Presentation on theme: "Section 6.2 Track Income and Expenses. Goals: Describe how to set up an effective filing system for your records. Explain the difference between fixed."— Presentation transcript:
Goals: Describe how to set up an effective filing system for your records. Explain the difference between fixed and flexible spending.
Section 6.2 Track Income and Expenses Key Terms Fixed expense Flexible expense
Keep Financial Records You need to list your income and expenses. By keeping records and establishing a filing system, you can track where your money goes. This allows you to estimate your income & expenses for your future budget.
Step 1-Track Your Income A paycheck is a source of regular income. Some income comes without a written record but still needs to be tracked. ○ Allowance ○ Babysitting ○ Birthday gifts To track all of your income effectively simply note the amount and source on your list of income.
Step 2-Track Your Spending Spending records include Sales receipts Credit card statements Checking account statements In order to track your spending, you need to make a note of all purchases
Step 3-Establish a Filing System AAn easy way to keep your records in order is to establish a filing system. GGood record keeping habits are the key to taking control of your financial life. CComputer programs or spreadsheets are very effective ways to track your finances.
The Importance of Effective Record Keeping YYour filing system needs to be: Organized Complete Easy to use AAll of your records must be available when you prepare your budget. ***The most important thing is to keep all your records in files and all your files in one place!**
How to use Financial Records You will use your financial records to help you plan your budget. By studying your records of income & spending you will get a true picture of your “financial self.”
Fixed Expenses Fixed Expenses- amounts you are committed to spend. (right now you don’t have many of these, you will when you get older) Examples include- mortgage/rent, car payment, property taxes, car insurance.
Flexible Expenses Flexible Expenses: amounts that you can choose to spend or not spend. (right now most of your spending falls in this category.) Examples include- new clothes, cell phones, laptops, music, out to dinner with friends.
How do fixed & flexible expenses impact budgets! Fixed expenses must be paid. They are easy to plan for and need to be set aside each month for payment. Flexible expenses may or may not be purchased depending upon careful analysis and your financial goals.