Personal Finance Assignment sheet 2 Budgeting and Saving

© EMC Publishing, LLC Defining Your Goals Kinds of Goals Distinguish between short-term, medium-term, and long-term goals. – Short-term (up to five years) – Medium-term (five to ten years) – Long-term (ten or more years)

© EMC Publishing, LLC Defining Your Goals Asking Questions Identify your financial goals: – What kind of housing do I want? – Where do I want to live? – What job do I want? – What about my family life? – What will I do for recreation? – How much money will I need?

© EMC Publishing, LLC Defining Your Goals Asking Questions Start planning to achieve your financial goals: – How do I get there from here? – What sacrifice does it take to achieve my goals? – Do my spending habits match my goals?

Defining Your Goals Short-Term Goals Where will I be in five years? © EMC Publishing, LLC Will Work For Food

© EMC Publishing, LLC Defining Your Goals Medium-Term Goals Where will I be in ten years?

© EMC Publishing, LLC Defining Your Goals Long-Term Goals Where will I be in twenty years?

© EMC Publishing, LLC Defining Your Goals Goal Chart

© EMC Publishing, LLC Which kind of goal would your plans for retirement most likely fall under? A.Short-term goal B.Medium-term goal C.Long-term goal

© EMC Publishing, LLC Which kind of goal would your plans for retirement most likely fall under? A.Short-term goal B.Medium-term goal C.Long-term goal

What do you think? Discussion © EMC Publishing, LLC What are short-term goals? What are medium-term goals? What are long-term goals?

© EMC Publishing, LLC Defining Your Goals Planning Sharing Goals How much do I want to share?

© EMC Publishing, LLC Defining Your Goals Planning Saving Goals How much do I want to save?

© EMC Publishing, LLC Defining Your Goals Planning Spending Goals How much do I want to (or can I) spend?

© EMC Publishing, LLC Creating a Budget Balancing Goals A budget helps you achieve your goals.

© EMC Publishing, LLC Creating a Budget Cash Flow Estimate your income. Estimate your expenses. Estimate your savings. Estimate your sharing.

© EMC Publishing, LLC Creating a Budget Creating a Cash Flow Statement Record your income. – Fixed income Regular wages / salary – Variable income Overtime Side jobs – Mowing lawns – Babysitting

© EMC Publishing, LLC Creating a Budget Creating a Cash Flow Statement Record your income. Record your expenses. – Fixed expenses Rent / house payment Car payment Food Utilities (electric, gas, cable TV, etc.) Fixed Expenses Rent$450 Car Payment$250 Food$275 Utilities$125

Variable Expenses Car repair$125 Dentist co-pay$15 Dancing$20 New Tire$75 © EMC Publishing, LLC Creating a Budget Creating a Cash Flow Statement Record your income. Record your expenses. – Fixed expenses – Variable expenses Auto repairs Medical expenses Entertainment / dates Unexpected emergencies

© EMC Publishing, LLC Using Your Budget Creating a Budget Use cash flow statements. Note surpluses and deficits.

© EMC Publishing, LLC Using Your Budget Qualities of a Good Budget Based on your values Geared toward your goals Practical Flexible Accessible and easy to use Budget  Excellent

© EMC Publishing, LLC Using Your Budget Accounting Records Income Expenditures

© EMC Publishing, LLC Using Your Budget Assessing Constantly assess and reassess budget. Revise when necessary. Fixed Expenses Rent$450 Car Payment$250 Food$275 Utilities$125 Fixed Expenses Rent$475 Car Payment Food Utilities

© EMC Publishing, LLC Which of the following is not one of the five qualities of a good budget? Add the quality that is missing. A.It is based on your values. B.It is rigid. C.It is geared toward your goals. D.It is practical. E.It is accessible.

© EMC Publishing, LLC Which of the following is not one of the five qualities of a good budget? A.It is based on your values. B.It is rigid. C.It is geared toward your goals. D.It is practical. E.It is accessible.

What do you think? Discussion What are the four steps of setting up a budget? What is the difference between a fixed and variable expense and give an example of each. What are some examples of “budget busters”? What are some tips for staying within your budget?

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