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Budgeting September 13, 2010 Bus 12 – Money Matters R. Okumoto.

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Presentation on theme: "Budgeting September 13, 2010 Bus 12 – Money Matters R. Okumoto."— Presentation transcript:

1 Budgeting September 13, 2010 Bus 12 – Money Matters R. Okumoto

2 Topics Today Bus 12 – Money Matters R. Okumoto  What is Budgeting ?  What is Financial Planning ?  How do you Measure your Financial Health ?  How do you keep track of Paperwork ?  What are the Basic Money Math Formulas ?

3  Budgeting = Short term forecast of income & spending (monthly or weekly)  Financial Planning = Long term forecast of income & spending (Multiple Years) (Typically includes savings & investment planning) (Typically includes major life event planning: marriage, kids, homes, retirement) What is Budgeting ? Bus 12 – Money Matters R. Okumoto

4  Budgeting = Short term forecast of income & spending (monthly or weekly)  Financial Planning = Long term forecast of income & spending (Multiple Years) (Typically includes savings & investment planning) (Typically includes major life event planning: marriage, kids, homes, retirement) What is Financial Planning ? Bus 12 – Money Matters R. Okumoto

5 Who Budgets? - Government Bus 12 – Money Matters R. Okumoto

6 Who Budgets? - Business Bus 12 – Money Matters R. Okumoto

7 Who Budgets? - Schools Bus 12 – Money Matters R. Okumoto

8 Who Budgets? - Movies Bus 12 – Money Matters R. Okumoto

9 Who Budgets? - YOU Bus 12 – Money Matters R. Okumoto

10  Budgeting enables you to manage your money  Budgeting structures your spending  Budgeting provides a structure to analyze your spending  Budgeting is a tool to help you achieve your financial goals  It also serves as a back up in case something happens to you So…Why Budget ? Bus 12 – Money Matters R. Okumoto

11  Budgeting enables you to manage your money  Budgeting structures your spending  Budgeting provides a structure to analyze your spending  Budgeting is a tool to help you achieve your financial goals  It also serves as a back up in case something happens to you So…Why Budget ? Bus 12 – Money Matters R. Okumoto

12  Budgeting enables you to manage your money  Budgeting structures your spending  Budgeting provides a structure to analyze your spending  Budgeting is a tool to help you achieve your financial goals  It also serves as a back up in case something happens to you So…Why Budget ? Bus 12 – Money Matters R. Okumoto

13  Budgeting enables you to manage your money  Budgeting structures your spending  Budgeting provides a structure to analyze your spending  Budgeting is a tool to help you achieve your financial goals  It also serves as a back up in case something happens to you So…Why Budget ? Bus 12 – Money Matters R. Okumoto

14  Budgeting enables you to manage your money  Budgeting structures your spending  Budgeting provides a structure to analyze your spending  Budgeting is a tool to help you achieve your financial goals  It also serves as a back up in case something happens to you So…Why Budget ? Bus 12 – Money Matters R. Okumoto

15  To ensure that:  You will incur minimal Financial Crises  You will likely survive any Financial Crises Why do all this? Bus 12 – Money Matters R. Okumoto

16  Start with a Goal  Build the Plan  Track Spending – start with Major items  Categorize Spending  Pay yourself First  Be Flexible  Use free tools and assistance  Review and improve: trial & error How to Budget (The Process) Bus 12 – Money Matters R. Okumoto 2

17  Start with a Goal  Build the Plan  Track Spending – start with Major items  Categorize Spending  Pay yourself First  Be Flexible  Use free tools and assistance  Review and improve: trial & error How to Budget (The Process) Bus 12 – Money Matters R. Okumoto

18  Start with a Goal  Build the Plan  Track Spending – start with Major items  Categorize Spending  Pay yourself First  Be Flexible  Use free tools and assistance  Review and improve: trial & error How to Budget (The Process) Bus 12 – Money Matters R. Okumoto

19  Start with a Goal  Build the Plan  Track Spending – start with Major items  Categorize Spending  Pay yourself First  Be Flexible  Use free tools and assistance  Review and improve: trial & error How to Budget (The Process) Bus 12 – Money Matters R. Okumoto

20  Start with a Goal  Build the Plan  Track Spending – start with Major items  Categorize Spending  Pay yourself First  Be Flexible  Use free tools and assistance  Review and improve: trial & error How to Budget (The Process) Bus 12 – Money Matters R. Okumoto

21  Start with a Goal  Build the Plan  Track Spending – start with Major items  Categorize Spending  Pay yourself First  Be Flexible  Use free tools and assistance  Review and improve: trial & error How to Budget (The Process) Bus 12 – Money Matters R. Okumoto

22  Start with a Goal  Build the Plan  Track Spending – start with Major items  Categorize Spending  Pay yourself First  Be Flexible  Use free tools and assistance  Review and improve: trial & error How to Budget (The Process) Bus 12 – Money Matters R. Okumoto

23  Start with a Goal  Build the Plan  Track Spending – start with Major items  Categorize Spending  Pay yourself First  Be Flexible  Use free tools and assistance  Review and improve: trial & error How to Budget (The Process) Bus 12 – Money Matters R. Okumoto 3

24  Use free tools and assistance Quicken OnlineQuicken Online - Recently became free of charge. Tracks your spending and categorizes it automatically. SimpleDSimpleD - An “open source Windows application designed for personal or household financial management.” The screenshots actually look pretty slick. AceMoney LiteAceMoney Lite - Freeware version of an offline personal finance management program. It even downloads stock quotes from the internet. PearBudgetPearBudget - An Excel spreadsheet that has definitely had a lot of time put into it. It’s a bit busy. How to Budget (The Process) Bus 12 – Money Matters R. Okumoto

