1. Introduction to Business & Technology
Budgeting
Introduction to Business & Technology
Welcome to our PowerPoint on budgeting. In this PowerPoint we will discuss why budgeting is important and how you can go about creating and implementing a budget
DI- get a banker to come in a speak on this

2. What is a Budget? A plan for spending and saving money
Most people think budgets are:
Rigid and inflexible
Painful – who wants to eat Top Ramen every night!
No fun!
So what exactly is a budget? A budget is a plan for spending and saving money. Budgets can be long and detailed, but they can also be very simple. Most people think that budgets are rigid, inflexible, painful, and no fun to make. However, making a budget can keep your finances more organized, and they can save you money in the long run.
“A budget takes the fun out of money” – Mason Cooley

3. Why Budgets Make Sense Budgets help you: A good budget is: Realistic
Set priorities
Achieve what’s important to you
A good budget is:
Realistic
Ongoing
Clear and easy to use
A budget helps you see your priorities because it shows you exactly how much of your money should be allocated out to individual entities. Take a look at the pie chart which shows the distribution of money. Clearly, housing is much more important than recreation.
A good budget is:
Realistic- because it it is not then it is pointless.
Flexible: It should change as your needs change.
Ongoing: It’s not a one-time event. A budget should be part of your everyday life.
Clear and easy to use: 12 page spreadsheets are out!

4. Budget Categories Income Savings Expenses Gross Net Emergencies
Long-Term
Retirement
Short-Term
Expenses
Fixed
Variable
Discretionary
There are three main categories to your budget: Your income, you savings, and your expenses. The goal of the budget is to increase your savings while paying your expenses, so your income should be divided between these two things.

5. Income: Money Earned
Gross income: An individual’s income before taxes.
Net income: Income after taxes are paid.
Taxes-
Georgia state taxes can range from 1-6% depending on your income
Federal Taxes also vary by income and can range from %
Let’s talk about income in a bit more detail. Income means the amount of money you earn.
Your Gross income is the total amount you earn BEFORE taxes
Your net income is how much you are paid AFTER federal, state, and local taxes are taken out of your income. When receiving pay checks, you can have these deductions automatically taken out. Georgia state taxes can range from 1-6% of your gross income; federal taxes can range from 10-nearly 40% of your gross income.
Taxes:

6. Taxes and Deductions Say your first job pays $30,000/year:
Your salary is your gross income (30,000). Take off at least 25% for taxes and other deductions to find your net income. That’s what’s left for you to spend.
Example:
Gross salary = $30,000
Minus 25% taxes and deductions ,500
Net income $22,500

7. Savings: Pay Yourself First
Savings- unspent income
Types:
Emergencies: Plan to set aside three months’ living expenses
Long-term: Large ticket items (house, car, college)
Retirement: It’s never too early to start
Short-term: Vacation, clothes, new skis
Savings are considered any amount of unspent income. There are four main types.
1.) Emergency savings- this is for any sort of emergency that may occur. Ideally you should save enough money for THREE months of living expenses in case of an emergency. An emergency could be losing your job, or any sort of medical issue.
2.) Long-Term Savings- this is saving for a long term goal, like college, buying a house, paying of a car, etc.
3.) Retirement Savings- which It is never to early to start saving for retirement
4.) And lastly, SHORT- Term savings- these are savings that are quickly spent like on clothing, gas, recreational activities, etc
“When it rains, it pours- make sure you save for the rainy day,” Anonymous

8. Interest on Savings Accounts
Interest: when you save your money in a savings account with a bank, they will pay you with interest. They are paying you because:
1) It is incentive to use their banking services
2) They use your money for capital and investments
Interest rates are a percentage of the money that you get back based on the amount you invest with the bank; so the more you put in, the more money you get back. These rates vary from bank to bank.
when you save your money in a savings account with a bank, they will pay you with interest. They are paying you because:
1) It is incentive to use their banking services
2) They use your money for capital and investments
Interest rates are a percentage of the money that you get back based on the amount of money that you deposit with the bank; so the more you put in, the more money you get back. These rates vary from bank to bank.

9. Savings: Certificate of Deposit
“CD”- an agreement that locks your money into an account that you cannot access for a set amount of time, but a bank will give you a higher fixed interest rate for compensation. A CD…
1.) Generally lasts for 1-5 years
2.) Cannot be accessed by the depositor (unlike savings accounts)
3.)Has a higher interest rate as opposed to savings accounts
A Certificate od deposit is a contract between you and the bank. It locks your money into an account that you cannot access for a set amount of time; you and the bank can negociateo n this amount of time. However, because you lock you money in, the bank will give you a higher fixed interest rate for compensation. A CD generally lasts for between 1-5 years, it cannot be accessed by the depositor, and it has a higher interest rate as opposed to savings accounts.

