S ETTING F INANCIAL G OALS, B UDGETING, AND L EGAL F ORMS Chapter 8 Page 181

I C AN … Write effective short-term, intermediate, and long-term financial goals Analyze and understand the budgeting process and prepare a personal budget Understand the purpose of personal record keeping, and creating a net worth statement Explain the elements of legal contracts

S ETTING FINANCIAL GOALS Realistic If you work part-time you are probably not going to save enough for a new car every couple years Stated and Specifics How much will you save? What will the saving be used for? Have a timeframe By when do you hope to have enough saved? State the action to be taken How will you save enough money within timeframe?

E XPENSES Fixed Expenses Expenses that are paid monthly and stay the same each month Rent, car, insurance, Internet service Fixed Variable Expense Expenses that are paid each month, but the amount varies gas, food Variable Expenses Expenses that may not be paid each month and can change from month to month Entertainment, clothing, toiletries

D EVELOP F INANCIAL P LAN Disposable income (take home pay) =Money after taxes, social security and other deductions All money you receive is Spent, Saved, or Invested…..so make a plan Financial Plan …organizes how you will spend, save or invest your money. Track use of money Get most from income Prevent careless spending Develop financial fitness…organize Avoid worries and problems

D EVELOP A B UDGET Budget – an organized plan which matches your expected income to your expected expenses. =related&safety_mode=true&persist_safety_mode=1 Determine income Determine expenses Compare the two Try to save at least 10% of net pay Income – Expenses = Surplus or Deficit Page 182 and Page 183

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A SSIGNMENTS Complete steps 1-4 on page 2 of the packet. Be realistic You will also need to complete the Estimated Income column of the budget on page 2

P ERSONAL R ECORDS Keep records because… Evaluate spending Provide documents for tax returns Analyze and plan Help determine goals Basis for budget

P ERSONAL R ECORDS Tax Returns Keep for 3 years Legal Documents Contracts, Loan applications, warranties, loan papers, receipts for major purchases

P ERSONAL P ROPERTY I NVENTORY Items purchased Amount paid Serial numbers Location purchased Warranty information Film or video tape Keep in safety deposit box Fire-proof safes are questionable

P ERSONAL R ECORDS Records of Income and Expenses W-2s – shows money earned and taxes withheld Bank statements Actually look at them Medical bills Look at them and keep Work expenses and Charitable contributions Can be tax deductible

N ET W ORTH S TATEMENTS Assets – things you own Liabilities – money you owe or debts Net worth/Equity – Your personal worth Can an item be an asset and a liability at the same time? Assets = $10,000 Liabilities = $6,500 Net Worth = $3,500

C ONTRACTS HTTP :// WWW. YOUTUBE. COM / WATCH ? V =HPY Z 2I Z I II 0& SAFETY _ MODE = TRUE & PERSIST _ SAFETY _ MODE =1& SAFE = ACTIVE HTTP :// WWW. YOUTUBE. COM / WATCH ? V =HPY Z 2I Z I II 0& SAFETY _ MODE = TRUE & PERSIST _ SAFETY _ MODE =1& SAFE = ACTIVE Legally enforceable agreement between two or more people to do or not to do something Dry-cleaning, credit card, buying a home, renting Six elements of a contract 1) Agreement (mutual assent) Offer and acceptance 2) Consideration – The price involved Can be in the form of an object of value, money, promise, or a performed act 3) Contractual Capacity – competence of both parties

S IX ELEMENTS OF A CONTRACT …. CONTINUED 4) Legality – Must be of a lawful nature 5) Genuineness of assent – no genuine assent Misrepresentation/fraud, a mistake, duress, undo influence 6) Legal Form – written up correctly date, names, terms, etc..

V ALID, V OID, V OIDABLE C ONTRACTS Valid – Contain all of the essential elements Void – Missing one or more of the essential elements Voidable – can be enforced or avoided by one of the parties to the contract.

I MPLIED AND VERBAL CONTRACTS Implied contract -- an agreement created by the actions of the parties involved, but it is not written or spoken Doctor, Dentist, Vendor, Contractor Verbal Contract --any contract which is expressed in spoken words. Are enforceable but not in your best interest He said she said

C ONSUMER R ESPONSIBILITIES IN A GREEMENTS Understand Keep copy Make sure its dated correctly Blank spaces filled in Written clearly Information correct Proper disclosure (interest, charges, price) All cancellations and adjustments in accordance with contract/agreement onsumer_credit/SamplePaydayLoanContract.pdf onsumer_credit/SamplePaydayLoanContract.pdf

A SSIGNMENTS – P AGE Vocabulary terms page Facts and ideas in review Page Don’t be upset by the results you didn’t get from the work you didn’t do.