Budgeting Creating a Plan for Your Spending

$50.00 What would you do if someone gave you $50? Would you spend it on something, would you save it? What would you do?

Vocabulary Budget: a plan for managing your money during a given period of time Expense: things you pay for each month with your income Fixed Expense: expenses that are the same each month (same amount, pay every month) Variable Expense: expenses that are not the same each month, they fluctuate

What Type of Expense Is It? DescriptionFixedVariablePeriodic Groceries Piano Lesson Fee Cable TV Bill Magazine Renewal Car Loan Payment ***Periodic Expense: expenses that you don’t pay for each month, pay on as needed basis***

P.Y.F. Pay Yourself First!

Do the Math! The Simpson family wants to buy a new refrigerator for the kitchen. Mr. Simpson has visited several stores and estimates that it will cost around $700 to buy and install the type of refrigerator the family wants. If their goal is to buy it in six months, how much do they need to save a month?

Do the Math! The Mencias want to buy their oldest daughter a computer to take to college next year. They’ve shopped around and think they can get a good desktop computer with all the software and a printer for about $1,100. With 15 months to save, how much do they need to set aside a month?

Steps to Create a Budget Decide time frame for tracking income/expenses – Jackson’s Monthly Budget Identify your total income Jackson’s Estimated Income: Paycheck (after taxes)$2,100 Interest Earned:$50 Total Income:$2,150

Steps to Create a Budget Identify all your expenses (fixed or variable) Jackson’s Fixed Expenses Savings (PYF)$500 Car Payment$325 Rent$750 Cable TV/Internet$75 Jackson’s Variable Expenses Utilities$150 Food$200 Gas$100 Jackson’s Periodic Expenses Car Insurance ($300/6mo)$50

Steps to Create a Budget Do the math (subtract total expenses from income) Jackson’sTotal Expenses$2,150 Total Income$2,150 -Total Expenses$2,150 $0 Evaluate your budget

Build a Budget Jessica is a Senior in high school. She earns $8 an hour working approximately 25 hours a week at the local grocery store. About 30% of her pay is deducted for taxes. Jessica also earns approximately $15 each month in interest on savings. What is Jessica’s monthly income?

Build a Budget Jessica’s Monthly Expenses Savings: 10% of her income Car payment: $235 Cell Phone: $35-$45 Gas: $40-$60 Auto Insurance: $50 Frequently buys games and music $25-$45 Typically buys her own clothes $30-$50 List Jessica’s monthly expenses, identify if each expense if fixed or variable, estimate cost of variable expenses

Build a Budget One of Jessica’s short term goals is to take a trip to visit her grandparents right after graduation (in June). She expects this to cost $1,000 and she has already saved $500. Add this expense under her savings category (which already has 10% of her income listed) It is October, Jessica has 8 months to save $500

Build a Budget Add the fixed expenses together – Total Fixed Expenses: Add the variable expenses together – Total Variable Expenses: Add the Fixed and Variable expenses together – Total Expenses: Subtract Expenses from Total Income – Are we within our limit?