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Major Expenditures Introduction The Essentials to Take Charge of Your Finances.

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Presentation on theme: "Major Expenditures Introduction The Essentials to Take Charge of Your Finances."— Presentation transcript:

1 Major Expenditures Introduction The Essentials to Take Charge of Your Finances

2 © Family Economics & Financial Education – September 2009 – The Essentials to Take Charge of Your Finances – Major Expenditures Introduction Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 7.15.3.G1 Which do you believe most similar to your family? 12 3 4

3 © Family Economics & Financial Education – September 2009 – The Essentials to Take Charge of Your Finances – Major Expenditures Introduction Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 7.15.3.G1 How do people decide how to spend their money? Purchase items to live Food, water, shelter Purchase items for specific needs Vehicle, school supplies Purchase items for fun Movie ticket, camping gear, electronics

4 © Family Economics & Financial Education – September 2009 – The Essentials to Take Charge of Your Finances – Major Expenditures Introduction Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 7.15.3.G1 Major Expenditures Major Expenditures – largest expenses in a spending plan Housing, Transportation, Food and Insurance Recommended percentages of net income provide guidance about how much should be spent in each area to prevent overspending Percentages should be adjusted to meet individual values, needs and wants

5 © Family Economics & Financial Education – September 2009 – The Essentials to Take Charge of Your Finances – Major Expenditures Introduction Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 7.15.3.G1 Other Expenses Major expenditure percentages are helpful when creating a spending plan, but other expenses need to be considered as well If major expenditure percentages are adjusted according to values, needs and wants, individuals are able to live within their means and have enough money for other expenses as well

6 Housing

7 © Family Economics & Financial Education – September 2009 – The Essentials to Take Charge of Your Finances – Major Expenditures Introduction Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 7.15.3.G1 Housing Largest major expenditure Approximately 30% of an individual’s net income If Leo earns $2000 each month, he should allocate approximately $600 in his spending plan for housing expenses ($2000 *.3 = $600)

8 © Family Economics & Financial Education – September 2009 – The Essentials to Take Charge of Your Finances – Major Expenditures Introduction Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 7.15.3.G1 Housing There are many types of houses available Decision depends on goals, values, needs and wants If Leo is single, spends very little time at home, and does not like to entertain guests, he probably does not need a huge house Individuals can rent or purchase homes Rent – make payment to the owner of the home Own – take out a home loan, or mortgage and make monthly payments to pay back the loan There are additional expenses for both options that should be explored

9 © Family Economics & Financial Education – September 2009 – The Essentials to Take Charge of Your Finances – Major Expenditures Introduction Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 7.15.3.G1 Housing Expenses Monthly payment Move-in costs Payments that are required before individuals move into a home Utilities Electricity, water, garbage Optional utilities - television, internet Insurance Can be purchased to protect the home and possessions inside Taxes Paid by the owner of the home Maintenance Includes upkeep such as painting or repairing broken appliances Paid by the owner of the home

10 Transportation

11 © Family Economics & Financial Education – September 2009 – The Essentials to Take Charge of Your Finances – Major Expenditures Introduction Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 7.15.3.G1 Transportation Owning a vehicle is the second largest major expenditure Approximately 20% of net income If Leo earns $2000 each month, he should allocate approximately $400 in his spending plan for transportation expenses ($2000 *.2 = $400)

12 © Family Economics & Financial Education – September 2009 – The Essentials to Take Charge of Your Finances – Major Expenditures Introduction Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 7.15.3.G1 Transportation Expenses Total cost of purchasing new or used Monthly payment – if a loan is taken out License and Registration Required by law to license and register vehicles Insurance Required by law to protect the vehicle and individuals involved in an accident Maintenance New tires, oil changes, engine repairs Fuel Optional Upgrades Leather interior, heated seats, DVD system

13 Food

14 © Family Economics & Financial Education – September 2009 – The Essentials to Take Charge of Your Finances – Major Expenditures Introduction Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 7.15.3.G1 Food Third largest major expenditure Approximately 15% of an individual's net income If Leo earns $2000 a month, he should allocate approximately $300 in his spending plan for groceries and/or food in restaurants. ($2000 *.15 = $300)

15 © Family Economics & Financial Education – September 2009 – The Essentials to Take Charge of Your Finances – Major Expenditures Introduction Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 7.15.3.G1 Food Options Eat meals at home 1.C ook meals from scratch Purchase the ingredients (pepperoni, mushrooms and cheese) to make a homemade pizza 2.Cook convenience foods Purchase a frozen pizza and cook it at home Convenience foods are typically more expensive than making meals from scratch Require less time and skill to prepare Other examples of convenience foods include frozen dinners, cookie mixes and hamburger helper

16 © Family Economics & Financial Education – September 2009 – The Essentials to Take Charge of Your Finances – Major Expenditures Introduction Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 7.15.3.G1 Food Options Eat meals at restaurants Different types of restaurants have a wide range of prices 1.Fast food 2.Restaurant – generally more expensive

17 © Family Economics & Financial Education – September 2009 – The Essentials to Take Charge of Your Finances – Major Expenditures Introduction Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 7.15.3.G1 Food Comparison Making meals at home Less expensive Can make meals exactly how you like them Preparation time Requires cooking skills Must purchase cooking utensils Eating out at restaurants More expensive Choose from a limited amount of options on the menu Driving and waiting time Do not need to prepare meals or clean up afterwards Create a list of pros and cons to preparing meals at home and eating out

18 Insurance

19 © Family Economics & Financial Education – September 2009 – The Essentials to Take Charge of Your Finances – Major Expenditures Introduction Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 7.15.3.G1 Insurance Life is full of risks and accidents Risk – uncertainty about a situation’s outcome Insurance is purchased to protect individuals from loss when accidents happen Approximately 7% of an individual's net income If Leo earns $2000 a month, he should allocate approximately $140 in his spending plan for insurance ($2000 *.07 = $140)

20 © Family Economics & Financial Education – September 2009 – The Essentials to Take Charge of Your Finances – Major Expenditures Introduction Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 7.15.3.G1 Insurance Main types of insurance Health Pays for a portion of health care bills Doctor visits, medicine, X-ray Auto Required by law If an individual is in an auto accident, their insurance may pay for a portion of the bill to repair the damages Home If a fire ruins part of a home and the contents inside, home insurance will cover a portion of the expenses to replace the damages or lost items

21 © Family Economics & Financial Education – September 2009 – The Essentials to Take Charge of Your Finances – Major Expenditures Introduction Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 7.15.3.G1 Questions?

22 © Family Economics & Financial Education – September 2009 – The Essentials to Take Charge of Your Finances – Major Expenditures Introduction Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 7.15.3.G1 Fernandez Family Step 1: Read the Fernandez family scenario and underline all phrases that indicate the family’s values, needs, and wants. Step 2: Calculate the number of beans that should be spent on each major expenditure and other expenses. Step 3: Make major expenditure and spending plan decisions by allocating your beans. Step 4: Describe why you think the choices you made for each spending plan category meet the values, needs, and wants of the family. Step 5: Answer the questions on the Fernandez family worksheet 7.15.2.A1.


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