Financial Literacy 11 th grade- Budget and Savings

Objectives for today Demonstrate a method to analyze your income and expenses ◦ How much do you really cost! Understand the basics of a budget Evaluate choices you can make now for a successful future.

What is Financial Literacy? Understanding how to manage money effectively Acquiring knowledge and skills to make informed decisions regarding money matters Helping individuals fulfill personal, family, social and governmental responsibilities

Why do I need to be financially Savvy? People who are financially literate are more likely to achieve their lifetime goals. Being financially savvy can: ◦ Help you buy something you need or want (car, computer, etc.) ◦ Save money for emergencies ◦ Afford college tuition ◦ Start a business ◦ Live comfortably in retirement ◦ Lead to financial independence

Financial Literacy: Budgeting A budget is an estimated list of your income and expenses over a given period of time. Developing a budget helps you control your money and limit your spending. Creating a budget plan is an important step every student can take to assess his or her financial wellness.

Financial Literacy: Budgeting Category Estimated Monthly Expenses EXPENSES: Savings Account$50.00 Cell Phone$50.00 Car Car Payment$ Car Insurance$ Gas$ Shopping Clothes$ Shoes$50.00 Fun Movies/Entertain$60.00 Music$20.00 Snacks/Dining Out$40.00 Friend's Birthdays$20.00 Vacation$50.00 Sports Registration Fee/Uniform/Equip$75.00 Gym membership$25.00 Health & Beauty Hair/ Nails$45.00 Education School Fees/Supplies$15.00 Tutoring$40.00 GRAND TOTAL$

Financial Literacy: Budgeting Use the steps below to help you create your first student budget plan. Step One: Assess Your Finances ◦ List all your sources of monthly income- job earnings, savings, parental support, gifts, internships

Financial Literacy: Budgeting Step two: Determine Your Expenses ◦ List all your monthly expenses. Consider meals, entertainment, personal care items, laundry, telephone, clothes, car expenses, gas, insurance, technology, college classes, school supplies. ◦ Include money for emergencies. (It is recommended to budget 10% of your income. Examples: lost phone, damaged ipad, book obligations, etc.)

Financial Literacy: Budgeting Step three: Total your income and expenses. ◦ If your expenses are greater than your income, you need to find ways to increase your income stream or reduce your spending. ◦ Think about the little things you can cut back on to save dollars here and there. ◦ Can you rent a movie from Redbox instead of going to the movie theater? ◦ Can you skip the Starbuck’s and make a coffee at home. ◦ Can you reuse an outfit from a formal event?

Financial Literacy: Budgeting ◦ Consider eliminating some of the nice-to-have entries that aren't really necessities. ◦ While having a car is convenient, do you really need one to survive at school? ◦ How about riding your bike or walking to school instead of paying for a gym membership? ◦ Only you can separate your necessities from your nice-to-haves.

Financial Literacy: Budgeting Step four: Set your financial goals Start by making a list of your short-, medium- and long-term goals and set monetary figures that will help you achieve them: ◦ Short-term goals change often and may include saving money to try a new restaurant, seeing a new band or taking a weekend ski trip. ◦ Medium-term goals may include saving money for a summer trip with your friends, studying abroad next year, financing for a new car, or paying for AP exams. ◦ Long-term goals may be paying off your student loans and investing in the stock market or saving for a down payment for a home, or starting your own business.

Financial Literacy: Budgeting Step five: Track your budget over time ◦ Compare your actual income and expenses with your budget to make sure you’re on target to meet your goals. ◦ You’ll need to monitor your budget periodically in order to make changes when necessary. ◦ Be prepared for the unexpected (e.g., car repairs, broken cell phone)

Financial Literacy: Budgeting Start Saving Early ◦ Savings Account ◦ Roth IRA’s ◦ Mutual Funds ◦ Stocks/ Bonds Pay yourself first Let your money work for you Pay your expenses Read biographies of financially successful people

Financial Literacy: Budgeting Compound Interest-Save and Watch it Grow Thanks to compound interest, small regular savings can add up over time. With compound interest, its not just your money that earns interest – your interest earns interest as well – creating a snowball effect.

Cost of Waiting

Financial Literacy: Budgeting Budgeting your money is an important part of financial literacy. The bottom line is that you are in control of your financial health. A student budget will keep you on track and help you realize your goals.

What can I do now to become financially literate? 1. Get a good education. 2. Work smart. 3. Learn money-management skills. 4. Spend less than you could spend. 5. Save early and often. 6. Gather information before making decisions 7. Have a budget plan Financial Fitness For Life Council For Economic Education

What can I do now to become financially literate? For more information go to: #gaininterest This website is designed by high school students for high school students and includes a lot of great resources for you to learn from and use while budgeting. This information brought to you by the Severna Park High School Business Advisory Board