1. Unit 2 - Budgeting: Making the Most of Your Money Did you Know? In 2001, the average American teen spent $104 per week.

2. NEFE High School Financial Planning Program Unit Two – Budgeting: Making the Most of Your Money NEFE High School Financial Planning Program Unit Two – Budgeting: Making the Most of Your Money ?

3. NEFE High School Financial Planning Program Unit Two – Budgeting: Making the Most of Your Money  Part1 – Pie Chart  Using your recently created Spending Log, create categories of expenses and calculate the percent you spent on each category  Use that information to create a pie chart that represents how you spent your money  Answer questions on handout  Part 2 – Values and Spending

4. NEFE High School Financial Planning Program Unit Two – Budgeting: Making the Most of Your Money  …Helps you determine where you are spending your money currently.  …Helps you decide where to spend your money in the future.  …You have an organized way to save for things that cost more.  …Puts you in control of your financial future, beginning NOW.

5. NEFE High School Financial Planning Program Unit Two – Budgeting: Making the Most of Your Money  Helps you create a BUDGET  What is a Budget?  A plan for managing your money during a given period of time  Income - Expenses

6. NEFE High School Financial Planning Program Unit Two – Budgeting: Making the Most of Your Money  Any money you receive  Where do most teens get their money?  62% part-time employment, summer job, or neighborhood jobs (i.e. babysitting)

7. NEFE High School Financial Planning Program Unit Two – Budgeting: Making the Most of Your Money  If you earn $12.00/hour and work for 40 hours a week, how much money will you take home?  Expect at least 20% to be taken out for taxes!

8. NEFE High School Financial Planning Program Unit Two – Budgeting: Making the Most of Your Money  Federal and State Income Taxes – fees collected by the federal/state government to support its programs; sent to the IRS/state revenue department  Social Security – provides a small income and other services to the elderly  Medicare – provides medical insurance to the elderly

9. NEFE High School Financial Planning Program Unit Two – Budgeting: Making the Most of Your Money  Gross Income  Total amount of income from your wages, before any payroll deductions taken out  # of hours worked x rate per hour  Net Income  Gross Income – taxes or other deductions  Take-home pay

10. NEFE High School Financial Planning Program Unit Two – Budgeting: Making the Most of Your Money

11. NEFE High School Financial Planning Program Unit Two – Budgeting: Making the Most of Your Money  What you spend money on; your needs and wants  3 main types of expenses:  Fixed  Variable  Periodic or Occasional

12. NEFE High School Financial Planning Program Unit Two – Budgeting: Making the Most of Your Money  Fixed - costs the same amount every time  Rent, Car Payment, Cable bill, etc.  Variable – fluctuate in amount; usually have more control over how much they’ll be  Food, Electric bill, etc.  Periodic or Occasional expenses – you don’t pay every month, and can be either fixed or variable  Car Insurance due every 6 months  Auto repairs

13. NEFE High School Financial Planning Program Unit Two – Budgeting: Making the Most of Your Money  P.Y.F. – Pay Yourself First!  Saving is an all-important part of reaching your financial goals  Whenever you receive money, you should immediately put a certain amount into an account that you will set aside to use later to meet a long- term financial goal

14. NEFE High School Financial Planning Program Unit Two – Budgeting: Making the Most of Your Money Veronica’s Monthly Budget Estimated Income: Paycheck (after taxes) $2,100 Interest Earned 50 Total Estimated Income: $2,150 Fixed Expenses: Savings (P.Y.F) $500 Car Payment 325 Rent 750 Cable TV/Internet 75 Estimated Variable Expenses: Utilities 150 Food 200 Gas 100 Periodic Expenses: Car Insurance ($300/6 months) 50 Total Expenses $2,150 Total Income$2,150 - Total Expenses 2,150 $ 0

15. NEFE High School Financial Planning Program Unit Two – Budgeting: Making the Most of Your Money 1. You need a budget, even if you don’t want one.  B udgets are the most practical way to regain control of your finances. They take some work and disciple, but they pay off in spades. 2. You can make a budget in 3 steps. ▪ Keep track of your current spending for a time, categorize and total your spending, and then track it to make sure it doesn’t exceed the limits you impose.

16. NEFE High School Financial Planning Program Unit Two – Budgeting: Making the Most of Your Money 3. Be careful with cash  If you find that you have no idea where your cash is going after you visit the ATM, consider tracking cash spending better. 4. Live within your means  It may seem simple, but don’t spend more than you make

17. NEFE High School Financial Planning Program Unit Two – Budgeting: Making the Most of Your Money 5. Understand the difference between a want & a need  Sometimes the things we think we “need” are better classified as luxuries. ie) drinking a mocha latte every morning when you could brew coffee at home. 6. Take 10% off the top. Pay yourself first.  Every paycheck, put 10% aside for you. This way, you will never spend more than 90% of your income.

18. NEFE High School Financial Planning Program Unit Two – Budgeting: Making the Most of Your Money 7. Let your computer do the work.  There are great software programs out there to make budgeting less of a chore. 8. Don’t obsess.  Focus on the big picture.

19. NEFE High School Financial Planning Program Unit Two – Budgeting: Making the Most of Your Money 9. Don’t count your eggs before they’re hatched.  Windfalls are nice, but you can’t depend on them. Big tax refunds, end-of-year bonuses, or investment returns are not guaranteed. 10. Don’t let your spending creep up.  As you make more money, don’t spend more.

20. NEFE High School Financial Planning Program Unit Two – Budgeting: Making the Most of Your Money

21. NEFE High School Financial Planning Program Unit Two – Budgeting: Making the Most of Your Money  …Are less likely to know what they have.  …Have no plan, often coming up short before their next paycheck or allowance.  …Are almost certain to have no plan to save for more expensive spending goals.

22. NEFE High School Financial Planning Program Unit Two – Budgeting: Making the Most of Your Money  Does it makes sense to create and live within a budget when you don’t have a lot of money?  What if you find that you are consistently spending more in one area than you had planned to?  What if you find that you can’t live within your budget?