1. Complete the Calculating Budget Items Handout!

2. Get out a sheet of paper. 1.Let’s draw two big circles 2.Create a pie chart for the following expenses. Transportation 25% Clothing25% Savings 20% Food15% Entertainment 15% 25% transportation 25% clothing 15% entertainment 15% food 20% savings

3. For Circle Number 2 Spend $300 in one month ▫Food $120 – What percent is that?  $120/$300 = 40% ▫Savings $60 – What is the percent?  $60/$300 = 20% ▫Transportation $75$75/$300 = 25% ▫Clothes $30$30/$300 = 10% ▫Entertainment $15$15/$300 = 5%

5. Calculating Budget Items Average weekly expense ▫$26.75 ▫$34.15 ▫$29.56 ▫$31.47 ▫$28.76 ▫Total (Sum) $150.69 Average weekly expense ▫$150.69 divided by 5 ▫$30.14 Average annual expense ▫$30.14 times 52 ▫$1567.28 Average monthly expense ▫$1567.28 divided by 12 ▫$130.61

6. Calculating Budget Items Average weekly expense ▫$26.75 ▫$34.15 ▫$29.56 ▫$31.47 ▫$28.76 ▫Total (Sum) $150.69 Average weekly expense ▫$150.69 divided by 5 ▫$30.14 Average annual expense ▫$30.14 times 52 ▫$1567.28 Average monthly expense ▫$1567.28 divided by 12 ▫$130.61

7. Percents (%) to Dollars ($) Monthly net income of $200 Food is 5% of the net income What is dollar amount for food for the month? Food (5%) ▫$200 x 5% = $10 Car (30%) ▫$200 x 30% = $60 Entertainment (25%) ▫$200 x 25% = $50

8. Percents (%) to Dollars ($) Monthly net income of $200 Food is 5% of the net income What is dollar amount for food for the month? Food (5%) ▫$200 x 5% = $10 Car (30%) ▫$200 x 30% = $60 Entertainment (25%) ▫$200 x 25% = $50

9. Dollars ($) to Percents (%) Monthly net income of $4000 Shelter is $900 of the net income. What percentage is shelter for the month? Shelter ($900) ▫$900/$4000 = 22.5% Food ($600) ▫$600/$4000 = 15% Clothing ($400) ▫$400/$4000 = 10% Transportation ($250) ▫$250/$4000 = 6.25%

10. Dollars ($) to Percents (%) Monthly net income of $4000 Shelter is $900 of the net income. What percentage is shelter for the month? Shelter ($900) ▫$900/$4000 = 22.5% Food ($600) ▫$600/$4000 = 15% Clothing ($400) ▫$400/$4000 = 10% Transportation ($250) ▫$250/$4000 = 6.25%

12. Pie Charting Your Weekly Spending Add your payments Check this number Circle this total payment number

13. Pie charts must be accurate, neat, and colorful to get full credit. Possible Categories Food ▫snacks or restaurants Car ▫Fuel, oil, insurance) Entertainment Clothing School Gifts Personal Items Savings Miscellaneous

16. Where should all my money go? Smart money managers know exactly how much money they can count on coming in, and exactly how much money they need to spend on bills and day-to- day purchases. Are you a smart money manager?

17. Video

19. Spending Plan (Budget) A plan for managing your money during a given period of time. Set up for you to see all your options and to make smarter choices so you can get the stuff you really want. It will change as your income grows and your priorities change. When creating a spending plan, it’s important to know what your values are.

20. Reasons for a Spending Plan  …Helps you determine where you are spending your money currently.  …Helps you decide where to spend your money in the future.  …You have an organized way to save for things that cost more.  …Puts you in control of your financial future, beginning NOW.

21. People Without a Budget…  …Are less likely to know what they have.  …Have no plan, often coming up short before their next paycheck or allowance.  …Are almost certain to have no plan to save for more expensive spending goals.

