BUDGETING Personal Finance

© Take Charge Today – August 2013– Major Expenditures – Slide 2 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Spending Plan Guide What variables may cause these percentages to be different?

© Take Charge Today – August 2013– Major Expenditures – Slide 3 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Spending Plan Development Process Step 1 - Track Current Income and Expense Step 2 - Personalize Your Spending Plan Step 3 - Allocate Money to Each Category Step 4 - Implement and Control Step 5 - Evaluate and Make Adjustments Develop the spending plan Maintain the spending plan

HOUSING (RENTING AND OWNING)

© Take Charge Today – August 2013– Major Expenditures – Slide 5 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Housing: Largest Expense for Most Prices vary greatly SizeLocationAmenities Choose housing that fits your personal needs and spending plan

© Take Charge Today – August 2013– Major Expenditures – Slide 6 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 What are common rental expenses? Utilities (all or some may be included in rent) Household furnishings (some may be furnished) Renters Insurance – provides payment to renters to cover the damage and loss of property in addition to liability losses Communications (internet, television, phone) The cost of housing is more than rent!

© Take Charge Today – August 2013– Major Expenditures – Slide 7 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 What initial expenses may be required to rent a property? Pre-payment First and last month’s rent Security Deposit Money paid to a landlord to cover cleaning costs and damage repairs beyond normal wear and tear One or both expenses may be required:

© Take Charge Today – August 2013– Major Expenditures – Slide 8 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Significant Initial Home Loan Expenses Down Payment Portion of the purchase price not borrowed Typically 5-20% of purchase price Mortgage insurance – protecting the lender if the borrower provides less than 20% down payment Closing Costs Fees and charges associated with the purchase of a property Typically 1-4% of purchase price

© Take Charge Today – August 2013– Major Expenditures – Slide 9 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Mortgage Payment Mortgage payments typically include: Cost of the homeInterest Funds to pay property taxes Funds to pay homeowners insurance A payment to pay off the loan used to purchase housing

© Take Charge Today – August 2013– Major Expenditures – Slide 10 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 What are typical home ownership expenses? Utilities Household Furnishings Special Assessments Homeowner’s Association Dues Maintenance and repairs Communications (Internet, television, phone) Housing expenses are more than a mortgage!

TRANSPORTATION

© Take Charge Today – August 2013– Major Expenditures – Slide 12 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Do Your Research! Before working with sales personnel Evaluate your needs and wants Identify the right type of vehicle for you and desired features Research expected costs You are responsible for yourself! Advance research will maximize your satisfaction with the purchase!

© Take Charge Today – August 2013– Major Expenditures – Slide 13 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 What are typical automobile ownership expenses? Automobile payment (if credit is used) Fuel Maintenance and Repairs License and Registration (yearly fee) Insurance Parking (in some locations) Before purchasing a vehicle, be sure you can afford the total cost of ownership

© Take Charge Today – August 2013– Major Expenditures – Slide 14 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Marina’s Out-of-Pocket Expenses 5-Year Average Out-of-Pocket (15,000 miles driven per year) Fuel$9,852 Insurance$3,915 State fees (licensing)$1,932 Maintenance$1,945 Repairs$1,758 5 Year Total$19,402 Monthly Amount$ Monthly Payment Purchase Price$21,548 Down Payment$2, Interest Rate2.84% Monthly Payment$ Total Paid (down payment + loan) $22, Marina’s monthly loan is $347.09, but on average, the car will cost her, $ per month to own! Marina purchased a 2013 Honda Accord Source: bankrate.comSource: kbb.com

© Take Charge Today – August 2013– Major Expenditures – Slide 15 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 What features would you look for in an automobile? CostSizeUsage Gas mileageSafety RatingsReliability Environmental Impact Depreciation Upgraded features

FOOD

© Take Charge Today – August 2013– Major Expenditures – Slide 17 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Two Primary Sources Scratch Convenience Ready-to-eat Fast-food restaurants Fast-casual restaurants Full-service restaurants Prepare Food at Home Least Expensive Food Away from Home Most Expensive

© Take Charge Today – August 2013– Major Expenditures – Slide 18 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Burger Night - Family of Four Cost per person$6.29 Family of 4$25.16 Cost per person$5.84 Family of 4$23.36 Food Away From HomeFood Prepared at Home McDonalds Quarter Pounder with Cheese Combo Meal Burger with bun, condiments, 5lb bag of potatoes (for fries) and a 12 pack of Coke The meal prepared at home is less expensive and will result in left-overs What are ways to reduce the cost for either option?

© Take Charge Today – August 2013– Major Expenditures – Slide 19 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Summary Housing, transportation, and food Over 60% of spending Determine if renting or owning a home is best for you Housing Consider the total cost of owning a vehicle Transportation Eat well-balanced meals high in nutrition that fit into your spending plan Food

© Take Charge Today – August 2013– Major Expenditures – Slide 20 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 What else to think about?  Electricity  Water  Gas  Phone  Sewer/Trash  Cable  Groceries and Necessities  Clothing  Cleaning/Laundry  Health Costs  Insurance  Recreation  Gas  Credit Cards  Student Loans  Savings  Blow Money

© Take Charge Today – August 2013– Major Expenditures – Slide 21 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 What % are you spending?