1. “Most people don’t plan to fail. They simply fail to plan.”
                                     
- BUDGETING -
“Most people don’t plan to fail. They simply fail to plan.”
After your test correction do “Test your $$ sense”

2. “Some Money Facts” The average person spends money three times a day.
A movie with popcorn and a soft drink can easily cost $20
Just one soft drink a day for .99c adds up to $ in a year
The biggest expense item for teenagers is FOOD!
Teens spend collectively $172 billion annually - $104 per week
Using a credit or debit card causes a person to spend 34% more
There are about 502 million credit cards in use today with $406 billion balance
Banks and credit companies make 51% profit from fees and penalties
UTAH, New York, and California buy the most “name brands”
Utah is #1 in Bankruptcy , Foreclosures, and Default on Mortgages
 2001 in Utah
Nearly 94,000 people under 25 yo filed for bankruptcy
Average in the US is 1 in 69 file for bankruptcy and in Utah is 1 in 34 filed
Rise in year olds moving back in with parents   

3. BE PREPARED How do you manage $$$? How do you build a house?
How would you go on a trip?
Floor plan
Gather resources
Consider options
Take action
Map it out
Gather resources
Consider options
Take action
How do you manage $$$?
When you operate without a personal budget, you are spending your money without a guideline or plan.

4. Spending Plan BUDGET
A plan for tracking and managing your income and expenses
“A Rich man knows exactly how much $ he makes and where it is going.
A poor man has no idea!”

5. Why a spending plan?
Gives a person an understanding of where their money is going.
Tracks income and expenses
Helps meet your financial goals
Helps live within your income
Reduces the need for using credit cards and going into debt.

6. 2 parts to a Plan Income Expense Money earned Money spent
Job, savings, parents, interest, gifts
Gross and Net
Expense
Money spent
Fixed and Variable / flexible

7. Budget Buster (off to side)
Give yourself 5 points if you have a budget.
Give yourself 5 points if you have a checkbook or a debit card.
Deduct 3 points if you have ever bounced a check or gone over on your card.
Deduct 2 points if you bought something this week without comparison shopping.
Give yourself 2 points if you bought a store brand, rather than a name brand item this week.
Give yourself 3 points if you have a savings account.
Give yourself 5 points if you added any money to your savings account this week.
Give yourself 3 points if you bring a lunch from home or eat school lunch.
Deduct 3 points if you go out for lunch more than 2 times a week.
Deduct 5 points if you routinely carry more than $10.00 in your purse or wallet.
Give yourself 5 points if you have a method of recording what you spend.
Total your points. The winner is the person with the most points.

8. Gross Income
The total amount of income earned before deductions are made.
You must earn $15.00 to buy a $10.00 item.

9. Net Income The amount of income left after deductions are taken out.
Now you get to spend!
How do your values influence your spending habits?

10. Income
Gumball machine represents components of the financial planning process
Income is money earned
Gumballs going into the machine
Wages from a job, allowance, gifts

11. Expenses - money spent *= Fixed Variable
Expenses which usually do not vary in amount and must be paid on a regular basis
(mortgage, car payment, insurance…)
Expenses which vary from week to week or month to month
(clothing, food, entertainment…)

12. Expenses Expense is money spent Money going out of the gumball machine
Fixed expenses may have a fixed amount due each month and are contractual
Flexible expenses can vary each month in the amount owed and are not contractual

13. Spending plan activity
Decide if each item is income, a fixed expense, or a flexible expense

14. Spending plan activity
Rent
Fixed expense
Wages
Income

15. Spending plan activity
Groceries
Flexible expense
Internet bill
Fixed expense

16. Spending plan activity
Tips
Income
Utilities
Fixed expense

17. Spending plan activity
Gift from family
Income
Savings
Fixed expense

18. Spending plan activity
Automobile registration
Fixed expense
Eating out/Snacks
Flexible expense

19. Spending plan activity
Scholarships
Income
Hobbies
Flexible expense

20. YOUR MONEY NET LOSS NET GAIN
When a person has more expenses than income during the time period of the spending plan.
If this occurs, either increase the income or decrease the expenses.
When a person has more income than expenses.
Remaining income can be allocated into savings, investing, or spent.
Take 20 Beans

