1. Back to Table of Contents pp. 454-469 Chapter 28 Planning a Budget

2. Introduction to Business, Planning a Budget Slide 2 of 59 Why It’s Important Budgeting techniques help you keep track of where your money goes so that you can make it go further.

3. Introduction to Business, Planning a Budget Slide 3 of 59 Lifestyle Costs Money management is the process of planning how to get the most from your income.

4. Introduction to Business, Planning a Budget Slide 4 of 59 Lifestyle Costs A budget is a plan for using your income in a way that best meets your wants and needs.

5. Introduction to Business, Planning a Budget Slide 5 of 59 Lifestyle Costs A budget includes a record of your expected income, your planned expenses, and your planned savings over a certain period of time.

6. Introduction to Business, Planning a Budget Slide 6 of 59 Lifestyle Costs The five steps in planning a budget are: Setting your goals Estimating your income Estimating your expenses continued

7. Introduction to Business, Planning a Budget Slide 7 of 59 Lifestyle Costs Planning for savings Balancing and adjusting your budget as needed

8. Introduction to Business, Planning a Budget Slide 8 of 59 Set Goals A budget should help you decide which goals you can meet with the amount of money you have.

9. Introduction to Business, Planning a Budget Slide 9 of 59 Estimate Income Your income is the actual amount of money you earn or receive during a given time period.

10. Introduction to Business, Planning a Budget Slide 10 of 59 Gross Pay Your gross pay is the total amount of money you earned for a specific time.

11. Introduction to Business, Planning a Budget Slide 11 of 59 Net Pay Your gross pay is reduced by various deductions, or amounts that are taken out of your pay before you receive your paycheck.

12. Introduction to Business, Planning a Budget Slide 12 of 59 Net Pay Your net pay, or take-home pay, is your gross pay minus deductions.

13. Introduction to Business, Planning a Budget Slide 13 of 59 Other Income If your net pay is the only income you have to consider, it’s easy to figure your total income. If part of your income is from tips, don’t overestimate how much you expect to receive in tips.

14. Introduction to Business, Planning a Budget Slide 14 of 59 Taxes Withholding, or subtracting taxes from a paycheck to be forwarded to the government, may include federal, state, and local income taxes.

15. Introduction to Business, Planning a Budget Slide 15 of 59 Taxes Employers are responsible for forwarding the taxes that are withheld to the government.

16. Introduction to Business, Planning a Budget Slide 16 of 59 Taxes Workers who don’t have all taxes withheld from their paychecks must budget for payment of those taxes.

17. Introduction to Business, Planning a Budget Slide 17 of 59 Estimate Expenses Items you have to spend money on such as food, rent, and clothing are called expenditures.

18. Introduction to Business, Planning a Budget Slide 18 of 59 Estimate Expenses The two basic types of expenses are: Fixed expenses Variable expenses

19. Introduction to Business, Planning a Budget Slide 19 of 59 Fixed Expenses Fixed expenses are expenses that occur regularly and that are regularly paid. For example, rent and insurance.

20. Introduction to Business, Planning a Budget Slide 20 of 59 Variable Expenses Variable expenses are expenses that fluctuate from month to month. For example, food and entertainment.

21. Introduction to Business, Planning a Budget Slide 21 of 59 Plan for Savings Savings protect you against expenses that you didn’t budget, that are higher than you expected, or that are completely unexpected.

22. Introduction to Business, Planning a Budget Slide 22 of 59 Balance and Adjust the Budget The total estimated income for a period should equal the total estimated expenses.

23. Introduction to Business, Planning a Budget Slide 23 of 59 Balance and Adjust the Budget The difference between how much you planned to spend and how much you actually spent is the budget variance.

24. Introduction to Business, Planning a Budget Slide 24 of 59 Figure 28.2 THE KEMALS’ FAMILY BUDGET A budget should be broken down into annual and monthly amounts for each category. Identify how much the Kemals spend on insurance payments.

25. Introduction to Business, Planning a Budget Slide 25 of 59 Using a Computer for Budgeting With a computerized budgeting program, you can store your budgeted amounts and enter your expenses as they occur or at the end of the month.

26. Introduction to Business, Planning a Budget Slide 26 of 59 Using a Computer for Budgeting The computer can give you a quick analysis of total expenses, including amounts that are over and under the budget.

27. Introduction to Business, Planning a Budget Slide 27 of 59 Using a Computer for Budgeting In addition, the computer can help with “what if” situations. For example, what if Nora Kemal’s income increased by ten percent, or their rent increased by $50 a month?

28. Introduction to Business, Planning a Budget Slide 28 of 59 HW page 466-467 # 1-18