1. © Family Economics & Financial Education – May 2005 – Spending Plan Unit – Developing a Spending Plan Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Developing a Spending Plan Family Economics and Financial Education

2. © Family Economics & Financial Education – May 2005 – Spending Plan Unit – Developing a Spending Plan Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.15.2.GI Spending Plan  Financial statement that helps you meet financial goals.  How is it different from a budget?  Specifically related to a financial goal.  A budget is part of a spending plan.

3. © Family Economics & Financial Education – May 2005 – Spending Plan Unit – Developing a Spending Plan Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.15.2.GI Income & Expense  Two parts:  Income  Expense  Fixed Expenses  Flexible Expenses

4. © Family Economics & Financial Education – May 2005 – Spending Plan Unit – Developing a Spending Plan Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.15.2.GI Expense Fixed expenses  Same amount paid each time, usually has a specific due date.  Rent/Mortgage, car insurance, car loan.  Difficult to change in short amount of time Flexible Expenses  Different amount paid each time  no specific due date or rotating due date.  Clothing, entertainment, credit cards.  Choices you make affect the amount you pay.

5. © Family Economics & Financial Education – May 2005 – Spending Plan Unit – Developing a Spending Plan Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.15.2.GI Spending Plan Process Six steps in the spending plan process 1. Set Financial Goals 2. Organize 3. Decide 4. Implement 5. Control 6. Evaluate

6. © Family Economics & Financial Education – May 2005 – Spending Plan Unit – Developing a Spending Plan Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.15.2.GI Step 1: Set Financial Goals  Financial Goals should be:  Specific:  Measurable:  Attainable:  Realistic:  Time Bound:

7. © Family Economics & Financial Education – May 2005 – Spending Plan Unit – Developing a Spending Plan Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.15.2.GI An example of a Financial Goal  To save $5,000 for a car down payment, I have to deposit $208 into my savings account each paycheck for 2 years.

8. © Family Economics & Financial Education – May 2005 – Spending Plan Unit – Developing a Spending Plan Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.15.2.GI Step 2: Organize  Select categories for the spending plan.  Select a time period  Usually when paychecks are received  Weekly  Bi-weekly  Monthly

9. © Family Economics & Financial Education – May 2005 – Spending Plan Unit – Developing a Spending Plan Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.15.2.GI Step 3: Make a plan.  Create a budget.  If expenses exceed income,  Earn more income  Decrease expenses  Do both

10. © Family Economics & Financial Education – May 2005 – Spending Plan Unit – Developing a Spending Plan Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.15.2.GI Step 4: Implement  Make it happen.  Keep track of all income and expenses  Self control!  Keeping track of expenses is the most important! Reality vs. Perception

11. © Family Economics & Financial Education – May 2005 – Spending Plan Unit – Developing a Spending Plan Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.15.2.GI Step 5: ControlSystems  Control spending by paying attention to how you spend your money. 3 systems: 1. Envelope system 2. Spending diary system 3. Check register system

12. © Family Economics & Financial Education – May 2005 – Spending Plan Unit – Developing a Spending Plan Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.15.2.GI Types of Control Systems Envelope System  Use an envelope for each category.  Put cash in the envelope.  Each time $ is taken out of an envelope, write down amount and put receipt inside  Move money around to meet expenses  Once cash is gone, its gone.

13. © Family Economics & Financial Education – May 2005 – Spending Plan Unit – Developing a Spending Plan Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.15.2.GI Types of Control Systems  Spending Diary System  Keep track of the money you spend every on a piece of paper or on a document.  Track spending for individual categories.

14. © Family Economics & Financial Education – May 2005 – Spending Plan Unit – Developing a Spending Plan Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.15.2.GI Types of Control Systems  Check Register System  Write money you spend checkbook register. Date, recipient, amount.  Running total, not based on categories

15. © Family Economics & Financial Education – May 2005 – Spending Plan Unit – Developing a Spending Plan Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.15.2.GI Step 6: Evaluate  Did you meet your goals?  Adjust based on outcome.

16. © Family Economics & Financial Education – May 2005 – Spending Plan Unit – Developing a Spending Plan Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.15.2.GI THE END!