1. Budgeting after you have identified your financial goals
How to budget your money

2. “Some Money Facts” $ The average person spends money times a day.
$ A movie with popcorn and a soft drink can easily cost $20
$ Just one soft drink a day for .99c adds up to $ in a year
$ What’s the biggest expense item for teenagers? FOOD!

3. Money Matters: How many times a day do you spend money?
The average person spends money 6 times a day.
Money brings happiness? – Money problems bring unhappiness
Money problems stay with you for the rest of your life.
Top reason for divorce is financial. Finances affects everything else in your life.

4. Ways to improve your finances
Make more money
Cut your expenses
“Wait and win the lottery” system
Have a budget

5. What is a budget? A tool to manage your money
For a specific period of time – usually monthly
Budget due to limited resources
Helps us meet responsibilities and financial goals

6. Reasons for a Budget Track spending Meet financial goals
Money toward expenses/bills
Avoid careless spending
Eliminates stress
Live within your means/income
Meet financial goals
Save
Invest
…Puts you in control of your financial future, beginning NOW.

7. Without a Budget… Have no plan Paycheck-to-paycheck Come up short
No plan for emergencies
No savings/investing plans
Less likely to know what $ you have

8. How to Build a Budget
Decide on a time frame for tracking expenses (monthly)
List all money you have coming in (income)
Disposable income
Discretionary income
PYF (Pay yourself first) = Savings
Make categories for all expenses
Subtract total expenses from income
Study budget and make changes

9. PAY YOUR$ELF FIRST!
Every time you PYF, you are developing a saving habit that leaves you with more money to spend later on for things that are really important to you!
Save 10% of your disposable income each time you get paid

10. Budgeting Terms Budget – tool for money management
Disposable income – after taxes
Discretionary income – after all expenses paid
Expenses:
Fixed expenses – monthly contractual
Variable expenses – not contractual, vary each month
Periodic fixed expenses

11. Spending plan activity
Decide if each item is income, a fixed expense, variable expense or periodic expense

12. Spending plan activity
Rent
Fixed expense
Wages
Income

13. Spending plan activity
Groceries
Variable expense
Internet bill
Fixed expense

14. Spending plan activity
Tips
Income
Utilities
Variable expense

15. Spending plan activity
Gift from family
Income
Savings
Fixed expense - PYF

16. Spending plan activity
Automobile insurance
Fixed expense
Eating out/Snacks
Variable expense

17. What is included in a budget for a family in a given month?
The typical family spends their money on:
Housing - 30%
Transportation - 20%
Food -15%
Utilities, Home Improvements - 14%
Saving - 10%
Insurance - 7%
Other - 4%

18. What does it look like? Budget Template
Income
Amount
Wages $
Total Income
Expenses
Fixed Expenses
PYF (10%)
Variable Expenses
Periodic Expenses
Total Expenses
Net Gain or Net Loss

19. Allocate money to each category
Net gain - $ remaining to either save, spend or invest
Net loss - spending more money than earning and has to use credit (borrowed money) to meet their financial obligations
A spending plan should have income and expense matching one another (reach zero)
Income
Expenses
Net gain or loss

20. Implement and Control
There is not one correct control system. Depends upon the individual/family
Envelope systems – individuals place the actual budget amount of cash from a paycheck into a specific envelope system for the expense
Check register system – helps consumers to track all expenditures in a checkbook register which has been divided into spending plan categories
Electronic spending plan systems – multiple types of software are available for consumers to use to help keep track of their financial records like

21. Net worth statement Net Worth Assets Liabilities
A net worth statement describes an individual or family’s overall financial condition on a specified date
The components include:
Assets – Everything a person owns with monetary value
Liabilities – Debts or what is owed to others
Net worth - The amount of money left when liabilities are subtracted from assets (indicates wealth)
Assets
Liabilities
Net Worth

22. Who is Wealthier? John – earns $35,000 per year
Alex – earns $100,000 per year
Assets
Home
$60,000
Retirement
$24,000
Automobile
$8,000
Total Assets
$92,000
Liabilities
College loan
$6,000
Mortgage
$35,000
Total Liabilities
$41,000
Net Worth
$51,000
Assets
Home
$75,000
Retirement
$35,000
Automobile
$8,000
Total Assets
$118,000
Liabilities
College loan
$10,000
Automobile loan
$4,000
Credit card debt
$20,000
Mortgage
$65,000
Total Liabilities
$99,000
Net Worth
$19,000