Presentation on theme: "Budgets. A budget is a spending and saving plan based on your expected income and expenses. A budget helps you plan your spending and saving so that."— Presentation transcript:
A budget is a spending and saving plan based on your expected income and expenses. A budget helps you plan your spending and saving so that you won’t have to borrow money or use credit to meet your daily needs.
When your Budget’s Income EQUALS the total Outgo Does not mean you spend ALL of your money Savings is considered part of your OUTGO
Steps in Preparing a Budget Estimate your income. Estimate your expenses. Decide how much to save. Balance your budget.
Four Main Parts to a Budget: 1. Income Includes Money from ALL sources of income 2. Fixed Expenses Expenses whose amounts remain relatively constant 3. Variable Expenses Expenses whose amounts change; Depend on how much you use them 4. Budget Difference How much money you have left over (Surplus) OR How much money you have overspent (Deficit)
Monthly Budget Expenses Fixed expenses are costs that generally do not change from month to month. Variable expenses are costs that vary in amount and type, depending on the choices you make.
Budget Formula Income -Fixed Expenses -Variable Expenses -Savings =Budget Difference (Should = Zero to balance)
Evan Anderson—Budget for September IncomeFixed Expenses Part-time job$320 Cell Phone$25 Allowance20Variable Expenses Birthday gift40Daily lunches$ 80 Total Income$380Supplies$20 Clothes$40 Entertainment$115 Total Expenses$280 Savings Expenses Savings Account$100 Budget Difference$0 Simple Budget The budget balances.
Chapter 8 A net worth statement shows a person’s net worth based on his or her assets and liabilities. Assets are items of value that a person owns. Money or debts you owe to others are called liabilities. When you subtract your liabilities from your assets, the difference is known as net worth. Assets – Liabilities = Net worth
Chapter 8 Anisa Newkirk January 1, 20— AssetsLiabilities Checking account$500Loan on car$1,800 Savings account800Loan from parents100 Car value3,000Total liabilities$1,900 Personal property5,000Net Worth Total assets$9,300Assets minus liabilities$7,400 Total liabilities and net worth$9,300 These two numbers must be the same.