Section 1: What is a Budget

 Distinguish a budget vs. a financial plan  Define: Scarcity, Budget (balanced, deficit, surplus), assets, net worth statement, and liabilities  Explain HOW to set a budget (the pie chart!)

 Your Net Worth (total value) is all of your assets ($ and stuff: house, car, boat, etc) MINUS all of your liabilities (what you owe) Sally has $45,000 in her retirement account, she has $9,000 in her savings. She owns a $180,000 home. She drives a car, which is valued at $3,000. She owes $171,000 on her mortgage (house loan). She owes $500 on her car. What is her net worth?

 We have a scarcity (limited supply) of money, so we have to know HOW to spread it out to get what we want for our standard of living  A budget is a day, week, month, year guide of where your income is going  A financial plan is a life long plan that considers education, tax flow, retirement management and individual’s life goals

 People want to balance their budget.  This means that they account for all of their money in their budget  A Budget Deficit means that you are spending more money that you have  What would YOU do if this happened to you?  A Budget Surplus means that you have more money than you have accounted for in your budget  What would YOU do if this happened to you?

Let’s do this together: Bob’s take home salary is $28,000Suzie’s take home salary is $240,000

 Distinguish a budget vs. a financial plan  Define: Scarcity, Budget (balanced, deficit, surplus), assets, net worth statement, and liabilities  Explain HOW to set a budget (the pie chart!) I can prove this by completing : Net worth calculation worksheet the Oprah Applied activity