Chapter 8 Budgets and Financial Records MYPF Chapter 08 11-Sept-2001 Chapter 8 Budgets and Financial Records 8.1: Budgeting and Record Keeping 8.2: Legal Documents and Filing Systems © South-Western Educational Publishing

Lesson 8.1 Budgeting and Record Keeping Lesson Goals: Describe the budgeting process and prepare personal budgets. Explain the purpose of record keeping and be able to prepare a personal net worth statement and a personal property inventory. © South-Western Educational Publishing

Importance of Financial Planning Disposable income The money you have left to spend or save after taxes have been paid. Financial plan An orderly program for spending, saving, and investing the money you earn. Steps in Financial Planning: 1. Determine and evaluate money related options 2. Make sure you use your limited funds for the things you want most 3. Prevent careless and wasteful spending 4. organize your financial resources 5. Avoid money worries by planning your saving, spending and borrowing to stay within your financial means. © South-Western Educational Publishing

Preparing a Budget Budget: a spending and savings plan based on your expected income and expenses. Steps in Budgeting: Estimate income Decide how much to save Estimate expenses Balance your budget – You can’t spend or save money you don’t have. © South-Western Educational Publishing

Simple Budget Income Work $320 Allowance 20 Lunch money 40 Expenses Lunches $ 80 Supplies 20 Snacks 40 Entertainment 120 Total income $380 Total expenses $280 Savings To credit union $100 Total expenses plus savings $380 © South-Western Educational Publishing

Monthly Budget Fixed expenses Costs you are obligated to pay at specific times, regardless of other events (rent, mortgage) Variable expenses Costs that vary in amount and type, depending on events and the choices you make. © South-Western Educational Publishing

Personal Records Records of income and expenses Statement of net worth Personal property inventory Tax records © South-Western Educational Publishing

Statement of Net Worth Assets – Liabilities Net worth © South-Western Educational Publishing

Personal Property Inventory Year Purchase Approximate Item Purchased Price Current Value © South-Western Educational Publishing

Lesson 8.2 Legal Documents and Filing Systems Explain the elements of legal contracts and negotiable instruments and describe your rights and responsibilities. Discuss ways to set up a filing system for personal records. © South-Western Educational Publishing

Essential Elements of an Enforceable Contract Agreement Consideration Contractual capacity Legality Genuine assent Legal form © South-Western Educational Publishing

Valid, Void, and Voidable Contracts Valid contracts Contain all essential elements of a contract Void contracts Missing one or more of the essential elements Voidable contracts Can legally be avoided by one party involved Example: Minor © South-Western Educational Publishing

Consumer Responsibilities in Agreements Understand agreement. Keep a copy of the agreement. Be sure the agreement is dated correctly. Be sure all blank spaces are filled in or marked out. Be sure all terms agreed upon are written clearly. Be sure all dates, amounts, and other numbers are correct and clearly written. Be sure proper disclosure is made by the seller. Be sure all cancellations and adjustments are made in accordance with the contract. © South-Western Educational Publishing

Negotiable Instruments Must be in writing and signed by the maker Must contain an unconditional promise to pay a definite amount of money Must be payable on demand or on a fixed or determinable future date Must be payable to the order of a particular person or to the holder of the note Must be delivered to the payee © South-Western Educational Publishing

Warranties Limited warranty Example: specified time Service contract Example: Car © South-Western Educational Publishing

Filing Systems for Personal Records Paper filing system Electronic record keeping Spreadsheet Database © South-Western Educational Publishing

Home Filing System Medical Warranties Insurance Utilities Household Travel Entertainment Taxes Automobile Subscriptions © South-Western Educational Publishing