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Budgeting Economics Ms. McRoy.

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Presentation on theme: "Budgeting Economics Ms. McRoy."— Presentation transcript:

1 Budgeting Economics Ms. McRoy

2 Aim What are the major categories on a budget?

3 When budgeting always remember the golden rule: “Pay yourself first!”
What is it? A list of your sources of income along with all of your expenses. Income: what you earn Expenses: what you spend it on Based on this, you can make informed decisions about best ways to spend, save, and invest your money! When budgeting always remember the golden rule: “Pay yourself first!”

4 Types of Expenses Fixed expenses: cost the same amount every time you pay them. Variable expenses: fluctuate in payment amount. Periodic/Occasional expenses: things you pay for once in a while. These can be fixed or variable.

5 Types of Expenses (cont’d)
What does your family spend money on? In groups of 5, make a list of expenses that your families spend money on. Which are fixed, which are variable, which are periodic? Did any group list “savings” as an expense? Looking at these lists, what are possible ways to increase savings?

6 Types of Expenses (Examples)
Fixed expenses: savings rent a mortgage with fixed monthly payments or car loan payments Variable expenses: utilities groceries Periodic/Occasional expenses: These can be fixed or variable. car insurance car repairs

7 Building a Budget Set a goal Decide on a time frame (e.g. monthly)
SMART goal: Specific, Measureable, Action-oriented, Realistic, and with a Time-frame Decide on a time frame (e.g. monthly) List all your forms of income (e.g. work, allowance, gifts, interest, etc) List all your expenses Break them up between fixed, variable, periodic Remember to think “pay yourself first!” Check your budget: If Income – Expenses < 0, you have a deficit! Adjust your budget If Income – Expenses = 0, then balanced If Income – Expenses>0, then you have a surplus!

8 Savings - How much is enough?
Emergency Fund The first goal should be the creation of an emergency account, an account to get you through an emergency (e.g. getting laid-off from work, extended illness/injury, or natural disaster) A typical emergency fund should have 3-6 months of income This number increases to 1 year as responsibilities (e.g. purchasing a home, starting a family) increase Advantage: It’s a liquid investment Have an emergency fund BEFORE you start to invest

9 “Aim” What are the major categories on a budget?


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