Chapter 6: Budgeting

Chapter 6.1 Choose Financial Goals

Cosmo Quiz Read each question on the Cosmo Quiz. Total up your answers Determine how you manage your money!

Cosmo Quiz Scoring 1. a. 5 b. 1 c. 3 2. a. 1 b. 3 c. 5 3. a. 3 4. 5. 6. c. 1 7. 8.

Scoring Results 10 – 20 points You tend to be a bit overcautious with money. You don’t mismanage your money, but you’re not being fair to yourself either. You should treat yourself to something special. 21 – 30 points You manage your money wisely. When you receive money, you know exactly what to do with it. You save some of your money and leave some left over for yourself. 31 – 40 points You tend to be a bit careless when it comes to managing money. Money burns a hole in your pocket. You need to learn to be a little more conservative with the money you receive. You will soon find that your finances will fall into place. Have students read their results based on the score of their quiz

Bell Ringer 1 Write down 3 short term spending goals you have (within 6 mo- yr) Write down 3 long term spending goals you have (1 yr-more)

Budget A plan for dividing income among spending and saving options. It can help you achieve more of what is important to you during your life span.

First Step in Budget Process.. First step in budgeting process is to consider important goals you have set in your life-span plan

Short Term Vs. Long Term Goals Things you hope to achieve within a year Spending $200 to visit a friend who moved away Can be achieved quickly Long Term Things you want to achieve over more than a year Pay for a house, college, retirement, etc. Saving over time

Balancing Long Term Spending with Long Term Success Control short term spending Saving NOW!! Spending to satisfy short term wants can affect your future plans Evaluate priorities

Your Goals Affect Others Your actions affect you and your family Consider how your goals impact other people in your life.

Your Goals Affect Others Your Current Family You have a goal of being a computer programmer Paying for this degree requires a lot of money for your education Most parent help out in getting loans to help their children It can take many years to pay off the loan How might this financial burden affect your lives?

Your Goals Affect Others Future Family 75% of people marry before 30 yrs old Your decisions now or in the next few years can affect the person you marry By borrowing you trade future spending for current spending Borrow Responsibly!

Your Community and Your Goals You go to school Get a job Earn money Start a family The work you choose to do can benefit many people in your community!

Chapter 6.2: Track Income and Expenses

Income Money you receive in the form of: Paycheck Cash Gifts Tips

Expenses Items you spend your income on Income Cell phone bill Rent Groceries Cable/Internet Income

Filing System Labeled file folders Computer spreadsheet File receipts, check stubs, and notes about income or purchases Computer spreadsheet Keep spending organized so you can plan for vacations, major purchases, and long term expenses

Record Keeping File each record as you receive it File folder or computer spreadsheet Keep all your records in files and all your files in one place!

Fixed Expense Amounts you are committed to spend and are generally the same amount each month. Rent/mortgage Cell phone bill Cable bill Car payment

Flexible Expenses Varies month by month Amounts you can choose to spend or not to spend Clothing Groceries Entertainment: movies, concerts, restaurants

Luxury Goods Goods that have special qualities that make them more expensive then alternative goods. Sports car vs. A used compact car (Lexus vs. Toyota) Coach purse vs. Purse from Kohls You must choose among flexible spending options. Prioritize your options!

2nd step of budget process List your income and expenses This tracks where your money goes You can use excel as a starting point!

Fixed Expenses Advantage You know how much you have to pay when you have to pay it!

Food Budget Open your Life Smart Project to Page 3 Underneath your bell ringer, write down your monthly net pay from your life smart project (found on tax page 3). Multiply this amount by 15% This is your food budget!

Bell Ringer 2 List 2 reasons why it is important to budget your expenses.

Vacation Budget Project

Food Budget Brainstorm using the calendar to create a meal plan for the month of March. Identify breakfast, lunch, dinner, and snacks. List the ingredients you need to complete your meal plans. Make sure you incorporate all food groups!

Fruits and Vegetables Lack of fruits and vegetables can affect your health Fiber: good for heart and intestines Potassium: good blood pressure Vitamin A: healthy eyes and skin; protects against infections Vitamin C: heals cuts and wounds; healthy teeth and gums Fat: Low Calories

Side Affects of Food Lack of food- tired, unable to focus, feel weak, and nauseated Diet soda- contain artificial sweeteners head aches and mood swings Caffeine- can trigger anxiety; mood swings Saturated Fats- cause blockages in veins and arteries heart attack and strokes

Food Groups Check the male and female serving size chart in your packet to determine your need for each day.

Food Budget 1. Use the grocery store ads and grocery price lists to identify the cost of your ingredients. 2. Use a calculator to add up your list. 3. Complete the food budget reflection!

Food Budget Project Use ads to finish project Total up your prices! Turn in Blue Packet and Purple Reflection sheet Due: Tuesday March 19th!

03/18/13 Work on the short and long term financial goals tab of your Life-Smart Project Choose 1 item you want to buy short term Search 2 places you can buy this item at Research Pricing Choose 1 item you want to buy long term

Cosby Show Budget Episode

Bell Ringer 3 Read “How to Squeeze A Nickel” article Complete the answer sheet

Chapter 6.3: Your Budget Worksheet

Budget Worksheet A planning document on which you record your expected and actual income and spending over a short time, usually a month.

Information on Budget Worksheet Sources of income Expected Amount Actual Amount Over or Under Fixed Expenses Flexible Expenses Savings

5 steps in building a budget 1. Create a worksheet 2. Estimate your income Use NET income! Estimate uneven income (tips, gifts, varied income)

5 steps in building a budget 3. Estimate Your Expenses and Savings Plan for uneven expenses Car insurance, property tax, etc. Charitable Giving Plan your savings You should save 10% of your Net Pay each month! Try not to spend this amount!!

5 steps in building a budget 4. Record Actual Income and Expenses As you spend money, write it down! Make sure you are also filing receipts in your file box! 5. Calculate the difference Subtract expected amounts from the actual amount in each row. In the over under column, record the difference

Chapter 6.4: Create your budget for the year

Audit Checking your budget for accuracy and to determine whether it is helping you to achieve your goals

Review Your Budget Once a Year Can help you plan steps toward major goals that may take many years to achieve House, retirement, college, etc.

Review to Change Goals People change overtime Your goals may be different in 5 years When your goals change, your budget should change A budget is a flexible tool to help you achieve what you want!

Peapod Activity Find a computer and Log on! Go to the J Drive Watson Consumer Ed Peapod Activity 1. Think of meals you eat during the week for breakfast lunch and deal 2. Make a meal plan for 7 days 3. Start making a list of all the ingredients you will need 4. Use www.peapod.com to find your items and determine prices

Store Brand vs. Name Brand Store Brand Vs. Generic- Extreme Couponing Consumer Report Video Consumer Report 1 Taste Test

Questions 21-24 Word Bank A. Fixed Expense B. Long-term C. Life-Span D. Flexible Expense E. Short-Term AB. Long-term Goal AC. Wants AD. Needs