Planning a Budget Chapter 28.

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Presentation transcript:

Planning a Budget Chapter 28

Did anybody see Borat this weekend?

Today’s Schedule Final Project Notes & Information Assignment of Homework Chapter 28 Quiz

Final Project Notes & Information Progress Feedback I need a copy of your first assignment Next assignment will be due on Friday Projected Income Statement (5 points) Use a sample income statement as a point of reference List projected expenses & projected revenue How will you make the goal set forth for you? Due 11/10/06

Homework Assignment Final Project Assignment Chapter 28 Definitions for Key Words

Chapter 28 Learning Objectives Explain how budgeting is helpful List the five steps in planning a budget Name different types of income and expenses Describe how a computer is used in budgeting

Why It’s Important Budgeting Techniques help you keep track of where your money goes so that you can make it go further Do the best with what you’ve got

Average Monthly Household Expenses Based on $3,125 per month

Lifestyle Costs Money is Limited for most Most want more than they can afford Money Management The process of planning how to get the most from your money Budget Plan for using your money in a way that best meets your wants & needs Includes: Expected income, planned expenses, planned savings over a period of time Sample Budget on Excel

5 Steps to Planning a Budget Set your goals Estimate your income Estimate your expenses Plan for savings Balance and adjust as needed (be adaptable)

Step 1: Set Goals What do you want to accomplish in the next month? Next year? Next Five years? What’s important to you? How will I get there financially

Step 2: Estimate Income Income – Actual amount you earn or receive in a time period Gross Pay Net Pay Other Income Taxes

Gross Pay Total amount of money you earned for a specific time

Net Pay Gross Pay minus deductions Deductions Amounts taken out of your pay before you receive your paycheck Include: Taxes, health insurance, retirement, union dues Could include: Child Support, money owed to creditors, etc.

Other Income Could include: Tips (do not include while budgeting) Other funds earned by those within a household Gifts, etc.

Taxes Withholding Federal, State, Local Subtracting taxes from a paycheck to be forwarded to the government Federal, State, Local Taxes not withheld must be budgeted Lottery Winners, self-employed persons

Step 3: Estimate Expenses Expenditures Anything you spend money on Must budget for known expenditures Must have money available for the unknown Fixed Expenses Variable Expenses

Fixed Expenses Expenses that occur regularly and that are regularly paid Rent, Insurance, Car Payments, etc. Can change over time Cannot reduce or avoid them

Variable Expenses Expenses that fluctuate Food, phone bills, entertainment, gifts, etc. Look at trends

Step 4: Plan for Savings Make it possible for future wants Can cover expenses for which you did not budget

Step 5: Balance & Adjust the Budget Usually the most difficult step Budget Variance The difference between how much you planned to spend and how much you actually spent Total expenses should always be less than total income If not, you must make changes

Quiz What are the five steps of planning a budget? (5 points) What are the two types of expenses? (2 points) ______ is the process of planning how to get the most from your money. (3 points) Extra Credit – At present, De La Salle offers _____ bus routes. (1 point)