Budget: Don’t Go Broke Financial Literacy Mrs. Dayley

Enduring Understanding: By effectively managing money and living on a budget, huge strides can be made to becoming financially independent. Taxes and other deductions influence the bottom line on a paycheck. With an effective plan on how to use money, anyone can be rich!

Essential Questions What is a budget, how does it work, and how can it help you? How do taxes and other payroll deductions affect your paycheck? What does “P.Y.F.” mean, and how can it benefit you? How can you make the best use of your cash?

Can You Believe? Page 28 Student Guide

Budget Smudget 1.A budget is a record of fixed expenses. 2.Interest earned on investments should be considered as part of a budget. 3.A budget helps you plan for the fun things in your life, so you can feel good about how you spend your money. 4.Flexible budgets are more likely to be followed.

Budget Smudget 5.Budgets aren’t necessary to reach your financial goals. 6.Savings should be paid first in every budget. 7.No one really uses budgets anymore. 8.A budget is too much trouble to follow. 9.Budgets are too restrictive.

BUDGET A plan for managing money during a given period of time. Decide on your goals Budget = Roadmap Consider length of time

INCOME Money coming in How do you RECEIVE money? –Job –Allowance –Garage sale

Reading Your Pay Stub Gross Income Payroll Deductions Taxes Federal Income Tax State Income Tax Social Security Tax Medicare Tax Net Income

W-4 Tells government how much tax to withhold from your paycheck LINE 5 TOTAL NUMBER OF ALLOWANCES The lower the number, the higher the amount of taxes withheld.

W-2 Earnings summary for work in the previous year. Received by January 31. Needed to file taxes by April 15.

Assignment 3.1 Analyzing a Pay Stub Page Student Guide

EXPENSES Money going out FIXED EXPENSES – –Have a set dollar amount every time. VARIABLE EXPENSES – (FLEXIBLE) –Always change –You have control of them

Spending & Values Complete the Spending & Values activity to analyze where your money goes and what your values are.

Building Your Budget Read under heading on page 34 in Student Guide Assignment 3.2 Create Your Own Budget

WHAT DO YOU SPEND YOUR MONEY ON? Assignment 3.3 How Do You Spend Your Money?

Cash Management Tools Write a check ATM card Debit card

Checking Account Considerations Insufficient funds charge Minimum balances Annual or monthly fees Overdraft protection ATM fees

Envelope System

Record Keeping Checking account statements Savings and investments Insurance Tax documents Pay stubs Loan papers Big ticket item receipts and warranties

P.A.Y.D.A.Y. Part of All Your Dollars Are Yours

Action Steps Page 42 Student Guide