25  Use free tools and assistance BuddiBuddi - An open-source personal finance and budgeting program, which will run on any machine with Java installed. Mo.neytrack.inMo.neytrack.in - A “free online webapp that allows you to track all your expenses and income.” GrisbiGrisbi - Another offline open-source personal finance app. Budget MasterBudget Master - A free personal budgeting program that offers charts and visual reports Microsoft Office Accounting Express 2007Microsoft Office Accounting Express Seems targeted at business, so this may be overkill for home budgets. But it’s free! How to Budget (The Process) Bus 12 – Money Matters R. Okumoto

26 How to Budget (Example) INCOME / EXPENSE ITEMSJANFEBMAR Income – Wages (net of taxes) Income – Investments $ 1,200 1,400 $ 1,200 1,200 $ 1, Net Income $ 2,600 $ 2,400 $ 1,900 Expenses: Fixed – Rent Expenses: Fixed – Car Payment Expenses: Fixed – SJSU Tuition $ $ ,200 $ Expenses: Variable – Food Expenses: Variable – Cell Phone Expenses: Variable – Utilities Expenses: Variable – Credit Card Expenses: Variable – Gas Expenses: Variable - Entertainment Expenses: Variable – Pay yourself Total Expenses $ 1,800 $ 3, 000 $ 1,800 Surplus / (Deficit) $ 800 ($ 600) $ 100 Bus 12 – Money Matters R. Okumoto

27 How to Budget (Example) INCOME / EXPENSE ITEMSJANFEBMAR Income – Wages (net of taxes) Income – Investments $ 1,200 1,400 $ 1,200 1,200 $ 1, Net Income $ 2,600 $ 2,400 $ 1,900 Expenses: Fixed – Rent Expenses: Fixed – Car Payment Expenses: Fixed – SJSU Tuition $ $ ,200 $ Expenses: Variable – Food Expenses: Variable – Cell Phone Expenses: Variable – Utilities Expenses: Variable – Credit Card Expenses: Variable – Gas Expenses: Variable - Entertainment Expenses: Variable – Pay yourself Total Expenses $ 1,800 $ 3, 000 $ 1,800 Surplus / (Deficit) $ 800 ($ 600) $ 100 Bus 12 – Money Matters R. Okumoto

28 How to Budget (Example) INCOME / EXPENSE ITEMSJANFEBMAR Income – Wages (net of taxes) Income – Investments $ 1,200 1,400 $ 1,200 1,200 $ 1, Net Income $ 2,600 $ 2,400 $ 1,900 Expenses: Fixed – Rent Expenses: Fixed – Car Payment Expenses: Fixed – SJSU Tuition $ $ ,200 $ Expenses: Variable – Food Expenses: Variable – Cell Phone Expenses: Variable – Utilities Expenses: Variable – Credit Card Expenses: Variable – Gas Expenses: Variable - Entertainment Expenses: Variable – Pay yourself Total Expenses $ 1,800 $ 3, 000 $ 1,800 Surplus / (Deficit) $ 800 ($ 600) $ 100 Bus 12 – Money Matters R. Okumoto

29 How to Budget (Example) INCOME / EXPENSE ITEMSJANFEBMAR Income – Student Aid Income – Part time Job (net pay) $ 1,200 1,400 $ 1,200 1,200 $ 1, Net Income $ 2,600 $ 2,400 $ 1,900 Expenses: Fixed – Rent Expenses: Fixed – Car Payment Expenses: Fixed – SJSU Tuition $ $ ,200 $ Expenses: Variable – Food Expenses: Variable – Cell Phone Expenses: Variable – Utilities Expenses: Variable – Credit Card Expenses: Variable – Gas Expenses: Variable - Entertainment Expenses: Variable – Pay yourself Total Expenses $ 1,800 $ 3, 000 $ 1,800 Surplus / (Deficit) $ 800 ($ 600) $ 100 Bus 12 – Money Matters R. Okumoto

30  What is Savings or Cash Surplus? (BMM – When Income is greater than Expenses) Savings Bus 12 – Money Matters R. Okumoto

31  Start with a Goal  Build the Plan  Track Spending – start with Major items  Categorize Spending  Pay yourself First  Be Flexible  Use free tools and assistance  Review and improve: trial & error How to Budget (Process Review) Bus 12 – Money Matters R. Okumoto

32  The Equation of Personal Net Worth: (BMM) (Assets – Debt = Personal Net Worth) How to Measure your Financial Health (Personal Wealth) Bus 12 – Money Matters R. Okumoto 4

33 How to Measure your Wealth AssetsValue Checking Account Savings Account Bonds Car ( 2009 – Ferrari Modena – RED ) House ( 3,000 SF custom home in the Los Altos Hills) $ 1, ,000 4,000,000 Total Assets $ 4,176,800 Debts Credit Cards Car Loan Mortgage $ 96, ,000 3,900,000 Total Debt $ 4,166,000 Net Worth $ 10,800 Net Worth Mr. “All for Show” Bus 12 – Money Matters R. Okumoto

34 How to Measure your Wealth AssetsValue Checking Account Money Market Account Stocks & Bonds Car ( 2006 Toyota Prius - RED ) House ( 1,700 SF City Condo – with a view) $ 1,000 30, ,000 28, ,000 Total Assets $ 1,109,000 Debts Credit Cards Car Loan Mortgage $ ,000 Total Debt $ 63,000 Net Worth $ 1,046,000 Net Worth Ms. “Millionaire” Bus 12 – Money Matters R. Okumoto

35 Topics Today Bus 12 – Money Matters R. Okumoto  What is Budgeting ?  What is Financial Planning ?  How do you Measure your Financial Health ?  How do you keep track of Paperwork ?  What are the Basic Money Math Formulas ?


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