1. Making the Most of Your Money
Unit 3: Budgeting
Making the Most of Your Money

2. Where should all my money go?
Smart Money Managers Know:
Money coming in
Money needed to spend on bills
Money needed for day to day purchases
How much to set aside to SAVE for bigger purchases

3. How Does Your Spending Measure Up?
How much money do you get on AVERAGE a week?
Where do you get it?
Where do you spend it?
Do you spend all of it?
Do you save any?
What do you have in the bank?
Complete the chart

4. Spending plans
Budgets – a plan for managing your money during a given period time
Also known as a spending plan
Plan will change over time
High School Student
College Student
First Job
Promotions
Evolves to help you meet your responsibilities and achieve goals

5. Budgets – What happens when you don’t have one
Spending money haphazardly
Buying things you don’t really need
Run out of money
Overspend
End up in debt

6. What if? Who buys a drink everyday? $1 .50 X 5 days = $7.50
$7.50 X 4 weeks = $30
What else could you spend $30 on?

7. What if? What if you stopped buying a drink a day for 3 months?
How much would you save?
$30 X 3 Months = $90
What could you spend $90 on?

8. Part 1 of the equation
Income

9. Income Cash Flow = the money you have coming in and out
Income = money you receive
Job
Allowance
Check for birthday
Selling your stuff
Interest on a savings account

10. NO! Income – Gross v Net Pay for doing work Gross Income v Net Income
Gross Income = total amount of income from your wages
Total number of hours you work times your hourly rate
Is your gross income what you bring home?
NO!

11. Income Gross v Net
Net Income – income received after payroll deductions are taken out of your pay
Also known as “Take Home Pay”
Starting point for creating a spending plan
Payroll Deductions – money subtracted from your employer for taxes and other work related items

12. Common Payroll Deductions
Taxes
Health Insurance
Retirement Plans
Day Care
Pension
Union Fees
Charities

13. Taxes Largest Deduction
Fees that support government programs and required by law to be applied to income, property or goods
Programs run at local, state or federal levels
Taxes pay for things such as road maintenance, public schools, armed services, and retirements income

14. 4 common tax deductions
Federal Income Tax – fee collected by federal government to support its federal programs
EMPLOYERS withhold this tax from employees and send it to the IRS (Internal Revenue Service)
State Income Tax – fee collected by the state to help pay for state services
EMPLOYERS collect this from all employees and send it to the state revenue department

15. 4 common tax deductions
Social Security Tax – provides small income and services to the elderly, disabled Americans and orphaned minors
EMPLOYERS withhold this tax from employees
Medicare Tax – provides medical insurance to the elderly, and some disabled Americans
Both taxes are deducted from the employees pay and EMPLOYERS send them to the Social Security Administration
Federal Insurance Contributions Act (FICA) is part of the tax code that applies these two taxes

16. What’s a W4? W-4 form is a form you fill out at time of hire
Tells your employer how much money to take out of our pay for taxes
Based on a series of factors
Martial status
Whether you have more than one job
How many children you have
The lower number of “allowances” the higher amount is taken out of your pay for taxes
Most High School and College students stay within the 0-1 range

17. review pay stub

18. Part 2 of the Equation
Expenses

19. Expenses Expenses - things you spend your money on
Can be needs or wants
Three Types of Expenses
Fixed – cost the same each time
Car loan, student loan, mortgage payment, rent
Variable – fluctuate in amount
Groceries, gas, you can control expense
Periodic (or occasional) – don’t pay every month
Magazine renewal, auto repair, roof repair

20. The Most Important Expense
Pay Yourself First (PYF) – whenever you receive money, put a certain amount into an account that you will set aside to meet a long term goal.
Good way to start an emergency fund
Direct Deposit allows you to split the deposit of your paycheck
Banks can do automatic transfers– they will transfer a set amount into your savings account from your checking

21. Building a Budget
Decide the time frame for tracking your income and expenses
List all the money you have coming in.
Break income into categories such as work, allowance or other
Total ALL INCOME
Categorize your expenses
Don’t forget PYF
Total ALL EXPENSES
Subtract your total expenses from your total income
Monitor budget – do you need to make any changes

22. 1. 2. 3. 4.

23. Keeping on track Get organized Use file folders
Break documents into categories
Checking Account Statements
Balance Checking Account each month
Catch up on fees
Keep for 1 Year
Shred after 1 Year

24. Keeping on track Savings and Investment Statements Pay stubs
Check statements
Keep 1 Year**
Shred after 1 year**
Pay stubs
Check you pay stubs for errors
Save until you file taxes
Check last paycheck against W2 form for taxes
Shred after taxes are files

25. Keeping on track Tax Documents Insurance Elements
Collect W2, checking and savings tax documents, and investment statements to file taxes
Keep tax info collected until after taxes are files
Keep Filed Taxes Report for 7 Year
Insurance Elements
Keep copy of “declaration” insurance pages – information on coverage and deductable amount
Keep premium notices for 1 Year

26. Keeping on track Loan and Credit Card Statements
Check for errors
Loans – keep signed agreement and statements for length of the loan
Credit – keep monthly statements for 1 year, signed agreements for as long as account is open
Receipts and Warranties for Big Ticket Items
Keep all BIG TICKET receipts
All other receipts, keep for a year

27. Tips on staying on track
The Envelope System – label envelops with your expenses, distribute money into each envelope
The Tally System – at end of week enter the amounts on the receipts below the amount budgeted for each category
Track with Your Checking Register – as you spend, make a note of what you spend in the payment/debit column so you track every dollar
The Budget Spreadsheet – enter each time you spend money into an Excel spreadsheet
Personal Finance Software - Quickbooks, accounting programs