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

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 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.

How to use Financial Records  You will use the previously discussed records to help you plan your budget.  By studying your records of income & spending for at least 6 months 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.  Fixed expenses must be paid. They are easy to plan for and need to be set aside each month for payment.

Flexible Expenses  Flexible Expenses: amounts that you can choose to spend or not spend. Examples include- new clothes, cell phones, laptops, music, out to dinner with friends. o Flexible expenses may or may not be purchased – these are much easier to change when looking to cut back on your spending and save more money!