Only 40 percent of Americans use a budget to plan their spending… The rest routinely spend more than they can afford.

Examine reasons to keep track of your spending Summarize the advantages of having a spending plan Identify various sources of income Identify various types of expenses Explain the purpose of paying yourself first (P.Y.F.) Explain how to build a budget Examine forms of record keeping involved with budget and cash management Summarize how a budget will change throughout your life cycle

A plan for managing your money during a given period of time

Helps determine where you are spending your money currently Helps decide where to spend your money in the future You have an organized way to save for things that cost more Puts you in control of your financial future, beginning NOW.

Are less likely to know what they have Have no plan, often coming up short before their next paycheck or allowance Are almost certain to have no plan to save for more expensive spending goals

Does it makes sense to create and live within a budget when you don’t have a lot of money? What if you find that you are consistently spending more in one area than you had planned to? What if you find that you can’t live within your budget?

1.Income – Wages from jobs – Allowances – Gifts – Interests from savings or investments 2.Spending – Expenses for our needs and wants

Taxes – government fees on business and individual income, activities, products or property. Medical Insurance Savings in Retirement accounts

1.Federal Income Tax – tax on the amount of income people earn 2.State Income Tax - TN does not have 3.Social Security Tax – Provides a small income and other services to the elderly, disabled Americans, and orphaned minors. 4.Medicare Tax – provides medical insurance to the elderly and some disabled Americans

1.Fixed: cost the same amt every time Home loan, car loan, rent

2.Variable: fluctuate in amt, you have some control on how much they’ll be Groceries, gas, power and water

3.Periodic or Occasional: ones you don’t pay every month be fixed or variable also Car insurance (every six months) Car repairs, doctor visits

DescriptionFixed?Variable?Periodic? Groceries Piano Lessons Cable TV Bill Magazine Subscription Renewal Car Loan Payment Cell Phone Bill √ √ √ √ √ √

Putting away money for savings should be included with all your other expenses

Building a Budget Jackson’s Monthly Budget Estimated Income: Paycheck (after taxes)$2, Interest Earned50.00 Total Estimated Income$2, Fixed Expenses: Savings (P.Y.F.)$ Car Payment Rent Cable TV/Internet75.00 Estimated Variable Expenses: Utilities Food Gas Periodic Expenses: Car Insurance ($300/6 months)50.00 Total Expenses$2, Total Income$2, Total Expenses2, $ 0 1.Decide the time frame for tracking your income and expenses. 2.List all the money you have coming in and total all your income. 3.Categorize your expenses into fixed, variable and periodic. 4.Subtract your total expenses from your total income. It should equal zero. 5.Step back and look at your budget and your financial plan. Do you need to adjust it to bring your spending plan more in line with your financial goals?

1.Checking account statements 2.Savings and investments statements 3.Pay stubs 4.Tax documents 5.Insurance statements 6.Loan and credit card statements 7.Receipts & warranties for big-ticket items