Diving Into Spending Plans! How to budget your money properly

Today We’ll Talk About Spending Plan/Budget - What is it? Why use it? Income and Expense

Almost half of all American families spend more money than they make. Why do you think this happens? People do not make enough money People spend too much money One point to each group that answers, each group gets a chance… Write on paper

Values, Needs, & Wants What is a need? What is a want? Something that is a necessity Food, water, shelter... What is a want? Something that is not a necessity but is desired Coffee from Starbucks, skis One point for each group

Why do needs and wants matter? Trade-Offs and Opportunity Costs Use trade-offs and opportunity costs to help you make these decisions Opportunity cost – the value of the next best alternative that must be forgone as a result of a decision Trade-off - giving up one thing for another Is the trade-off to your decision a need or a want? What is the value (opportunity cost) of that trade-off to you?

Spending Plan/Budget - What is it? A spending plan/budget is A tool to help people manage their money

Spending Plan/Budget - Why use it? Why would you want to know where your money is going? Spending plans/budgets are used to help people Track where their money is going Identify income and expenses Meet financial goals

A Spending Plan/Budget Tracks….. Income Money earned Expense Money spent Variable: Changes each month Fixed: Remains the same each month

Spending Plan/Budget Contents Expenses: Fixed or variable? Housing Utilities Transportation Savings Food Insurance Clothing Income

Lee’s Spending Plan Example Income Expenses Item Amount Mowing a lawn $10.00 Movie ticket and popcorn $15.00 Birthday gift Snack and drink $5.00 Total $25.00 $20.00 Does Lee have enough income to pay his expenses? If he would like to buy a new shirt for $15, does he have enough money?

In Conclusion A spending plan is A spending plan is based on A tool to help people track their money A spending plan is based on Values, wants, and needs A spending plan tracks Income and expenses

The End!