1. Lesson 7.2 Creating a Budget July 2011Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved1 Introduction A budget is a spending plan that keeps track of the money you have coming in and going out. The primary reason to use a budget is to ensure you are spending less than you make, thus generating savings. Realistically, everyone who earns money should use a budget and it doesn’t have to be a painful experience. Your budget should be a reflection of your life and the financial goals you want to achieve.

2. Lesson 7.2 Creating a Budget July 2011Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved2 Identify the common sources of income most people have Discuss how people spend their money Describe why creating a budget is mostly psychological Explain the first step to creating a budget Define potential saving and other key budget terms List the primary and secondary budget categories Summarize how the budget categories correlate to needs and wants Identify how much money you should be saving each pay period Illustrate why it is hard to reduce spending in the primary budget categories You should be able to do the following after completing this lesson Objectives

3. Lesson 7.2 Creating a Budget July 2011Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved3 7.2.1 – Why Create a Budget? The primary reason you should create and use a budget What you have to do in order to regularly create savings How many sources of income and expenses you will probably have What a good budget can tell you In this section, you will learn

4. Lesson 7.2 Creating a Budget July 2011Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved4 7.2.2 – Budget Income What savings are What income is and whether it is always constant The different types of savings you should have How much you should be saving each pay period The factors that determine how much you should be saving What short-term savings are used for In this section, you will learn What long-term savings are used for What retirement savings are used for

5. Lesson 7.2 Creating a Budget July 2011Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved5 7.2.3 – Budget Expenses How much money you are free to spend each pay period How to determine the budget categories you will use How the major budget categories are classified What primary budget categories are What secondary budget categories are The importance of small expenses In this section, you will learn Cost of Daily Coffee Example You will run the following Interactive Example

6. Lesson 7.2 Creating a Budget July 2011Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved6 7.2.4 – Primary Budget Categories What money spent in the primary budget categories affects The expenses considered as primary budget categories Amount of your income that will be spent in the primary budget categories Why it is hard to eliminate or reduce the money you spend in the primary budget categories In this section, you will learn

7. Lesson 7.2 Creating a Budget July 2011Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved7 7.2.5 – Secondary Budget Categories What money spent in the secondary budget categories affects How much of your income will be spent in the secondary budget categories Whether you can eliminate or reduce the amount you spend in the secondary budget categories The expenses included in the secondary budget categories In this section, you will learn What spending in the secondary budget categories is called

8. Lesson 7.2 Creating a Budget July 2011Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved8 7.2.6 – Making the Hard Decisions How much time and effort it takes to create a budget Why you must limit the amount of money you spend in each budget category What you should consider when determining how much you can spend in each category What the hardest part of creating a budget is In this section, you will learn

9. Lesson 7.2 Creating a Budget July 2011Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved9 7.2.7 – Creating a Budget Who is responsible for creating and using a budget Why ½ of the people old enough to retire cannot retire Whether the average person is saving enough money In this section, you will learn Sample Monthly Budget Exercise You will run the following Interactive Exercise

10. Lesson 7.2 Creating a Budget July 2011Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved10 Discussion Questions What is the correct percentage of income an individual should be saving for retirement? What is wrong with beginning to save a small percentage of your income and as you get older gradually increasing the percentage?