10. Savings: Stock Investments
Stock- a type of money investment that signifies ownership in a corporation and represents a claim on a part of the corporation’s assets, earnings, and losses. Stocks are usually…
1.) Long term investments
2.) Extremely variable
3.) Not guaranteed (savings accounts & certificates of deposit are guaranteed by our government)
Stock is a type of money investment that signifies ownership in a corporation and represents a claim on a part of the corporation’s assets, earnings, and losses. In other words, the stock holder owns a claim on a portion of a company, and can either gain or lose money depending how the company is doing on he market. A stock is usually a long term investment, it extremely variable and it is not guaranteed

11. Personal Savings Rate Declining
1974 to 1984  10%
 Fell to 4.8%
2004  1.8%
2005  -0.5%
2006  -0.7%
This is the first time the rate has not been negative since the Great Depression }
The personal savings rate is, essentially, the amount of after-tax income left once household bills are paid. As a percentage of income, it's declining. The personal savings rate used to be 10 percent of disposable income from 1974 to 1984, according to the Bureau of Labor Statistics. It fell to 4.8 percent by 1994, and was negative for all of As of January, the personal savings rate was minus 0.7 percent.
Americans not only spent all of their after-tax income in but had to dip into previous savings or increase borrowing.
The savings rate has been negative for an entire year only twice before — in 1932 and 1933 — two years when the country was struggling to cope with the Great Depression, a time of massive business failures and job layoffs.
One major reason that consumers felt confident in spending all of their disposable incomes and dipping into savings last year was that a booming housing market made them feel more wealthy. As their home prices surged at double-digit rates, that created what economists call a “wealth effect” that supported greater spending
Source: The Bureau of Labor Statistics, March 2006

12. Expenses Expense: A cost to meet a need or pay a debt
Types of expenses
Fixed
Variable
Discretionary
Expenses. Expenses are any cost that needs to be paid. There are three main types: fixed, variable, and disretionary

13. Needs vs. Wants Needs are essentials: Wants are extras: Food Shelter
Clothing
Transportation
Wants are extras:
Eating out
Big, expensive house
Shop till you drop
Brand-new or expensive car
Lets remember with expenses there is always a difference between needs and wants, needs are necessary things and wants are extra. Sometimes It’s hard to differentiate between needs and wants. What are some more examples of each?

14. Fixed Expenses Costs that occur regularly and do not vary in amount
Rent
Mortgage
Car payment
Insurance premium
School loans
Others?
Fixed Expenses. Fixed expenses are costs that occur regularly and DO NOT vary in amount. For example, rent, mortgage payments, car payments, and school loans are all payments in which you pay the same amount every time.

15. Variable Expenses Costs that occur regularly but may vary in amount:
Electricity
Water and Garbage
Telephone
Gasoline
Groceries
Variable Expenses. A variable expense is a cost that occurs regularly but it may vary in amount. For example, water and electric bills come monthly, but the cost depends on the usage.

16. Ways to Reduce your Grocery Bill
Make a shopping list
Study grocery ads
Buy store-brand products
Avoid impulse purchases
Learn the basic prices of your favorite foods.
One large expense is food, many people over spend in this area because it is easy to confuse a “want” and a “need” when it comes to food. Eating out may appear cheaper, but in the long run it will cost more money. One way to save money is to grocery shop correctly. These five steps can save you a lot of money when you go to the grocery store.
Make a shopping list
Deviating from your list usually causes you to buy things you don’t really need — and impulse buying can significantly add to your bill. Limiting yourself to one trip a week will also keep you on track with your list. Those extra trips almost always end with more in your cart than you set out to buy.
Study grocery ads
Note what’s on sale, and plan your menu around sale items. Just make sure the sale items you buy are ones you will really use. Pick two stores to shop at — going to more will take too much time and use up any savings in gas money. Make one of the stores an outlet store, and consider shopping there first. Then you can buy at the main grocery store what you couldn’t find at a cheaper price at the outlet store.
Buy store-brand products
Brand-name products almost always cost more than store brands. Shoppers should also realize that store brands are often made by the same companies that make brand-name products. In these cases, the food inside each package is the same; the only difference is the package itself. Coupon clipping might not be as helpful as you think because most coupons are put out by brand-name companies.
Avoid impulse purchases
Don’t push your cart up and down all the aisles; stick to the ones that hold items on your list. In some stores, it’s best to shop the outer perimeter of the store, and avoid the middle aisles where many non-essential items are located. That doesn’t always work, however, as many stores are now sticking impulse-buy items in those outer aisles. At first, you may not even realize it, but think about how often you’ve seen glaze and shortcakes displayed right next to the fresh strawberries.
Learn the basic prices of your favorite foods.
This may take some time and serious study at the grocery store, but it’s the only way to know if something is a bargain. Also, use simple math to figure out if the popular come-on for “10 cans for $10” is really a good deal. And remember: you don’t always have to buy all 10 cans; the price for that kind of deal may be set per can.

17. Discretionary Expenses
Costs determined by personal wants that may be controlled
Movies, videos, CDs
Sports
Eating out
Grooming and clothes
Concerts and plays
Vacations
Others?
Discretionary Expenses. Discretionary expenses are costs determined by personal wants that may be controlled. The amount of discretionary expense that you have may vary from time to time; for example if you get higher pay check you may spend more money in this category. This expense includes things like going out to the movies, videos, sporting vents, clothing, etc.

18. Budget Summary Establish a budget:
Income
Savings
Expenses
Fixed
Variable
Discretionary
End up with a budget surplus and you’re a success!
So now that you understand the individual pieces of a budget, you can now establish one. Remember, a budget is based around income, savings, and expenses. The goal of a budget is to end up with a surplus of money; this is how you know it is a success. Good luck.