22. For an interactive version of this slide, open the Excel File for this unit and go to Excel Worksheet 2-A-2 NEFE High School Financial Planning Program Unit 2 – Budgeting: Making the Most of Your Money 2-A-2

23. Cash Flow The money you have coming in, as well as the money you have going out. Income (Receipts): any money you receive. ▫Includes your paycheck, allowance, birthday (holiday) money, interest you earn from savings account, or things you sell. Expenses (Payments): any money you spend

24. Payroll Deductions For most people, taxes are the biggest deductions. Taxes-fees that support government programs and are required by law to be applied to income, property, or goods.

25. F OUR MOST COMMON TAX DEDUCTIONS Federal Income Tax -a fee collected by the federal government to support its programs. Percent varies based on tax bracket. State Income Tax -helps pay for state services (Tennessee does not have)

26. F OUR MOST COMMON TAX DEDUCTIONS Social Security Tax taken out to provide a small income and other services to the elderly, disabled Americans, and orphaned minors. Age: 62 Everyone pays 6.2%

27. F OUR MOST COMMON TAX DEDUCTIONS Medicare Tax taken to provide medical insurance to the elderly and some disabled Americans. Age: 65 Everyone pays 1.45%

28. F I C A Federal Insurance Contributions Act Adds Social Security of 6.2% and Medicare Tax of 1.45% TOTAL 7.65% is deducted from ALL payroll checks Employers also pays 7.65% for each employee. Government received total of 15.3% for FICA

29. Income Gross Income –the total amount of income from your wages or before any payroll deductions. Net Income –After taxes have been deducted, this is your “take-home pay.”

30. Form W-4 You fill this out when you start a job. Line 5- “total number of allowances.” ▫Factors-marital status, whether you have more than one job, and how many children you have. You can change your W-4 allowances whenever you want. Sample w-4 Form… ▫IRS W-4 FormIRS W-4 Form

31. Bottom of the page, put Gross Pay = $16.01

32. Pay Your Taxes Federal Taxes (varies)8% FICA (fixed) 7.65% (Federal Insurance Contributions Act) Combination of Social Security (6.2%) and Medicare (1.45%)

33. Calculate Your Percent $16.01 x 8 % = $1.28 $16.01 x 7.65% = $1.23 I know I goofed and rounded up; just go with it, please : D

34. Calculate Your Net Pay Gross Pay = $16.01 Taxes = $2.51 Net Pay = $13.50

35. Expenses What you spend your money on; your wants and needs.

38. Calculate Your Percent $1 / $16.01 6. 2%

39. Three types of expenses: 1.Fixed expenses – cost the same amount every time. (ex. Home mortgage, car payment) 2.Variable expenses –fluctuate in amount, so you usually have more control over how much they’ll be. (ex. Groceries) 3.Periodic or occasional expenses –ones that you don’t pay every month, and can be either fixed or variable. (ex. Car insurance, home repairs, car repairs)

40. FIXED, VARIABLE, OR PERIODIC? ExpenseFixedVariablePeriodic Car PaymentX Electric Bill X Twice-yearly Insurance Payment X Haircut Birthday Gift

42. Calculate Your Percent $5.00 / $16.01 31.2%

43. Random: Did You Know? The average person spends money ______ times a day. Putting aside every ______ you touch usually results in saving about $50 a month. If you purchase a ______ a day for a year, you will have spend approximately $ ______. 3 times a day coincoinsoda/tea/coffee$365soda/tea/coffee$365

45. Calculate Your Percent $3.00 / $16.01 ???? %

46. How to Build a Budget 1.Decide on a time frame for tracking expenses (week, two weeks, month). 2.List all money you have coming in (income). 3.Make categories for all expenses. 4.Subtract total expenses from income. 5.Study your budget and your financial plan to make sure it fits with your plans and goals.

54. EXPENSES Taxes ▫Federal: 8% (based on W-4) ▫FICA: 7.65% (fixed) From Net Pay ▫PYF: $1.00 – 6.2% ▫Rent: $5.00 – 31.2% ▫Cell Phone: $3.00 – 18.7% ▫Lottery$0 or $1 ▫Gas: varied ▫Left Overvaried Calculate percents (should total 100%) for each category and pie chart

55. Turn In TODAY!!! Exit Ticket: ▫Paper label “Money Notes Activity with Pie Chart from today’s activity. ▫Put your remaining money back in the baggie.

