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ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 WHAT’S AHEAD 6.1Choose Financial Goals 6.2Track Income and Expenses 6.3Your Budget Worksheet 6.4Create Your.

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Presentation on theme: "ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 WHAT’S AHEAD 6.1Choose Financial Goals 6.2Track Income and Expenses 6.3Your Budget Worksheet 6.4Create Your."— Presentation transcript:

1 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 WHAT’S AHEAD 6.1Choose Financial Goals 6.2Track Income and Expenses 6.3Your Budget Worksheet 6.4Create Your Budget for the Year

2 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 LESSON 6.1 Choose Financial Goals GOALS ► Identify your financial goals. ► Explain how your goals might affect your family and community. © 2010 South-Western, Cengage Learning Slide 2

3 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 Types of Financial Goals ► Budget ► Short-term financial goals ► Long-term financial goals ► Balancing short-term spending with long-term success © 2010 South-Western, Cengage Learning Slide 3

4 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 Types of Financial Goals Budget – A plan for dividing income among spending and saving options. It can help you achieve more of what is important to you during your life span.

5 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 Types of Financial Goals Short-term financial goals – things you hope to achieve in less than one year. Long-term financial goals – things you want to achieve over more than one year.

6 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 Types of Financial Goals Life-span goals - the most important things you hope to achieve during your lifetime.

7 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 Your Goals Affect Others ► Your family and your goals ► Your current family ► Your future family ► Your community and your goals © 2010 South-Western, Cengage Learning Slide 7

8 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6  Why should your short-term goals fit in with your life-span goals?  Why do other members of a community benefit when individuals within that community achieve their life-span goals? © 2010 South-Western, Cengage Learning Slide 8

9 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6  Why should your short-term goals fit in with your life-span goals? If a person’s short-term goals do not contribute to his or her life-span goals, it is unlikely that these goals will ever be achieved. © 2010 South-Western, Cengage Learning Slide 9

10 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6  Why do other members of a community benefit when individuals within that community achieve their life-span goals? Other members of a community will benefit because individuals who achieve their life-span goals will be productive citizens in their chosen careers and spend income in that community, pay taxes, and not require public assistance. © 2010 South-Western, Cengage Learning Slide 10

11 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 LESSON 6.2 Track Income and Expenses GOALS ► Describe how to set up an effective filing system for your records. ► Explain the difference between fixed and flexible spending. © 2010 South-Western, Cengage Learning Slide 11

12 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 KEY TERMS  fixed expense  flexible expense  luxury good © 2010 South-Western, Cengage Learning Slide 12

13 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 KEY TERMS  fixed expense – Amounts you are committed to spend.  flexible expense – Amounts that you can choose to spend or not.  luxury good – goods that have special qualities that make them more expensive than alternative goods.

14 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 Keep Financial Records ► Track your income ► Track your spending ► Establish a filing system ► Effective record keeping ► How to use financial records © 2010 South-Western, Cengage Learning Slide 14

15 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6  Describe a filing system you could set up to keep records of your financial transactions.  How do fixed and flexible expenses affect your spending plan? © 2010 South-Western, Cengage Learning Slide 15

16 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6  Describe a filing system you could set up to keep records of your financial transactions. A filing system needs to be... comprehensive easy to use easy to maintain © 2010 South-Western, Cengage Learning Slide 16

17 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6  How do fixed and flexible expenses affect your spending plan? Fixed expenses must be paid and therefore must be included in a spending plan. Flexible expenses may be important, although not required, and should be included in a spending plan, but not to the extent that they prevent payment of fixed expenses. © 2010 South-Western, Cengage Learning Slide 17

18 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 LESSON 6.3 Your Budget Worksheet GOALS ► Identify steps you should take to create a budget worksheet. ► Explain common problems with budgeting. © 2010 South-Western, Cengage Learning Slide 18

19 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 KEY TERM  budget worksheet – a planning document on which you record your expected and actual income and spending over a short time, usually a month. © 2010 South-Western, Cengage Learning Slide 19

20 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 Create Your Budget Worksheet ► Step 1: Create a worksheet ► Step 2: Estimate your income ► Step 3: Estimate your expenses and savings ► Step 4: Record your actual income and expenses ► Step 5: Calculate the differences © 2010 South-Western, Cengage Learning Slide 20

21 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 Budget Pitfalls ► Few consumers have realistic budgets. ► Some people get too specific. ► Some people don’t predict the correct amount of their flexible expenses. ► Some people lump too many expenses under miscellaneous. ► Some people give up on budgets because they think budgets take too much time and effort. © 2010 South-Western, Cengage Learning Slide 21

22 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6  What steps should you take to create a budget worksheet for yourself?  What are some problems people may encounter when trying to budget? © 2010 South-Western, Cengage Learning Slide 22

23 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6  What steps should you take to create a budget worksheet for yourself? The best way to estimate future income and spending is to examine past income and spending. Maintaining an accurate and complete record of income and spending will enable an individual to construct an appropriate one-month budget worksheet. © 2010 South-Western, Cengage Learning Slide 23

24 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6  What are some problems people may encounter when trying to budget? People run into problems with budgets when they... Are too detailed Incorrectly predict the amount of flexible expenses Lump too many expenses under the miscellaneous category Fail to set aside time to maintain the budget © 2010 South-Western, Cengage Learning Slide 24

25 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 LESSON 6.4 Create Your Budget for the Year GOALS ► Evaluate and adjust your budget worksheet. ► Explain why consumers should create and update yearly budgets. © 2010 South-Western, Cengage Learning Slide 25

26 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 KEY TERM  audit © 2010 South-Western, Cengage Learning Slide 26

27 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 Evaluate Your Budget Worksheet ► Adjust your spending ► Make several plans © 2010 South-Western, Cengage Learning Slide 27

28 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 Budgeting for the Year ► Review and adjust your budget ► Relate your goals to your budget ► Adjust to changing goals ► Family budget ► Planning together ► Compromising ► The budget cycle © 2010 South-Western, Cengage Learning Slide 28

29 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 Sample Family Budget Slide 29 © 2010 South-Western, Cengage Learning Home 44.0% Clothes 13.7% Savings 5.0% Entertainment 5.2% Food 9.8% Utilities 9.5% Car 12.8%

30 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6  How should you adjust your budget worksheet to receive the greatest satisfaction from your income over time?  What steps should people take to create and update their yearly budgets? © 2010 South-Western, Cengage Learning Slide 30

31 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6  How should you adjust your budget worksheet to receive the greatest satisfaction from your income over time? If your spending exceeds estimates, you can either adjust your spending estimates or change your spending habits. You should choose whichever option best meets your life- span goals. Completing several budget worksheets will show various spending and saving options and allow you to select the one that works best for you. © 2010 South-Western, Cengage Learning Slide 31

32 ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6  What steps should people take to create and update their yearly budgets? By reviewing your budget at least once a year, you can compare your financial plan with what actually happened. You can also assess outcomes in light of any of your goals that may have changed. With these evaluations in mind, you can make appropriate adjustments for your next year’s budget. © 2010 South-Western, Cengage Learning Slide 32


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