Mr. Park ERHS Mr. Saliani, Principal Budgeting Mr. Park ERHS Mr. Saliani, Principal

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What is a budget?

Vocabulary Budget: A financial plan used to forecast and track income and expenses Surplus/Deficit: ____________________________________________ Expense: Use of finances to fulfill a one-time or ongoing obligation; can be fixed or variable Fixed Expense: A regular, predictable expense such as a mortgage payment or rent. Variable Expense: An expense or expense category that is not fixed and can’t be precisely predicted; budget planning is something used to limit or constrain variable expense.

+ - Fixed Expenses Variable

Sample Monthly Budget

Budget Template

Budget Answer Key

Why Create a Budget?

Balanced Budget —A plan that shows that the money coming in (income) is equal to the amount going out (expenses)

Strategies to reduce expenses

Budgets Strategies to reduce your expenses and move towards a surplus…. —Save money (coupons, less dining out, avoid spending on luxuries) —Use comparison shopping…. —Spend less than you earn and then you can get to a budget surplus

Gross Pay

Disposable Income —The amount of income remaining after taxes that is available for spending (Also referred to as Net Pay) —Also defined as the amount of money left after deductions have been taken from your gross pay

Paycheck Deductions —Mandatory payroll deductions: Federal and State income tax, Social Security and Medicare taxes —Optional payroll deductions: Money going into a 401k savings plan, money going directly into paying life insurance premium

Emergency Fund —Always have an emergency fund of at least six to eight months of income at your disposal —Why have one?