56. Ellie On Her Own List 20 things that Ellie must do in order to be prepared for her move to St. Simon’s Island. Complete the math calculations in Section 2 at the bottom Annual salary: $37,000 Biweekly Gross Pay: annual salary/26 Biweekly Gross Pay: $1,423.08 Withholdings: Biweekly Gross Pay x % (given) Total ALL Withholdings Find Biweekly Net Pay

57. Homework (Ellie Is On Her Own) on your desk! 1.Read the paragraph and list things that Ellie needs to do to move to St. Simon’s Island 2.Calculate her Biweekly Gross Pay: ($37,000/26) 3.Calculate her withholdings. 11.5% =.115 and 2% =.02 and 5.2% =.052 4.Calculate her Biweekly Net Pay. 5.Calculate her Monthly Net Pay (biweekly x 2) ▫Add underneath 6.Create a budget for Ellie based on what you THINK may be her expenses.

58. Ellie On Her Own List 20 things that Ellie must do in order to be prepared for her move to St. Simon’s Island. Complete the math calculations in Section 2 Her salary will be $37,000 Divide her annual salary by 26 Biweekly Gross Pay - $1,423.08

59. Assignment – Personal Finance 1.Small Groups –need access to TWO calculator 2.Complete Alicia Moves In following the instructions ▫Get the Monthly Net Pay off ▫Read to find the cost of the apartment she decides to rent. 3.Complete Alicia’s Budget following the instructions ▫Entertainment also includes downloads ▫Household Items includes towels and curtains ▫Dining Out also includes pizza ▫Miscellaneous only includes Birthday Gift and Card 4.Complete Cutting the Family Budget 1.Calculate their current spending – check at least twice 2.Calculate the needed 20% cut in expenses 3.Change some of their current expenses for the 20% cut 4.Re-calculate their spending 5.Answer question number 5 6.Extra Credit: Pie chart their current spending either using MS Excel or drawing the pie chart – You can also open “Cutting the family budget” document in the Student Common – Adams Personal Finance folder HINTS

60. Group Assignment – Personal Finance 1.Get in small groups – group needs access to at least two calculators. 2.Complete Alicia Moves In following the instructions. 3.Complete Alicia’s Budget following the instructions ▫ HINTS ▫Gas$80 ▫Personal Care$44.20 ▫Medical Cost$12.56 ▫Miscellaneous$24.32

61. Partner Exercise – Cutting the Family Budget 1.Get a handout – Cutting the Family Budget 2.Calculate Total Spending 3.Double Check Total Spending 4.Multiple Total Spending by 20% 5.This is the minimum amount you must eliminate from your budget. ▫You may not change any amounts that I have marked NO. ▫Make the necessary changes for the budget. 6.Recalculate your spending 7.Answer question #5 8.Turn paper into the tray You do NOT have to Pie Chart their current expenses.

62. Calculating Deductions (withholdings) Example Gross Pay $1500. 00 $1500. 00 Withholdings: Federal Income11.25% ($1500 x 11.25%) $168. 75 State Income4.5% ($1500 x 4.5%) $67. 50 Social Security6.2% ($1500 x 6.2%) $93. 00 Medicare1.45% ($1500 x 1.45%) $21. 75 Total (Add all withholding costs) $351. 00 Net Pay (Gross Pay – Total Withholdings) $1149. 00

63. Sales Tax Rate Jefferson County ▫Most items Subtotal ▫$72.38 Tax ▫$7.06 Grand Total ▫$79.44

64. BUDGET COLLAGE Finish your budget collage. ▫8 food items; 5 clothing items All items must have a price. Glue your white sheet to the front and put your individual price amounts on it. Make sure you have double checked your math. Your TOTAL at the bottom must be within your budget or you will lose 15 points. Glue your colored paper (price range) to the back. Bring your completed collage to Mrs. Adams for grading.