1. BUDGET – SAVING MONEY

2.  A BUDGET is a plan for dividing income among spending and saving options.  Most budgets are based on SHORT TERM and LONG TERM financial goals. Do you have any short term or long term goals? Write a couple on the note lines next to the slide in your notes.

3.  short term goals are things you hope to achieve within a year, such as spending $200 to visit a friend who moved away.  Long term financial goals are always important parts of life-span plans. Life span plans require more money than people can set aside from current income.  To pay for goals such as college, a home, and retirement you need savings.

4.  You should always have a way of tracking your income and tracking your spending. Track income: keep paychecks (usually your employer will keep an electronic record now) Keep track of money received from Birthdays, Christmas Keep track of your bank account – money in and money out Track Spending: keep sales receipts Track credit card statements Track checking statement (either online banking or check register) Establish a filing system – keep important purchase receipts and written records of other purchases

5.  Fixed Expenses: amounts of money you are committed to spend. You have no choice. You must pay these expenses when they are due  Rent, phone bill, student loans, utility bill  Do YOU have any fixed expenses right now as a teenager? Write down 3 or 4 on the lines next to this slide.  Flexible expenses: amounts of money that you can choose to spend or not to spend. These are Wants, not Needs.  Designer clothes, going out to eat, newest electronic device  Do YOU have any flexible expenses right now as a teenager? Write down 3 or 4 on the lines next to this slide.  Luxury goods – goods that have special qualities that make them more expensive than the alternative  Sports car, fur coat, Rolex watch

6.  5 steps in creating a Budget Worksheet 1. Create a worksheet Take a sheet of paper, and divide it into 4 columns. 1 st column – list your sources of income and categories of spending and saving 2 nd column – record the amounts you expect to receive, spend or save during the month 3 rd column – record the amount you actually receive, spend or save 4 th column – record the difference I WILL NOW GO IN DEPTH WHAT YOU ARE TO PUT IN EACH COLUMN… LOOK AT PAGE 202 IN YOUR BOOK FOR AN EXAMPLE

7. 2. Estimate your Income – column 1: estimate uneven income – your income will not be the same every month Be sure the income is real – try to think of every income, including uneven income flows 3. Estimate your Expenses and savings – column 2: Plan for uneven expenses  Like care insurance may be due in May and Nov. Charitable Giving  Predict the amount (if any) you donate to charity Plan your saving – your saving account should have money that you planned on putting in, not just the amount left over after spending everything

8. 4. Record your Actual Income – column 4 Here is where you are recording your actual income, expenses, and savings. You should have most of your receipts or a written log of what you spend your money on during the month 5. Calculate the difference – column 5 Now this is where you subtract the differences between your estimated expenses and your actual expenses TAKE TIME TO COMPLETE YOUR BUDGET WORKSHEET RIGHT NOW IN PAIRS, THEN TURN IT IN. USE THE EXAMPLE ON PAGE 202 AS A REFERENCE

9. Here are some reasons some people fail when making a budget: 1. Some people get too specific, too much detail makes it too hard to follow – keep it simple 2. Some people don’t predict the correct amount of their flexible expenses 3. Some people lump to many expenses under miscellaneous 4. Some people give up on budgets because they think it takes too much time and effort to maintain them.