1. Financial Responsibility and Money Management: Personal Budgeting Big Ideas Responsible personal finance decisions are based upon reliable information and used to reach personal goals A personal financial plan includes financial goals and a budget. A Budget includes ……? spending on goods and services, savings and investments, insurance and philanthropy

2. Overview Information A personal financial plan is designed to enable an individual to reach a goal What are some goals you may want to save for? – Steps to buy new phone or a car – How to save to pay for college

3. Financial plans are used for both short range and long range goals – Short-range: goals obtained within a year…Ex’s?.... Purchasing clothes, tickets, electronics Taking a vacation – Long-range: goals that take a significant amount of time Renting apartment, buying car Saving for college/retirement

4. Personal financial plan = budget that estimates the income and expenses over a specific period of time – Manages spending – Help achieve financial goals – Usually focus on long-range goals

5. Budget Categories Daily, Weekly, Monthly Spending: Ex’s….? Fixed vs. Variable Expenses….Ex’s? …..

6. Budget Categories Investments – maximize savings but involve risks – Stocks, securities, mutual funds – Can be fixed or variable Insurance – protects personal financial plan – Life, health, auto, home – Pay small amounts to possibly receive a large amount later – Usually Fixed but can VARY and can be PERIODIC

7. Budget Categories Philanthropic giving – making donations – Throughout life or after death – Money given to charities/foundations/scholarship funds Retirement and Estate planning – long term goal – How wealth accumulates over time for use after work/after death

8. Fixed Costs Life Ins 60 College Savings 200 Car Ins70 Car 250 + 280 = 530 Home Security90 Mortgage600 Home Ins / Tax 350 Home Equity Loan100 Furniture Loan 90 Savings 50 TOTAL$2140

9. Variable Costs Natural Gas 80 Electric 100 Water Sewer75 / month (every 3 Phone (home/cell)150 TV/Internet80 Gasoline80 Babysitter100 Church/Charity70 TOTAL735 Fixed + Variable =2875 + Deductions = 5167

10. Methods of budgeting – Personal financial worksheet May be for annual, monthly, or weekly Tracks income vs. expenditures – Checkbook balancing Provides a ledger for writing down income vs. expenditures for a particular bank account – Write down cash withdrawals made, debit card use, checks written

11. Has been largely replaced by online banking and online bank statements – Bank customers can now view their income vs. expenditures almost immediately after making a transaction (if using debit card) – Checks don’t “post” to account until they have been deposited by the receiver

12. – Requires awareness of personal income vs. expenditures Necessitates financial responsibility Allows individual to see “trouble areas”

13. A Budget: So Simple, But So Hard Why? Bravery/Courage……(Huh!?!??) Discipline