personal finance ms. gorski spring 2017 budgeting personal finance ms. gorski spring 2017

facts & stats The average person spends money 3 times per day Just buying one soda for $1 a day adds up to $365 a year Financial troubles are a leading cause of divorce Teens spend over $208 BILLION a year, but only earn $91.1 Billion The number of 18-25 year olds moving back in with parents is growing $30,100 is the average student loan debt Paid back in $300 amounts for 10 years!

want to be a millionaire? Biggest characteristic = living within their means Own homes Have emergency fund - can live without working for 10+ years Well-educated & Don’t screw it up! Bankruptcy Buying silly things Bad investments Fail to plan and budget

budgeting Important step to financial security Plan accounting for expenses and saving How much do you need to pay in bills? How much do you have left over for your wants? How much should you save? Choose how to spend your money wisely & prioritize expenditures 4 Steps: Keep track of spending Determine monthly income Determine expenses Decrease spending Increase income

Step 1: keep track of daily spending Have you ever had money and spent it, not knowing where it all went? Do you remember exactly what you buy? Control your money! Know where it goes Keep personal spending diary Actually read your credit card and bank statements

set your goals Consider goals when planning a budget Be realistic Be specific Have a time frame Say what you want to do Have milestones

daily spending diary Use a spending log or diary; apps available Know where money goes Reflect >> cut expenses to save for goals

Step 2: income Income = money coming into your wallet from: Allowance Work (Wages, salary) Miscellaneous work (cutting grass, babysitting) Interest & dividends from investments Gifts

Step 3: expenses Items paid for each week, month, quarter, year… Housing payment Car payment Insurance Food Clothing Utility bills - electric, heat, water, sewer Personal, pet, or child care Education (student loans; tuition)

types of expenses Fixed - cannot really change Car payments; rent Flexible - have options and ways to decrease costs Electricity; food; clothing; entertainment Periodic - occur occasionally and regularly Insurance; subscriptions; warranties; license renewals All costs must be planned for!

specific expenses to plan for Housing - rent/mortgage is usually your biggest expense Shouldn’t be more than ⅓ of your income Pay this first - you NEED housing Be smart with loan payments Get a car you can AFFORD Student loan payments - don’t miss one! + options if you fall behind Credit Card - be mindful of interest LATE FEES! Utilities - these vary; conservation is key Electricity rates skyrocket in winter when you use more electric heat Be mindful of water use in summer, esp. droughts Food - groceries save more $ than eating out Yes, even versus fast food! Savings - best to put away 10% of your income Emergency Savings - should have 3-6 months worth of salary, minimum

Step 4: decrease spending Carry little cash; control credit card use No shopping ‘for fun’ when bored Remember your savings goals Buy only what you need Pay bills on time - avoid extra fees and charges

Step 5: increase income Get a second job, or another job that pays more Plan for future - continue education Seek opportunities at current job: Over time Teachers - coaching, Home Instruction, class coverage, tutoring... Use certain tax credits that can increase your income Change W4 so you pay less in taxes and get more in paycheck

paying bills Create a monthly payment calendar (or use an app) If you don’t have enough money for all of your bills: Pay rent/mortgage FIRST Then necessary household expenses Then highest-interest credit card Make changes to your budget to try to allot for bills first

what does a budget LOOK like? Total Income Total Flexible Expenses Total Fixed Expenses Income - Expenses = Total for Saving & Investing NOT total for ‘fun’ spending

unit assignments Due Budgeting Practice F.02/10 Mint.org Budget Simulation F.02/10 Financial Planning Workshop M.02/13 Spending Log Project T.02/14 My Future Budget Activity F.02/17 Budgeting Quiz F.02/17