Bell Ringer  Write down 3 things you know your parents spend money on each month.

Managing Your Money Chapter 15, Section 1

By the end of today’s lesson, you should be able to:  Apply the principles of money management to the preparation of a personal budget

Budget  Budget: a plan for spending and saving money  3 Parts: 1. Income: amount of money you receive each month 2. Expenditures: money spent 3. Savings Goal

Step 1: Determine Your Monthly Income  Earned Income: Pay that people receive for their work (Wages, Commission, Salary, Bonus)  Fringe Benefits: Indirect payments for work (medical insurance, sick leave, paid vacation days)  Interest Earned on Investments  Child Support  Social Security Benefits

Step 1: Determine Your Monthly Income  Disposable Income: amount of money left over after taxes have been paid  You must subtract your total amount of income earned by the taxes that you pay to determine how much income you really have to spend.

Step 2: Determine Your Monthly Expenditures  Fixed Expenses: expenses that are the same from month to month  House Payment/Rent  Loan Payments  Insurance Premiums

Step 2: Determine Your Monthly Expenditures  Variable Expenses: Expenses that change from month to month  Heating Bills  Clothing Purchases  Entertainment Expenses

Step 2: Determine Your Monthly Expenditures  Because resources such as money are scarce, you have to make choices involving trade offs, especially with variable expenses.  Your personal goals and values will shape your budget by determining what you do with your money.  Some examples of goals and values are: 1.Spend money on consumer goods 2.Planning to stay out of debt 3.Giving money to charity 4.Saving money for education

Teens – Lesson 3 - Slide 3-Ca incomebudgetactualdifference Job #1$$$ $$$ Other$$$ total monthly income $$$ expensesbudgetactualdifference fixed expenses Rent$$$ Car insurance$$$ Car payment$$$ flexible expenses Savings$$$ Food$$$ Utilities$$$

Teens – Lesson 3 - Slide 3-Cb expensesbudgetactualdifference transportation Bus fare$$$ Gas and oil$$$ Parking and tolls$$$ Repairs$$$ other Medical expenses$$$ Clothing$$$ Entertainment$$$ Household items$$$ Personal items$$$ Tuition$$$ School expenses$$$ total monthly expenses $$$

Balanced Budget  To create a balanced budget, income must be greater than your expenditures.  If in the original budget, income is not greater, you can get another job that pays more, work more hours, or decrease expenses.

Guided Practice  As the item appears on the screen, write it under the heading of Fixed Expense or Variable Expense,  Mortgage Payment  Dry cleaning bill  Car Payment  Newspaper Bill  Cost of Movies & Eating Out  Utility Bills

Comprehension Check  What 2 major budget categories should people consider when planning a budget?  Income and Expenditures

Comprehension Check  For a balanced budget, what must be greater – income or expenditures?  Income

Comprehension Check  What type of expenses stay the same from month to month?  Fixed Expenses

Comprehension Check  Give 2 examples of variable expenses?

Comprehension Check  Is this an example of earned income?  Stock Dividends  Paid Sick Leave  Wages  Inheritance

Comprehension Check  Is this an example of a fringe benefit paid by an employer?  Medical Insurance  Wages  Gifts  Savings Account Interest  Sick Leave  Commission  Salary  Paid Vacation Time

Comprehension Check  What is an example of a personal plan for spending and saving?  Plan to be debt free  Donate money to a cause or organization (charity)  College Fund  Buy lots of things!!!