1. Budgets

2.  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.

3.  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

4. Steps in Preparing a Budget  Estimate your income.  Estimate your expenses.  Decide how much to save.  Balance your budget.

5.  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)

6. 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.

7. Budget Formula Income -Fixed Expenses -Variable Expenses -Savings =Budget Difference (Should = Zero to balance)

8. 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.

9. 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

10. 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.