FACS 56 life management money management— spending record & savings

income—scarcity problem needs vs. wants needs? required for survival wants? desires above & beyond needs think of 5 wants… once wants are fulfilled, often replaced by 2-3 more…creating the problem of scarcity scarcity: not enough resources to fulfill all our needs and wants

income—scarcity problem how does this scarcity impact our self- belief? success=amount if income success=type of our possessions use money to fulfill emotional needs problems with this method?

why have a plan? sticking to a budget has negative connotations for many… 1 out 3 families do not use a plan those that do, report that it is worthwhile why?

why have a plan? helps users to feel secure & to reach long- term goals

why have a plan? FIVE benefits of money management: 1.helps you get what you want avoid wasting money on unused/unsuitable good & cost of credit 2.you live within your income never enough money to buy it all—applying the decision making process allows you to live your values & priorities 3.can help maintain a harmonious home studies show that failure to agree on spending plan leads to arguments and often divorce 4.helps with future planning records help with taxes, warranties, etc… 5.puts you in control & helps you stay there reduces need for credit and allocates money to primary goals

money management— accounting for income and expenses the first step toward a sound financial plan—clear picture of where you are now begin with gross income—total amount of money coming in: salary child support payments student loans tax refunds gifts is all of this money available for us to spend?

money management— accounting for income and expenses after all deductions are made we are left with our net or disposable income most people can accurately estimate their income—far more difficult to identify where the money has gone a spending record is ESSENTIAL for planning

money management— accounting for income and expenses how do we keep an accurate spending record? each family member should have some sort of system in place so they can record daily expenditures systems that work for you? for easier record keeping use categories— food rent utilities transportation entertainment

participation activity: add it up pgs …look at figure 14-3 on pg. 286 …starting today, keep a daily record of all that you are spending …if there are multiple members of your family spending money, their spending needs to be monitored as well—how will you motivate them to do this? …your completed spending record is due April 25 th in Packet #3

money management— analyzing your situation group your spending categories into two chunks—fixed & variable fixed—regular, predictable, definite, frequently the same each month variable—differ from one period to another, usually include food, clothing, entertainment, gifts, education

money management— analyzing your situation next, consider how this month differs from others insurance due? taxes? gifts? travels? holidays?

money management— analyzing your situation now you have gathered all the necessary information, ask yourself: were you able to meet all of your fixed expenses? did your spending exceed your income? If so, why? did you pay off all your credit card balances, or just the minimum payment? did you save toward short-term and long- term goals?

money management— savings are you protected by an emergency fund? everyone should prepare for unexpected expenses— car repair broken appliances illness accident loss of work at minimum should have 2 months income saved as an emergency fund—many experts recommend 3 or more

money management savings

participation activity: saving strategies pgs. 290 & 293 …lets read the activity together …the key to success with money management is to recognize what are your strengths & your weaknesses—capitalize upon the strengths and work to overcome the weaknesses …select two different strategies to try in order to increase savings—work at them and include the analysis of these strategies with your spending record (April 25 th )