1. Budgeting Essential Questions
Why is it important to have a balanced budget?
2. How does evaluation play a role in the budgeting process?
Budget, income, expense, cash flow, discretionary income, gross/net pay, asset, liability, net worth, liquidity, market value, fixed/variable/periodic expense, surplus, deficit, variance

2. Budget A successful budget is….. Carefully planned Practical Flexible
A budget is a plan for managing your money for a given period of time.
A successful budget is…..
Carefully planned
Practical
Flexible
Written & accessible
Step 2– Categorize & list income & expenses
Step 1- Planning
(Decide your goals & timeframe)
Step 5– Evaluate and Make Adjustments
Step 4– Implement and Control
Step 3– Estimate your expenses

3. Spending plan category pie chart

4. $ $ $ $
Income: Money you receive as payment for goods or services (salary, wages, interest, capital gains, commission)
Expense: Payment for good or service
Cash Flow = Income - Expenses
Discretionary Income: Money left after paying essentials
ex: food, clothing, shelter

5. Gross vs. Net Pay

6. Net Worth (ASSETS – LIABILITIES = WORTH)
Asset: Item that has economic value
Market value: Price at which an asset would sell
Liquidity: Ability to convert to cash & maintain value
Liability: Financial obligations (debts) that must be paid
Net worth: Value of a person’s assets-liabilities
Personal Balance Sheet: List of assets, liabilities, and net worth
…Are less likely to know what they have
People without a plan are rarely organized enough to stay focused on just how much they have to spend at any one point.
…Have no plan for spending what they have, often coming up short of money before their next paycheck or allowance.
Even if they know how much they are earning, people without a budget have no structured way of spending what they’re bringing in. That often leads to an empty wallet long before the next paycheck or allowance.
…Are almost certain to have no plan to save for more expensive spending goals.
When you don’t necessarily know what you’re making, and you have far less of an idea of where you’re spending your money, you’re also very unlikely to have any real saving plan for buying those things that cost a lot of money. Lacking any of these, the temptation to borrow money to get ‘big ticket’ items is great. As you’ll learn later, borrowing costs money that you will pay to whoever is loaning you the money. Bottom line? A big ticket item that is paid for with credit (rather than saved for over time) will cost you many more hard-earned dollars, leaving fewer dollars for you to spend on things that would directly benefit you.
(B&PF: p. 67)
2-B-2
Google images
Google images

7. Budget For Fixed Expenses: Same amount on a regular basis
Variable Expenses: Different amount on a regular basis
Periodic Expenses: Occur occasionally & can be fixed or variable

8. BUDGET 0 Balance: Income = Expenses
Variance: Difference between estimated & actual expenses
Surplus: An amount left over when requirements have been met (if you spend less than you had expected)
Deficit : The amount by which a sum of money is less than the required amount (spending more than expected)
2-F

11. Create A Spending Chart
Open Microsoft excel
In row 1 type your expenses (minimum of 4)
In row 2 (directly below) write the dollar amount spent on each of the expenses
Highlight all of the data (do not include any extra cells)
5. Click on the insert tab
6. Under the charts session, click Pie Chart
7. Make the chart have values in each section of the pie
8. Give the chart a title
Rent
utilities
cable
phone
food
ent.
700
100 75 50
250
125
This budget example has two categories, income and expenses.  Income includes money earned, including wages.  Expenses includes items you spend your money on, including rent and food.
The sample also has three columns, the first column, Monthly Budget Amount, is the budget estimate for the month.  The next column, Actual Amount, is the actual income and expenses for the month.  The final column, Difference, is the difference between the estimate and the actual budget (column 1 minus column 2).
Note that in this budget, the actual income and expenses were both below the budget estimate (Monthly Budget Amount).  Also, the person spent slightly more ($6) than they earned for the month.  They may need to cut their expenses next month, unless they receive higher income.  We would recommend that they add an additional row called 'savings' where they can budget for saving money every month.