Presentation on theme: "He runs out of money each month before all of his expenses are paid"— Presentation transcript:
1 He runs out of money each month before all of his expenses are paid Meet EvanPaid once per monthPuts enough money in his checking account to cover his expenses for the monthHe runs out of money each month before all of his expenses are paid
2 How does Evan think he is spending his money? ExpenseAmountRent and Utilities$500Health insurance$100Renter’s Insurance$10Car insurance$40GasGroceriesCell phone$70Personal care$30Entertainment$50Total$1000Evan created a list of all of his expensesFirst allocates money to his savings accountEstimates that his remaining expenses will be no more than $1000/month:But he runs out of money before the end of each month
3 Are you sure there isn’t anything else you spend your money on, Evan? Well… I do purchase a cup of drip coffee almost every morning but that is only $1.00! And I usually eat lunch at a restaurant about once per week… but I didn’t think that added up to much money.$1.00/day$30/ month$365/yearLunch at $8.00/week$32/month$416/yearEvan wasn’t accounting for $62.00 per month!
4 Help Evan Create an Income and Expense Statement Create an Income and Expense Statement for Evan for the month of MarchGross Income$FederalIncome Tax$200.00Social Security$99.20Medicare$23.20Net Income$Evan has summarized the information from his March paycheckThis is Evan’s only source of income
5 Used an app on his smartphone to track his expenses Evan’s ExpensesUsed an app on his smartphone to track his expenses3/1 – Automatic transfer to savings account $255.523/1 – $400 check for rent payment3/1 – Health insurance $1003/2 – Withdrew $20 in cash to purchase daily coffee3/3 – Lunch $6.503/3 - Hockey game admission - $103/5 – Purchased gas for $403/6 – Movie theater ticket $7.503/7 – Groceries $52
6 Evan’s Expenses 3/10 – Lunch $8 3/12 – Basketball game admission $15 3/15 – Cell phone payment $703/15 – Car insurance payment $403/15 – Renter’s insurance payment $103/16 – Haircut $153/17 – Purchased gas for $403/20 – Lunch $7.503/25 – Bowling with friends $153/27 – Groceries $383/27 – Concert ticket - $453/28 – Purchased gas for $403/31 – Electricity payment $503/31 – Water payment $50
7 Evan’s Income and Expense Statement Income and Expense Statement for:EvanTime Period:MarchAmountIncomeEarned IncomeWages or salary before deductionsTotal Income$1,600.00ExpensesDeductions Often Taken from PaychecksFederal Income Tax200.00Social Security (FICA)99.20Medicare23.20Saving and Investing (Pay Yourself First)Contribution to savings and investments255.52Insurance PremiumsHealth insurance, Medicaid and Medicare100.00Renters or homeowners insurance10.00Auto insurance40.00Housing CostsHousing payment (rent or mortgage)400.00Utilities (gas, electricity, water, garbage)Transportation CostsFuel (gasoline/diesel)120.00Food CostsFood at the grocery store90.00Meals at restaurants22.00Snacks away from home (coffees, treats)20.00Communication and ComputersCell phone70.00Clothing and Personal CarePersonal care (shampoo, haircuts, cosmetics)15.00EntertainmentMovies, books, and other entertainment92.50Total Expenses$1,657.42Net Gain or Net Loss (Income less Expenses)-$57.42Customize Evan’s statement by removing the categories andsub-categories that you believe he doesn’t needNet Loss-$57.42
8 DiscussionAccording to Evan’s Income and Expense Statement, he has a net loss. What could he do to change his net loss to a net gain? What changes did you make to give him a net gain?
9 Discussion Were Evan’s mental calculations accurate? What does this say regarding only thinking about your finances versus writing the information down?How has creating an Income and Expense Statement helped Evan manage his money?ExpenseAmountRent and Utilities$500Health insurance$100Renter’s Insurance$10Car insurance$40GasGroceriesCell phone$70Personal care$30Entertainment$50Total$1000