Money Management

What is Money Management? The daily financial activities connected to using your limited income to satisfy all your needs and wants. Getting the most for your money through careful planning, saving, and spending.

Why We Buy? Income and Price Price Status The amount of money a family earns determines their purchases Price The cost of an item influences whether or not we buy it. Status Conspicuous consumption – the desire to impress people with our purchases

Why We Buy cont’d Current Trends Peer pressure and what is trendy can influence purchasing decisions

Why We Buy cont’d Customs and Habits Advertising/Promotions Purchases are made repetitively and with little thought Customs (family, religion, etc.) Habitual Advertising/Promotions Advertising, contests, coupons, giveaways, etc. all encourage purchases

To get better value for youe money when you make a purchase Spending Money Wisely Smart consumers comparison shop before making a purchase Why? To get better value for youe money when you make a purchase

Spending Money Wisely Things to Compare: Prices Quality Features Services Warranties Ways to Compare: Visit store Internet Flyers Newspaper ads

When to Buy Clearance Sales Promotional Sales At the end of the season, stores reduce prices to make room for new merchandise Promotional Sales Publicize a new store or location, introduce a new product

When to Buy cont’d Second-hand Shopping Avoid Impulse Buying Saves money and is environmentally friendly (ex. Garage sales, kijiji) Avoid Impulse Buying Buying on a whim without thought: end up with items you don’t really need might not have enough money left for essential items items cost more waste money

Budgeting A budget is a plan for wise spending and saving based on income and expenses. An example:

Budgeting cont’d Steps in creating a budget: Calculate income (Gross Income) Find Disposable Income by subtracting deductions (ex. Income tax, EI) Find Discretionary Income by subtracting all expenses FIXED EXPENSES: occur regularly and cannot be adjusted (ex. Car payment, rent) VARIABLE EXPENSES: differ from month to month (ex. Food, clothing) Find income leftover for savings by subtracting money spent on entertainment