1. personal finance ms. gorski spring 2017
budgeting
personal finance ms. gorski spring 2017

2. facts & stats The average person spends money 3 times per day
Just buying one soda for $1 a day adds up to $365 a year
Financial troubles are a leading cause of divorce
Teens spend over $208 BILLION a year, but only earn $91.1 Billion
The number of year olds moving back in with parents is growing
$30,100 is the average student loan debt
Paid back in $300 amounts for 10 years!

3. want to be a millionaire?
Biggest characteristic = living within their means
Own homes
Have emergency fund - can live without working for 10+ years
Well-educated
& Don’t screw it up!
Bankruptcy
Buying silly things
Bad investments
Fail to plan and budget

4. budgeting Important step to financial security
Plan accounting for expenses and saving
How much do you need to pay in bills?
How much do you have left over for your wants?
How much should you save?
Choose how to spend your money wisely & prioritize expenditures
4 Steps:
Keep track of spending
Determine monthly income
Determine expenses
Decrease spending
Increase income

5. Step 1: keep track of daily spending
Have you ever had money and spent it, not knowing where it all went?
Do you remember exactly what you buy?
Control your money!
Know where it goes
Keep personal spending diary
Actually read your credit card and bank statements

6. set your goals Consider goals when planning a budget Be realistic
Be specific
Have a time frame
Say what you want to do
Have milestones

7. daily spending diary Use a spending log or diary; apps available
Know where money goes
Reflect >> cut expenses to save for goals

8. Step 2: income Income = money coming into your wallet from: Allowance
Work (Wages, salary)
Miscellaneous work (cutting grass, babysitting)
Interest & dividends from investments
Gifts

9. Step 3: expenses Items paid for each week, month, quarter, year…
Housing payment
Car payment
Insurance
Food
Clothing
Utility bills - electric, heat, water, sewer
Personal, pet, or child care
Education (student loans; tuition)

10. types of expenses Fixed - cannot really change Car payments; rent
Flexible - have options and ways to decrease costs
Electricity; food; clothing; entertainment
Periodic - occur occasionally and regularly
Insurance; subscriptions; warranties; license renewals
All costs must be planned for!

11. specific expenses to plan for
Housing - rent/mortgage is usually your biggest expense
Shouldn’t be more than ⅓ of your income
Pay this first - you NEED housing
Be smart with loan payments
Get a car you can AFFORD
Student loan payments - don’t miss one! + options if you fall behind
Credit Card - be mindful of interest
LATE FEES!
Utilities - these vary; conservation is key
Electricity rates skyrocket in winter when you use more electric heat
Be mindful of water use in summer, esp. droughts
Food - groceries save more $ than eating out
Yes, even versus fast food!
Savings - best to put away 10% of your income
Emergency Savings - should have 3-6 months worth of salary, minimum

12. Step 4: decrease spending
Carry little cash; control credit card use
No shopping ‘for fun’ when bored
Remember your savings goals
Buy only what you need
Pay bills on time - avoid extra fees and charges

13. Step 5: increase income
Get a second job, or another job that pays more
Plan for future - continue education
Seek opportunities at current job:
Over time
Teachers - coaching, Home Instruction, class coverage, tutoring...
Use certain tax credits that can increase your income
Change W4 so you pay less in taxes and get more in paycheck

14. paying bills Create a monthly payment calendar (or use an app)
If you don’t have enough money for all of your bills:
Pay rent/mortgage FIRST
Then necessary household expenses
Then highest-interest credit card
Make changes to your budget to try to allot for bills first

15. what does a budget LOOK like?
Total Income
Total Flexible Expenses
Total Fixed Expenses
Income - Expenses = Total for Saving & Investing
NOT total for ‘fun’ spending

16. unit assignments Due Budgeting Practice F.02/10
Mint.org Budget Simulation F.02/10
Financial Planning Workshop M.02/13
Spending Log Project T.02/14
My Future Budget Activity F.02/17
Budgeting Quiz F.02/17