1. Unit 2 - Budgeting: Making
the Most of Your Money

2. ? 2-A-1 NEFE High School Financial Planning Program
Unit Two – Budgeting: Making the Most of Your Money ?
2-A-1

3. 2-A-2 NEFE High School Financial Planning Program
Unit Two – Budgeting: Making the Most of Your Money
2-A-2

4. Reasons for a Spending Plan
…Helps you determine where you are spending your money currently.
…Helps you 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.
…You will always know what you have to spend.
When you take the time to create a budget have a clear understanding of just how much money they actually have to spend. With that information they then know their limits.
…You know where you want to spend your money and how much you want to spend in any one area.
When you take the time to analyze how you spend your money you will quickly find out where it all goes. In that process, you may find yourself spending lots more on some things than you actually intended, leaving you much less money for other things you want. A budget lets you decide just how much of your available money you want to spend in each area of your life.
…You have an organized way (“Pay Yourself First”) to save for things that cost more than what you have at any one time.
The most important part of a budget is that it gives you a structured way of saving for things that cost more than what you might ordinarily have at any one time. By saving – and by waiting until you have the money to buy something expensive – you can pay cash for what you want without borrowing and going into debt (and paying lots more in interest charges!)
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5. 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.
…Are less likely to know what they have
People without a plan are rarely organized enough to stay focused on just how much they have to spend at any one point.
…Have no plan for spending what they have, often coming up short of money before their next paycheck or allowance.
Even if they know how much they are earning, people without a budget have no structured way of spending what they’re bringing in. That often leads to an empty wallet long before the next paycheck or allowance.
…Are almost certain to have no plan to save for more expensive spending goals.
When you don’t necessarily know what you’re making, and you have far less of an idea of where you’re spending your money, you’re also very unlikely to have any real saving plan for buying those things that cost a lot of money. Lacking any of these, the temptation to borrow money to get ‘big ticket’ items is great. As you’ll learn later, borrowing costs money that you will pay to whoever is loaning you the money. Bottom line? A big ticket item that is paid for with credit (rather than saved for over time) will cost you many more hard-earned dollars, leaving fewer dollars for you to spend on things that would directly benefit you.
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6. 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?
Does it makes sense to create and live within a budget when you don’t have a lot of money?
It makes more sense than ever to have a budget when you don’t have a lot of money. With only a few dollars in your hand, there is a much greater need to know what you have and where you want to spend it, or you could run out of money before the next allowance or pay check comes in!
What if you find that you are consistently spending more in one area than you had planned to?
Could be that you need to reevaluate spending plan. If you are consitently overspending in the same area, and it seems as though it makes sense that you’re doing that, you may need to put more money into that area and take some money out of other areas to stay within what you’re making.
What if you find that you can’t live within your budget?
You either need to show more self-control over your spending or identify ways of acquiring more money to include in your income.
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7. FIXED, VARIABLE, OR PERIODIC?
Expense
Fixed
Variable
Periodic
Loan Payment X
Electric Bill
Twice-yearly Insurance Payment
???
For an interactive version of this slide, open the Excel File for this unit and go to the Excel Worksheet with this same number
2-C

8. S A V E PAY YOUR$ELF FIRST! etting aside money for “big ticket items”
voids borrowing, which costs you a lot! It’s a V
ery wise thing to do, because E
very time you pay yourself first, you are developing a saving habit that leaves you with more money to spend later on for things that are really important to you!
2-D-1. (2-D-2 and 2-D-3 on Excel file Unit 2 Visuals.xls)

9. Personal Plan for One Week
NEFE High School Financial Planning Program
Unit Two – Budgeting: Making the Most of Your Money
Personal Plan for One Week
For an interactive version of this slide, open the Excel file for this unit and go the Excel worksheet #2-E
2-E

10. How to Build a Budget
Decide on a time frame for tracking expenses (week, two weeks, month).
List all money you have coming in (income).
Make categories for all expenses.
Subtract total expenses from income.
Study your budget and your financial plan to make sure it fits with your plans and goals.
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11. Build a Budget Answer Key