21. STAND UP: For the rest of your life you cannot spend money on…
STAND UP: For the rest of your life you cannot spend money on…. (sit down if you cannot go with out spending money)
Opening day for movies
Manicure/pedicure
Athletics/gym memberships
Hairstyles that have expensive treatments (color, perms, etc.)
Going out to eat more than 3 times a month
Expensive Vacations
Name brand clothes, shoes, accessories
Data plan Cell phones
Cable Channels
Internet

22. Identify your Needs vs wants when figuring out how to spend you money.
Essentials…the basics of life
WANTS
Simply increases the quality of living

23. You just got a surprise gift $100! What will you do with it?
1. Spend it right away for something I want—“A shirt in that new shade of blue will look great on me!”
Spend it right away for something I need— “My running shoes are falling apart. Now I can get a new pair to break in before track season starts!”
Use it to get more money out of Mom or Dad—“That MP3 player I’ve been wanting is $200. I wonder if Mom or Dad will give me the extra $100?”
Spend some/save some—“College is in my future, so I want to be sure to have some money to get me started. But it also is important to have a little fun, like taking in a movie and having dinner with my friend.”
Help someone out— “Our rent went up $50 a month. Mom doesn’t know how she’s going to pay for it. This money could help her out for a couple of months.”
6. Save it all— “A penny saved is a penny earned. If I put this into my bank account it will earn interest and I’ll have money when I really need it. My car insurance is due in a few weeks.”

24. What do you value? - Money Personality
Spend it right away for something I want
(you want a lot of stuff and you want it now)
Spend it right away for something I need
(money is unimportant, but it helps you get the things you want and need)
Use it to get more money out of Mom or Dad
(you use money to make you feel important)
Spend some/save some
(you are not concerned with money, no reason to worry about it)
Help someone out
6. Save it all
(you value money for the security it gives you)

25. Group Juggle
How Do You Balance it all?

26. SPENDING PLAN PROCESS 1. Set Financial SMART Goals Specific Meaurable
Attainable
Realistic
Time bound
To save $5,000 for a car down payment, I will deposit $208 into savings each paycheck for 2 years.

27. Step 2- Get organized
Determine the appropriate record keeping format to use.
Notebook, keep receipts, debit card tracking, cell phone or computer program,…
Select categories of spending.
Select time period for income and expenses.

28. Spending Plan
3. Decide on your Plan
Creating a Budget Video

29. Make A Budget / Plan
1. Track your spending to find out where your money is going.
2. List and add up all of your monthly expenses ($612.00)
3. Add up your monthly income ($750.00)
4. Balance your monthly expenses to match your monthly income.
Is it a Net Loss or a Net Gain?
Rework the expense amounts until these 2 areas balance.
This is your budget. ($ left)

30. POSSIBLE BUDGET ITEMS
hobbies Holidays/birthdays/gifts home interior/exterior (yard) * house payment or rent household supplies (cleaners, paper products) insurance * medical bills * medication natural gas pet care phone savings schooling vacation
*auto—fuel and maintenance or transportation cable TV car payment clothing clubs or organization fees cosmetics *credit card or loan payments Donations eating out *electricity entertainment *food Hair cuts

31. The Costs Add up Monthly haircut
$35.00 per month
$420 per year
Weekly date night at the movies with popcorn
$30 per week
$1,560
Daily Latté
$3.75 each time
$1,365 per year
Eating lunch out 5 days per week
$5-$10 each time
$1,300-$2,600 per year
Daily sport drink
$2.00 each daily
$728 per year
BUDGET JAR

32. Budgeting % allowance for each month
Housing 25-35%
Savings 10%
Food 15-20%
Insurance 2-8%
Personal care/clothing 10%
Recreation/entertainment 2-6%
Transportation 10%
Charity
Misc./unexpected 3-10%
Utilities/phone 4-7%
Study Guide Figures

33. How does the typical family spend their pay check?
Remember living expenses vary
depending on where you live, age,
and personal goals.
$2500 net pay check
$600 (30%) Housing
$440 (22%) Food
$200 (10%) Clothing
$40 (2%) Personal
$180 ( 9%) Other
$140 (7%) Recreation
$160 (8%) Insurance
$280 (14%) Transportation
$280 (14%) Utilities, home repairs

34. 4. Implement
Track the money that you spend throughout the month both variable and fixed. Update your budget as expenses change.

