11th grade- Budget and Savings Financial Literacy 11th grade- Budget and Savings “It’s not what you make, it’s what you keep.” James Henson, Sr.

Objectives for today Demonstrate a method to analyze your income and expenses How much do you really cost? Understand the basics of a budget Evaluate choices you can make now for a successful future

What is Financial Literacy? Understanding how to manage money effectively Acquiring knowledge and skills to make informed decisions regarding money matters Helping individuals fulfill personal, family, social and governmental responsibilities

Why do I need to be financially Savvy? People who are financially literate are more likely to achieve a better quality of life and reach their lifetime goals. Being financially savvy can: Help you buy something you need or want (car, computer, etc.) Save money for emergencies Afford college tuition Start a business Live comfortably in retirement Lead to financial independence

Financial Literacy: Budgeting A budget is an estimated list of your income and expenses over a given period of time. Developing a budget helps you control your money and limit your spending. Creating a budget plan is an important step every student can take to assess his or her financial wellness.

Financial Literacy: Budgeting How much do you cost? FUN Movies/Entertain $60.00 Music $20.00 Snacks/Dining Out $40.00 Friend's Birthdays Vacation $50.00 SPORTS Registration Fee/Uniform/Equip $75.00 Gym membership $25.00 HEALTH & BEAUTY Hair/ Nails $45.00 EDUCATION School Fees/Supplies $15.00 Tutoring GRAND TOTAL $1200.00 Category Estimated Monthly Expenses Savings Account $50.00 Cell Phone $110.00 CAR Car Payment $250.00 Car Insurance $150.00 Gas $100.00 SHOPPING Clothes Shoes

Financial Literacy: Budgeting Use the steps below to help you create your first student budget plan. Step One: Assess Your Finances List all your sources of monthly income- job earnings, savings, parental support, gifts, internships

Financial Literacy: Budgeting Step two: Determine Your Expenses List all your monthly expenses. Consider: Meals Entertainment Personal care items Laundry Telephone Include money for emergencies. It is recommended to budget 10% of your income. Examples: lost phone, damaged iPad, book obligations, etc. Try to keep at least one month of total expenses in savings. Car expenses, gas, insurance Clothes Technology College classes School supplies

Financial Literacy: Budgeting Step three: Total your income and expenses. If your expenses are greater than your income, you need to find ways to increase your income stream or reduce your spending. Think about the little things you can cut back on to save dollars here and there. Consider needs verses wants. Examples: Rent an on-demand movie or use Netflix instead of going to the movie theater Skip the Starbucks and make a coffee at home Borrow an outfit for a formal event Walk instead of driving your car

Financial Literacy: Budgeting Step four: Set your financial goals Start by making a list of your short, medium, and long-term goals and set monetary figures that will help you achieve them: Short-term goals: Trying a new restaurant Buying a new game Taking a weekend ski trip Medium-term goals: Summer trip with your friends Studying abroad next year, Paying for AP exams Long-term goals: Paying off your student loans Investing in the stock market Saving for a down payment for a home Starting your own business

Financial Literacy: Budgeting Step five: Track your budget over time Compare your actual income and expenses with your budget to make sure you’re on target to meet your goals. You’ll need to monitor your budget periodically in order to make changes when necessary. Be prepared for the unexpected. (e.g., car repairs, broken cell phone)

Financial Literacy: Budgeting Start Saving Early Savings Account Roth IRA’s Mutual Funds Stocks/ Bonds Pay yourself first Let your money work for you Pay your expenses Read biographies of financially successful people

Financial Literacy: Budgeting Compound Interest-Save and Watch it Grow Thanks to compound interest, small regular savings can add up over time. With compound interest, it is not just your money that earns interest – your interest earns interest as well – creating a snowball effect.

Cost of Waiting

Financial Literacy: Budgeting Budgeting your money is an important part of financial literacy. The bottom line is that you are in control of your financial health. A budget will keep you on track and help you realize your goals.

What can I do now to become financially literate? 1. Get a good education. 2. Work smart. 3. Learn money management skills. 4. Living below your means. 5. Save early and often. 6. Gather information before making decisions. 7. Have a budget plan. 8. Ask questions and attend financial seminars Financial Fitness For Life Council For Economic Education

What can I do now to become financially literate? For more information go to: www.360financialliteracy.org www.macpa.org www.mdfinancialskills.org www.mymoney.gov This information brought to you by the Severna Park High School Business Advisory Board www.sphsbab.org