1. Chapter 8 Budgets and Financial Records
MYPF Chapter 08
11-Sept-2001
Chapter 8 Budgets and Financial Records
Budgeting and Record Keeping
Legal Documents and Filing Systems

2. Lesson 8.1 Budgeting and Record Keeping
Describe and prepare personal budgets.
Explain the purpose of record keeping.
Prepare a personal net worth statement and a personal property inventory.
© South-Western Educational Publishing

3. Importance of Financial Planning
Disposable income—money you have left to spend or save after taxes haves been paid
Financial plan—a set of goals for spending, savings, and investing the money you earn

4. Financial Planning Helps You to:
Determine and evaluate options for your money
Prioritize your options so your money goes as far as possible
Avoid careless and wasteful spending
Organize your income so you can achieve your financial goals
Avoid money worries by planning your saving, spending, and borrowing to live within your means

5. Achieving Your Financial Goals
First step is to prepare a budget
Budget is a spending and saving plan based on your expected income and expenses
Money coming in must equal money going out

6. Preparing a Budget Estimate your income. Decide how much to save.
Estimate your expenses.
Balance your budget.

7. Simple Budget Income Work $320 Allowance 20 Lunch money 40 Expenses
Lunches $ 80
Supplies 20
Snacks 40
Entertainment 120
Total income $380
Total expenses $280
Savings
To credit union $100
Total expenses plus savings $380

8. Monthly Budget Fixed expenses Variable expenses
Costs you are obligated to pay on a regular basis (i.e., rent or mortgage, car payment)
Should equal no more than 50-60% of net pay
Variable expenses
Costs that vary in amount and type, depending on events and the choices you make (i.e., eating out, vacations)

9. Personal Records 4 types of personal records a person should keep:
Records of income and expenses (W-2 forms, bank statements, investment statements, receipts for charitable contributions, medical expenses, etc.)
Net worth statement
Personal property inventory
Tax records

10. Records of income and expenses
Examples include W-2 forms, bank statements, investment statements, receipts for charitable contributions, medical expenses, etc.

11. Net Worth Statement Assets – Liabilities Net worth
Net worth statement is a list of items of value (assets), amounts of money owed to others,or debts (liabilities), and the difference between the two, which is a person’s net worth.
Assets
– Liabilities
Net worth

12. Personal Property Inventory
A personal property inventory is a list of all valuable items a person owns, along with their purchase prices and approximate current values
Item
Year Purchased
Purchase Price
Approximate Current Value

13. Tax Records
Keep copies of tax returns, W-2 forms and other tax receipts for at least three years

14. Lesson 8.2 Legal Documents and Filing Systems
Discuss the elements of legal contracts and your responsibilities regarding contracts.
Describe negotiable instruments and warranties.
Discuss ways to set up a filing system for personal records.
© South-Western Educational Publishing

15. Types of Contracts
A contract is a legally enforceable agreement between two or more parties
Express contracts
Oral
Written
Implied contracts

16. Elements of an Enforceable Contract
Agreement
Consideration
Contractual capacity
Legality
Genuine assent
Legal form

17. Consumer Responsibilities in Agreements
Understand agreement.
Keep a copy of the agreement.
Be sure the agreement is dated correctly.
Be sure all blank spaces are filled in or marked out.
Be sure all terms agreed upon are written clearly.
Be sure all dates, amounts, and other numbers are correct and clearly written.
Be sure proper disclosure is made by the seller.
Be sure all cancellations and adjustments are made in accordance with the contract.

18. Negotiable Instruments
Must be in writing and signed by the maker
Must contain an unconditional promise to pay a definite amount of money
Must be payable on demand or on a fixed or determinable future date
Must be payable to the order of a particular person or to the holder of the note
Must be delivered to the payee

19. Warranties
Guarantee
Limited warranty

20. Filing Systems for Personal Records
Paper filing system
Electronic record keeping
Spreadsheet
Database

21. Home Filing System Medical Warranties Insurance Utilities Household
Travel
Entertainment
Taxes
Automobile
Subscriptions