1. Looking at Finances Budgeting

2. Financial Planning Benefits of planning: 1. Helps you live within your incomeHelps you live within your income 2. Identifies financial priorities 3. Helps distribute funds to pay expenses 4. Can help reduce the amount spent on credit

3. Financial Planning 5. Helps prepare to face emergency expenses 6. Helps meet long-term financial goals 7. Gives a sense of financial independence

4. Financial Planning Premature Affluence: A false sense of wealth some teens get once they begin to make their own income Do you agree?

5. Financial Planning Elements of financial planning: 1. Identify financial goals: Includes understanding what is important to you and future success 2. Understand your current financial situation: evaluate your state of finance This can be done by creating a 

6. Financial Planning Balance sheet: a statement of what you own and what you owe Assets: Items of value you own, including cash Liabilities: Debt, money you owe others Net worth: The difference between your assets and liabilities

7. Personal Balance Sheet Example

8. Financial Planning 3. Analyze current spending habits : understanding where your money goes Who has ever wondered where that twenty dollars you had went to? 4. Use management tools to help reach goals One such tool is known as a budget

9. Financial Planning Budget: a plan for spending and saving your funds, based on your income and expenses.Budget Future needs may change, you must adapt. Possible reasons may include Marriage, parenthood, children moving out, aging, family crisis

10. Financial Planning Financial software: designed to aid in the managing your personal and family finances. May include Checkbook and expense tracking, automatic reminders, budgeting programs, investment tracking, planning calculators, Smart phone Apps.budgeting programs Also includes many online features such as:

11. Financial Planning Online Banking: conducting business with financial institutions over the internet. –What are some advantages and disadvantages of online banking? Online bill payment: paying bills electronically over the internet Online bill presentment: receiving bill payment over the internet

12. Financial Planning Using software is not for everyone Tips for using software: 1.Make regular back-ups of data 2.Understand the software and be comfortable using it 3.Stay aware of upgrades –Disadvantages of financial software?

13. Financial Planning Why make a budget? Budgeting is often misunderstood. Many think it deprives you of things you want. It really creates a plan on how to effectively get the things you want

14. Financial Planning Budget can help you: Avoid running out of money between paychecks Evaluate your spending habits and make better choices Set aside savings for unexpected expenses Work toward financial goals

15. Financial Planning Budgets can be set-up for a year or monthly Budgets are based on income: Gross income- money earned before taxes and deductions Net income- Take home pay

16. Financial Planning Estimating expenses are usually broken down into two categories 1.Fixed Expenses: regular payments that don’t vary in amount. Examples? 2.Variable expenses: expenses that increase or decrease from month to month. Examples? 3.How to build a budgetHow to build a budget

17. Financial Planning What happens if you can not balance your budget? Start looking at Discretionary expenses: expenses that are not absolutely necessary. What are some of these expenses you have and could cut out? Budgets may need some fine tunings and revisions

18. Financial Planning Good recordkeeping helps ensure finding information when you need it. Typical documents could include 1.Identification: birth certificates, drivers license, passports 2.Legal proof: car titles, cancel checks 3.Loan applications: documents of assets or income

19. Financial Planning 4. Tax purposes: tax related information, receipts, charity donations 5. Will also include aid in budgeting, verifying transactions, reference, and medical reasons

20. Financial Planning A few terms to know: Safe deposit box: locked box that can be rented from your bank Items that be stored may included certificates, deeds, titles, or any valuables that are not being used at home ex: antique jewelry

21. Financial Planning Credentials: a license, certification, or degree that indicates that a person is qualified to perform a certain service Pro bono: legal services provided at no charge from attorneys