2/18/14 BR: Give an example for each expense Fixed: Variable: Periodic: TODAY YOU WILL... CREATE A PLAN TO GUIDE YOUR SPENDING. ©2012 National Endowment.

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2/18/14 BR: Give an example for each expense Fixed: Variable: Periodic: TODAY YOU WILL... CREATE A PLAN TO GUIDE YOUR SPENDING. ©2012 National Endowment for Financial Education | Lesson 1-4: Spending Plan 1

Preview Today we will answer these questions: How can a spending plan help me better manage my spending habits? What is a spending plan? How do I use a spending plan? Use what you learn today to create a spending plan. ©2012 National Endowment for Financial Education | Lesson 1-4: Spending Plan 2

Building a Spending Plan 1.What are the goals? 2.How long will the plan be used? 3.How much income is available? 4.What are the anticipated expenses? 5.How does the plan need to be adjusted? ©2012 National Endowment for Financial Education | Lesson 1-4: Spending Plan 3

Predict Your Income ©2012 National Endowment for Financial Education | Lesson 1-4: Spending Plan 4 Tips to Predict: Use what is known: –Pay –Regular allowance –Average interest earned Be conservative: –When estimating, aim lower rather than higher –Don’t count on windfalls Types of Income: Pay Allowance Interest Gift money Sales

Estimate Your Expenses ©2012 National Endowment for Financial Education | Lesson 1-4: Spending Plan 5 Tips to Estimate: Use averages for variable expenses Split periodic expenses into chunks –Example: Plan to set aside $100 a month to pay the annual $1,200 car insurance premium. Classify Expenses: Fixed: Known, regular payments (Internet fee) Variable: Known but irregular payments (groceries) Periodic: Known but occasional payments (school fees)

PYF – Pay Yourself First! S et aside money for “big ticket” items. A void borrowing, which costs you more money. V ery wise to save a little now for later. E very time you PYF you have more money to spend later on things that are important to you! ©2012 National Endowment for Financial Education | Lesson 1-4: Spending Plan 6

Make Adjustments If Expenses > Income  variable expenses  income  unnecessary expenses ©2012 National Endowment for Financial Education | Lesson 1-4: Spending Plan 7 Ideal Situation: Spend at or below your means Income < or = Expenses If Income > Expenses  PYF savings funds  any loan obligations

Maya’s Budget Scenario Maya is a senior in high school who works part time. She is expected to pay her car loan and a few other bills. Help her set up a spending plan to cover her expenses and also allow room to save money for a trip and college tuition. ©2012 National Endowment for Financial Education | Lesson 1-4: Spending Plan 8 Answer the following as a guide to complete your task: What are Maya’s goals? How much is her income? What are her fixed expenses? How should her variable expenses be adjusted?

Without a Spending Plan May come up short on money before the next paycheck or allowance payment More likely to not reach long-term spending goals Added stress if struggling to keep up with payments May need to give up something you planned if money needs to be used for unexpected emergencies Give up independence if you need to rely on others for financial help (c) 2012 National Endowment for Financial Education | Lesson 1-4: Spending Plan 9

Challenge Assignment 1-C page 31 Create a spending plan so you can pay for the things you need and want. Choose one of the following situations: Big purchase Upcoming event Monthly expenses (c) 2012 National Endowment for Financial Education | Lesson 1-4: Spending Plan 10