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

Lesson 8.1 Budgeting and Record Keeping Describe and prepare personal budgets. Explain the purpose of record keeping. Prepare a personal net worth statement and a personal property inventory. © South-Western Educational Publishing

Importance of Financial Planning Disposable income Money left after taxes Financial plan Set of goals for spending, saving, and investing © South-Western Educational Publishing

Preparing a Budget Estimate your income. Decide how much to save. Estimate your expenses. Balance your budget Income = Saving + Spending © 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 Variable expenses Period expenses Costs you must pay on a regular basis Rent, mortgage, car loan Not easy to change Variable expenses Costs that vary in amount depending on your choices Cable, groceries, clothing, gas Period expenses Amounts that occur periodically Insurance, magazines © South-Western Educational Publishing

Personal Records Records of income and expenses Net worth statement Income taxes Net worth statement Solvent/insolvent Getting a loan Personal property inventory Insurance Tax records Keep for 3 years © South-Western Educational Publishing

Net Worth Statement 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 Discuss the elements of legal contracts and your responsibilities regarding contracts. Describe negotiable instruments and warranties. Discuss ways to set up a filing system for personal records. © South-Western Educational Publishing

Types of Contracts Contract Express contracts Implied contracts Legally enforceable agreement between two or more parties Express contracts Stated agreement in words Oral Written Implied contracts Part of our daily life Alterations, riding a bike, driving a car, children © South-Western Educational Publishing

Elements of an Enforceable Contract Legality Must be for something legal Genuine assent Both parties agree Legal form Must be in writing More than a year Property Over a certain amount Agreement Offer and acceptance Consideration Something of value Contractual capacity Legal ability competent parties © 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 Guarantee is a warranty Limited warranty Guarantees a products performance For all products Tennis ball must bounce Limited warranty Time constraint © South-Western Educational Publishing

Filing Systems for Personal Records Paper filing system Envelopes of folders Electronic record keeping Spreadsheet Excel Used for calulations Database Access Used for data retrieval © South-Western Educational Publishing

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