Section 6.2 Track Income and Expenses

 Goals: Describe how to set up an effective filing system for your records. Explain the difference between fixed and flexible spending.

Section 6.2 Track Income and Expenses  Key Terms Fixed expense Flexible expense

Keep Financial Records  You need to list your income and expenses.  By keeping records and establishing a filing system, you can track where your money goes. This allows you to estimate your income & expenses for your future budget.

Step 1-Track Your Income  A paycheck is a source of regular income.  Some income comes without a written record but still needs to be tracked. ○ Allowance ○ Babysitting ○ Birthday gifts  To track all of your income effectively simply note the amount and source on your list of income.

Step 2-Track Your Spending  Spending records include Sales receipts Credit card statements Checking account statements  In order to track your spending, you need to make a note of all purchases

Step 3-Establish a Filing System AAn easy way to keep your records in order is to establish a filing system. GGood record keeping habits are the key to taking control of your financial life. CComputer programs or spreadsheets are very effective ways to track your finances.

The Importance of Effective Record Keeping YYour filing system needs to be: Organized Complete Easy to use AAll of your records must be available when you prepare your budget. ***The most important thing is to keep all your records in files and all your files in one place!**

How to use Financial Records  You will use your financial records to help you plan your budget.  By studying your records of income & spending you will get a true picture of your “financial self.”

Fixed Expenses  Fixed Expenses- amounts you are committed to spend. (right now you don’t have many of these, you will when you get older) Examples include- mortgage/rent, car payment, property taxes, car insurance.

Flexible Expenses  Flexible Expenses: amounts that you can choose to spend or not spend. (right now most of your spending falls in this category.) Examples include- new clothes, cell phones, laptops, music, out to dinner with friends.

How do fixed & flexible expenses impact budgets!  Fixed expenses must be paid. They are easy to plan for and need to be set aside each month for payment.  Flexible expenses may or may not be purchased depending upon careful analysis and your financial goals.