Budgets and Financial Records Chapter 8 Budgets and Financial Records

Financial Planning Disposable income – . Financial plan – All $$ you receive is _____, ______, or __________.

Reasons for Financial Planning Determine and evaluate options for using $ Make sure you use your limited funds for the things you most want. Prevent careless and wasteful spending. Organize your financial resources. Avoid money worries.

Preparing a Budget Budget – Money coming in (earnings plus borrowing) must equal money going out (spending plus savings). A budget should ___________ Total income =

Steps to Prepare a Budget -

Typical Monthly Budget Example budget on page 210 Estimate income including wages, interest, and investment earnings Fixed expenses – Ex:

Typical Monthly Budget Variable expenses – Ex:

Personal Records -

Record of Income and Expenses -

Statement of Net Worth Assets – Liabilities = Net Worth Assets – If Assets > Liabilities = If Assets < Liabilities =

Personal Property Inventory List of all valuable items you own Include purchase price, and approx. value Ex: Clothing, furniture, appliances, electronics Useful in the event of fire, theft, property damage. Also can take pictures or video.

Tax Records Keep all tax returns, W-2 forms, and other receipts used for tax purposes. Keep returns for at least __________. Could be used in the event of an ____ _______. Can be audited up to 3 years after filing return.

Legal Documents and Filing Systems Contract – Ex: credit plans, mortgages, rental agreements.

Types of Agreements Express Agreements – Implied Agreements -

Required Elements of an Enforceable Contract -

Elements AGREEMENT Mutual Assent – 2 conditions – Valid offer (intention) and acceptance of exact offer Counteroffer -

Elements cont. CONSIDERATION – Object of value, money, a promise, a performed service. Each party must receive something of value and/or give something up.

Elements cont. CONTRACTUAL CAPCITY Competent parties – Cannot have a mental deficiency or illness May not be a minor (limited contractual capacity)

Elements cont. LEGALITY – LEGAL FORM –

Elements continued GENUINE ASSENT – cannot contain any of the following: Fraud - Mistake Duress - Undue Influence -

4 Elements of Fraud 1) 2) 3) 4)

Classification of Contracts Valid - Void - Voidable -

Consumer Responsibilities Understand all clauses and terms Keep a copy of agreement Be sure agreement is dated correctly Be sure all blank spaces are filled in Be sure all terms are written clearly Be sure all numbers are correct Be sure proper disclosure is made by the seller Be sure all adjustments are made in accordance with terms of the contract

Negotiable Instruments Ex: Cosigner -

Negotiable Instruments Legally collectable if: 1) 2) 3) 4) 5)

Warranties Warranty – All products contain implied warranties– Specific warranties often guarantee that a product will perform for a certain period of time.

Personal Record Keeping Paper Filing System – filing cabinet w/ labeled folders Electronic Record Keeping Spreadsheet - Ex: Database -