envelope is empty, you are done spending for that category

Bank fees
Bank Fees

  • Shop around when opening a checking account

    • Minimum balances

    • Annual or monthly fees

    • Overdraft protection

    • Insufficient funds charge

    • ATM fees

Record keeping
Record Keeping

  • Checking account statements

  • Savings and investments

  • Insurance declarations page

  • Tax documents

  • Pay stubs

  • Loan papers

  • Big-ticket item receipts and warranties