How to budget your money?

“Some Money Facts” $ The average person spends money three to six times a day. $ A movie with popcorn and a soft drink can easily cost $20 $ Just one soft drink a day for $1.50 adds up to $540 in a year $ What’s the biggest expense item for teenagers?

Money Matters: How many times a day do you spend money? Money problems stay with you for the rest of your life. Top reason for divorce is financial. Finances affects everything else in your life.

Chapter 7 bankruptcy – no payment necessary Chapter 13 bankruptcy – set up payment plan to pay back The filing fee for Chapter 7 bankruptcy is $299 and $274 for Chapter 13. Without a monthly check most families would last 1 to 2 mos.

On average…. 10% owe $10,000 or more in credit card debt Nearly 94,000 people under 25 file for bankruptcy each year. A little more than 82,000 Americans, 65 years or older, filed for bankruptcy in 2001—up 244 percent in a decade. 1.5 million Americans will file bankruptcy this year. Average in the US is 1 in 34 file for bankruptcy Bankruptcies due to medical bills increased by nearly 50 percent in a six-year period, from 46 percent in 2001 to 62 percent in 2007, and most of those who filed for bankruptcy were middle-class, well-educated homeowners Rise in 18-25 year olds moving back in with parents College students have $3,000 in credit card debt 10% owe $10,000 or more in credit card debt

87% of retires are retiring with $10,000 or less Wealth is not what you spend but your net worth or accumulative wealth, what you have. 80% of millionaires have accumulated slow and steady What is the portrait of a millionaire? Live in same city/town for over 20 years Live below their means Married 1 time and still married Usually owns a chain of stores or similar At age 20 if you save $200.00 a month at 10% interest you will be a millionaire by the age of 55.

Ways to improve your finances Make more money Cut your expenses “Wait and win the lottery” system Have a budget

Discussion: What is a Budget? Why do you have a budget?

Budgeting Terms Budgeting Gross income Net income Fixed expenses Flexible expenses

Budget: A plan for managing income and expenses Gross Income : the total amount of income earned before deductions are made. Net Income : amount of income left after deductions are taken. (25-35% less than gross)

Budgeting Terms Fixed Expenses: Expenses which usually do not vary in amount and must be paid on a regular basis (mortgage, car payments, loans, insurance.) Flexible Expenses – Expenses which vary from week to week or month to month (clothing, food, etc.)

What is included in a budget for a family in a given month? The typical family spend their money how? Housing: 25%-35% Transportation: 2%-5% Food : 10%-15% Utilities: 2%-10% of monthly rent Insurance: 2%-5% Emergency: 10% Pocket $: 1%-2% Debt obligations: 5%-15%

Steps to Budgeting 1. Keep track of spending for 1-2 months 2. Determine Net and Gross income (net is 25%-35% less than gross) 3. Set financial goals 4. Figure fixed expense and flexible expenses 5. Determine emergency expenses (10%) 6. Total expenses (expenses=income)