35. Spending Plan Template
Income
Amount
Wages $
Total Income
Expenses
Percentage of income used for each expenditure
Housing
Rent or mortgage
Utilities
Maintenance
Insurance
Food
Eating out
Groceries
Total Expenses
Total Income – Total Expenses

36. Vanessa’s Budget
Vanessa's monthly student worker paycheck earnings after taxes is $412. She also has a part-time waitress job on the weekends and earns $168 per month after taxes.  Her parents supplement her earnings with $200 a month. She adds that to her monthly paycheck earnings to get a total monthly income of $780.
Next, Vanessa adds up her fixed expenses: rent (she shares an apartment with two others and pays 1/3 of the rent) $200, and she is responsible for her car insurance which is $128 per month.  She has a car that her parents have given her, so she does not have a car loan. She is very lucky that her parents pay her tuition and fees for school each semester.  She is also on her parent’s health insurance and that takes care of any doctor visits when she gets sick as well as visits to the dentist.

37. Now Vanessa adds up her variable expenses
Now Vanessa adds up her variable expenses. Her share of utilities is usually $100 per month and that includes cable.  She spends about $40 per month on her cell phone calls.  Groceries average around $80 per month,  Gasoline is another $40 per month.  And she figures she’ll be able to spend $40 per month on clothing, movies and going out with her friends.  She adds all these up and sees that her variable expenses total $300 per month.
Vanessa subtracts her total expenses of $628 from her income of $780 to get $152.  Vanessa knows that she will need probably about $20 per week for snacks, incidental school supplies, etc.  That leaves $72.  Since Vanessa will have some money left over after taking care of her expenses, she decides to put at least $60 per month into savings for unexpected expenses, e.g., repairs to car, additional materials required for class, etc.

38. Is Vanessa’s spending within the budget guidelines?

39. THE BEAN GAME Living on a “20 Bean Salary”
Purpose
Managing money means making choices. There is never enough money available for all of the things we’d like to have or do. This game will help you decide what is most important to you.
Do the work and Answer the questions on your own paper.
How to Play
Round 1: Each individual receives 20 beans and a spending category sheets. The individual must decide how to spend their “income” based on life circumstances, values and goals. Each item has a set number of squares which indicates how many beans are needed to “pay” for that item.
Round 2…….

40. It is said that money brings happiness, - BUT (behold the ultimate truth) - Money problems bring unhappiness that can stay with you for the rest of your life and affect your relationships. Finances affects everything! - We are in an Anti Dowry period – you take debt into a marriage instead of a dowry.
Grandma's Advice
Dave Ramsey Says:
Fix it up
Wear it out
Make it due or
Due without.
“Live like no other today so that one day you will live like no other.”

41. Step 5 - Control Joint Bank Accounts Separate Accounts
Money is available to either the husband or the wife. Both are free to make deposits and withdrawals at will.
Separate Accounts
The two may each have their own account. In this method, the couple divides the expenses up between the two.
One Spouse Manages
One spouse gives the other money, as it is needed.
Envelope Method (link)
In this method several envelopes represents the budget categories. Each pay period money is placed in the assigned envelope until it is time for it to be spent/paid.
Watch link

42. Step 6 - Evaluate
Monthly review your budget to see where changes need to be made. Evaluate how well you are meeting your financial goals.

43. gumball analogy Income (money in) Net Worth (wealth)
Always have more money coming in than out!
Work towards building wealth!
Income (money in)
Net Worth (wealth)
Flexible Expenses (money out)
Fixed Expenses (money out)

44. MONEY, MONEY, MONEY
Keep track of your spending and income for 2 weeks.
Every penny
Keep all receipts in an envelope
Complete the analysis questions.
Record your budget spending results
Create a new budget
Write an analysis for this