1. Making a Financial Plan Chapter 27-2

2. Creating a Financial Plan Financial plan – guides spending and saving so that money makes life enjoyable rather than upsetting (also called a budget) Look at short and long term goals What do you want to do with your money? What expenses are necessary and which are luxuries?

3. Creating a Budget First estimate your income If employed, base your income on take-home pay rather than on your hourly wage or salary If your hours are irregular, estimate your average pay Money for taxes, social security, and company benefits is deducted from paychecks Add allowance and other regular income

4. Creating a budget Secondly, determine your expenses Keep a record of the cost of everything you buy Third, analyze your spending habits (think about how much you spend on: snacks, candy, gum, magazines, personal products, clothing, CDs, etc.?) Fixed expenses – regular expenses (rent, insurance, activity fees) Flexible expenses – these do not occur regularly (birthday gifts, textbooks)

5. Plan for Spending and saving To make a financial plan, decide how to spend your money List total fixed expenses