Money Management Why budget?

Introduction Radio Call-In Show

Budgeting What is it? –plan for spending/savings; tool to help you take control of your money What does it take? –choosing a time period –estimating expenses and income –balancing expenses and income What does a budget do for you? –puts you in control of your finances –helps you create a visual spending picture –helps you prevent impulse spending –sets priorities –helps you achieve financial goals Don’t have one?  …Are less likely to know what they have.  …Have no plan, often coming up short before their next paycheck or allowance.  …Are almost certain to have no plan to save for more expensive spending goals.

Budgeting--What does it involve? Disposable Income –Money left to spend after taxes and other deductions are withdrawn from your gross pay (net pay) Expenses What you spend money on—your needs and wants –Fixed Expenses Expenses that remain constant- don’t change Examples? –Variable Expenses Expenses that we have limited or all control over Examples? –Periodic/Occasional Expenses Expenses not paid every month—either fixed or variable Luxury Expenses--Expenses that we choose to incur Examples? –Insurance, car repairs, prom dress, medicine What are common expenses you will incur once out of high school or living on your own? –List on the board –Fixed, Variable, or Periodic? –Calculate yearly income

Average Household Spending

Setting Up a Budget Estimate your income Estimate your expenses –Fixed and variable Does it makes sense to create and live within a budget when you don’t have a lot of money? What if you find that you are consistently spending more in one area than you had planned to? What if you find that you can’t live within your budget?

Two Guidelines for Budgeting for Savings Pay Your$elf First –Pay Yourself First –Setting aside money for “big ticket items” –Avoids borrowing, which costs you a lot! –Develops a saving habit Rule –70% of disposable income to daily expenses –20% of disposable income to regular savings –10% of disposable income to investing

Tips to Maintain Your Budget P.Y.F and Keep your personal and financial goals in mind Balance your budget –Compare income to expenses every month; adjust Become a good consumer –Learn how to get the most for your money –Comparison shop –Buying on sale—Are you really saving? Exercise will-power and self-control –Try to not indulge in unnecessary spending Keep good records

Review What is a budget? What do you need to know to prepare a budget? –Financial goals –Disposable income; fixed, variable, luxury expenses What are the two guidelines for budgeting? –P.Y.F. and What are some tips for budgeting? –Know goals, be a good consumer, discipline, keep good records, P.Y.F, Assign: “Jerome’s Budget” teacher handout & Parent Interview