Creating a budget

Note for teacher: Use “Pick a Student” button in CPS Warm-Up Questions CPS Questions 1 – 2 Note for teacher: Use “Pick a Student” button in CPS Chapter 1, Lesson 1

Chapter Overview Lesson 1: Creating a Budget Lesson 2: Savings and Bank Accounts Lesson 3: Real-Life Issues in Buying and Selling Chapter 1, Lesson 1

Lesson Overview The Components of a Personal Financial Plan The Steps to Creating and Developing a Personal Financial Plan The Elements of a Budget Chapter 1, Lesson 1

Note for teacher: Use “Pick a Student” button in CPS Quick Write Why do you think it is important for you to have a financial plan? Do you think a plan is just as important for someone who is wealthy as it is for someone who’s just getting by? Why or why not? Note for teacher: Use “Pick a Student” button in CPS Chapter 1, Lesson 1 Photo courtesy of Shutterstock

Components of a Financial Plan Finance - the management of money Personal Finance - how you manage your money Chapter 1, Lesson 1 Photo courtesy of Shutterstock

Advantages of a Personal Financial Plan Make good financial decisions Evaluate the opinions of financial advisers Chapter 1, Lesson 1 Photo courtesy of Shutterstock

Creating a Personal Financial Plan Managing your budget Managing your liquidity Financing Large Purchases Protecting Your Assets Investing for the Future Investing in Your Retirement Chapter 1, Lesson 1 Photo courtesy of Shutterstock

GOAL: Income > Expenses Managing Your Budget Budget Detailed summary of expected expenses and income Income Money coming in on a regular basis Expenses Money going out for needs and wants GOAL: Income > Expenses Chapter 1, Lesson 1 Photo courtesy of Shutterstock

Managing Your Liquidity Access to funds to cover a short-term cash need Money needed to cover unexpected expenses Chapter 1, Lesson 1 Photo courtesy of Shutterstock

Financing Your Large Purchases Obtaining or providing money for a specific purpose Generally comes in the form of loans Interest Charge on borrowed money Compound Interest Interest on accumulated unpaid interest Chapter 1, Lesson 1

Protecting Your Assets Something of value that you own Tangible assets are physical items Assets may be protected with insurance Insurance An agreement between two parties Premium or monthly fee Chapter 1, Lesson 1

Investing for the Future Investment Something you own that you expect to increase in value over time Examples of investments: Stocks Bonds Mutual Funds Chapter 1, Lesson 1 Photo courtesy of Shutterstock

Investing in Your Retirement Period of life during which you no longer work full time People typically retire once they qualify for Social Security Military members may retire after 20 years of service Start planning for retirement now Chapter 1, Lesson 1 Photo courtesy of Shutterstock

Learning Check Questions CPS Questions 3 – 4 Note for teacher: Use “Pick a Student” button in CPS Chapter 1, Lesson 1

Activity 1: Financial Planning Process On the worksheet provided, list the six steps in the financial planning process. For each step, list an activity/task that you should accomplish. Be prepared to share your answers with the class. Chapter 1, Lesson 1

Steps for Developing a Personal Financial Plan Establish your financial goals: How important is money to you? What do you need money for? Be realistic Timing is important: Short-term Intermediate-term Long-term Chapter 1, Lesson 1 Photo courtesy of Shutterstock

Learning Check Questions CPS Questions 5 – 6 Note for teacher: Use “Pick a Student” button in CPS Chapter 1, Lesson 1

Activity 2: Financial Goals On the worksheet provided, identify 3-5 financial goals for each timeframe: Short-term goals Intermediate goals Long-term goals Be prepared to share your answers with the class. Chapter 1, Lesson 1

Steps for Developing a Personal Financial Plan (cont) Your Current Financial Position Present financial position impacts future decisions Identify and Evaluate Alternative ways to Achieve Goals Savings Account Investments/Stocks Chapter 1, Lesson 1 Photo courtesy of Shutterstock

Steps to Creating a Personal Financial Plan (cont) Select the best plan Should be a plan you can stick with Evaluate your plan Review it regularly to see how you’re doing Revise your plan Note where it’s worked and not worked Chapter 1, Lesson 1 Photo courtesy of Shutterstock

Learning Check Questions CPS Questions 7 – 8 Note for teacher: Use “Pick a Student” button in CPS Chapter 1, Lesson 1

Activity 3: Smart Money Research Use the internet to research smart money management techniques. Focus on tips that help meet your financial goals. Identify your top 5 tips for smart money management. Be prepared to share your tips with the class. Chapter 1, Lesson 1

The Elements of a Budget Income – money you receive regularly Salary / Wages Savings Investments Expense – money you spend Clothing Entertainment Food Car Graphic courtesy of Shutterstock Chapter 1, Lesson 1

Learning Check Questions CPS Questions 9 – 10 Note for teacher: Use “Pick a Student” button in CPS Chapter 1, Lesson 1

Activity 4: Personal Budget Planning Using the worksheet provided, create a three-month budget listing your expenses and income. Is your budget balanced? Is your budget realistic? If not, revise it. Be prepared to share your tips with the class. Chapter 1, Lesson 1

Summary The Components of a Personal Financial Plan The Steps to Creating and Developing a Personal Financial Plan The Elements of a Budget Chapter 1, Lesson 1

Note for teacher: Use “Pick a Student” button in CPS Review Questions CPS Questions 11 – 12 Note for teacher: Use “Pick a Student” button in CPS Chapter 1, Lesson 1

Next… Savings and banking accounts Chapter 1, Lesson 1 Graphic courtesy of Shutterstock Chapter 1, Lesson 1