Economics

Making a budget ONE thing that every good money manager does is make a budget

What is a budget? It's a means of keeping track of exactly how much money is coming in and exactly how much money is going out.

What is a budget? If you own a company or you get an allowance, you want to know how much money you have at any given time. You don't want to run out of money, so you won't have any when you really need it. You also don't want to assume that you don't have any money when you really do have more than enough to pay for something.

Making a budget The most common way to make a budget is to write down (or use a computer to record) every single expense and every single income. Mai-Ling's Babysitting Service Date Expenses Income 6/13$20 6/20$20 6/24 $20 (gas)

Mai-Ling’s Budget How much did Mai-Ling earn before? How much did she have to pay for expenses? What was Mai-Ling’s profit from babysitting?

Profit A profit is what is made after all expenses are paid. Remember Mai-Ling? What was her profit?

What is profit? Companies need to make a profit in order for their business to keep running. For example: A toy company earned $6,400 in sales in the last week of March. The company paid out $5,950 in expenses. So, the company made $450 in March, after all expenses are subtracted from income.

Why is it a good idea to know all this? Class discussion…

Ways to increase profit… If your company is not making a profit there are things you can do to increase profit, such as: Advertisements Increasing prices Reducing number of employees Which one of these does not affect the customer or employees?

Prices for goods and services If more people want something, they will be willing to pay more for it.

Prices A good example is the newest basketball shoes. Everybody wants them, and they will be willing to pay more than they normally would to get them. The demand goes up. Why? Because more people want them. The price also goes up. Why? Because the seller knows he or she can get more money for the product because it is in demand.

Prices In the same way, the price will go down when the demand goes down.

Prices When the new style of basketball shoes comes out, everyone wants the new shoes. The old shoes don't seem so new anymore. The seller still wants to sell those older shoes, since he or she has a lot still in stock. So, the price goes down. Why? The seller hopes that people will be willing to buy the older shoes at a lower price. After all, the older shoes aren't that much older or worse than the brand new shoes.

Wordles Start wordles for budget, price or profit You must include a definition in your own words for the vocabulary word Also, include an example and a synonym Remember to SAVE to the gallery and put your name in the wordle or when you save it!