1. 2.15.2.G1 Major Expenditure Mania “Get Ready to Take Charge of Your Finances” Introductory Level

2. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 2 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 My Money Bag Are your money bag expenses the same as the person sitting next to you?

3. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 3 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 How do people decide how to spend money? Need - something required to live Values - what is important to a person Want - something unnecessary but desired Consider needs versus wants Depends on personal values

4. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 4 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 Meet the Lopez Family! Zach and Anita Lopez have four children, two girls and two boys ages 7-13 Family enjoys spending time together, especially during meal times when the family sits around their large dining room table enjoying home- cooked food Currently do not own a vehicle of their own but have been looking to purchase a vehicle to use for family outings and vacations Save a large amount of money every month to help pay for their children’s future college education

5. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 5 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 The Lopez Family How do your values, needs, and wants influence the spending decisions in your money bag? What does the family... Value?Need? Want?

6. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 6 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 What is a Spending Plan? Everyone has an individualized spending plan Spending plan – financial statement that assists with money management Income – money earned Expense – money spent

7. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 7 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 Why is it important to create a spending plan? Helps to determine needs versus wants Prevents overspending What information would you need to add to your money bag in order for it to become a complete spending plan?

8. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 8 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 What are Taxes? Required citizen charges by the government Provide public goods and services One of the largest expenses Required Gross Income- money earned before taxes are deducted Taxes Net Income- (take-home pay) money left after taxes have been deducted Spending plan expenses paid from net income

9. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 9 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 What are Major Expenditures? Major Expenditures- largest expenses in most spending plans Major Expenditures Savings Insurance Housing Transportation Food

10. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 10 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 Typical Major Expenditure Amounts How might the Lopez families major expenditure percentages be different than the typical percentage amounts? A reference when creating a spending plan Provides guidance Can adjust percentages to meet individual values, needs, wants

11. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 11 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 What is Savings? Portion of income not spent on current expenditures jj How much? Why? What? Income not spent on current expenses Provides money in case of an emergency Recommended – at least 10% of net income

12. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 12 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 Pay Yourself First! Set aside money for saving before spending any money Save then spend! 10-20% of net income is recommended Did you account for savings as an expense in your money bag? Underline the expenses in your money bag that are related to savings.

13. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 13 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 Lopez Family Savings Decisions How much money do you believe the Lopez family would choose to save? The minimum recommended- 10% of net income 20% of net income

14. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 14 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 Insurance Arrangement between an individual and an insurance company Protects people financially from unexpected expenses caused by accidents or illness

15. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 15 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 Types of Insurance Did you account for insurance as an expense in your money bag? Place an arrow next to all of the expenses in your money bag that are related to insurance. HealthAutomobileHome Pays for a portion of health care bills Required by law May pay for: automobile damages injuries to people involved in an accident Helps pays for damages to a home and its contents

16. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 16 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 Housing Rent or Own? Rent – make monthly payment to owner of home Own – may need to receive a loan and make monthly payments to pay back loan Total cost of a home What may a person have to pay for to live in a home? What should a person consider when choosing a home to live in?

17. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 17 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 Housing Expenses Monthly payment Move-in costs Utilities Insurance Taxes- Paid by owner of home Maintenance Circle all of the expenses in your money bag that are related to housing.

18. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 18 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 Other Items to consider … Condition and required maintenance Size Location

19. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 19 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 Lopez Family Housing Decisions Both of these houses fit into the Lopez families spending plan. Which housing option would be best for the Lopez family? Three bedroom house with a large family room, dining room, and kitchen Five bedroom house with a small kitchen and an area for a small dining room table connected to the kitchen

20. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 20 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 Transportation What expenses should be considered when purchasing an automobile? What types of transportation options are available? If an automobile is purchased consider the total cost

21. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 21 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 Expenses Associated with Owning an Automobile Monthly payment – if a loan is needed License and Registration- Required by law Insurance – Required by law Maintenance Fuel Optional Upgrades Place a star next to all of the expenses in your money bag that are related to transportation.

22. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 22 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 Other items to consider … Typical use Condition and required maintenance

23. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 23 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 Lopez Family Transportation Decisions As the Lopez family considers purchasing a vehicle, which option would be the best for their family? An economy car that gets excellent gas mileage A large suburban that can hold up to seven people

24. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 24 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 Food… Least expensive Most expensive Meals from scratch at home Convenience foods at home Fast Food Sit-down restaurant What options are available for purchasing food? Place a square around all of the expenses in your money bag that are related to food.

25. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 25 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 How does the cost of eating out compare to preparing meals at home? A spaghetti dinner for one person In a restaurant - $12.00 At home - $1.30-hamburger ($.50 for 1 serving) -spaghetti sauce ($.70 for 1 serving) -noodles ($.10 for 1 serving) At homeIn a restaurant 1 meal$1.30$12.00 1 meal per month for 6 months$7.80$72.00 1 meal per month for 1 year$15.60$144.00

26. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 26 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 Other items to consider… Time Special dietary needs Nutritional Value

27. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 27 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 Lopez Family Food Decisions Which food option would be the best for the Lopez family? Cook convenience meals at home since the family doesn’t have much time to cook meals from scratch Cook meals from scratch at home with one family outing to a restaurant every month

28. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 28 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 What expenses are not included in the major expenditure categories? ClothingDonations Personal CareEntertainment What category does the remaining expenses in your money bag fit into?

29. © Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – Slide 29 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 2.15.2.G1 Summary Everyone has an individualized spending plan based on values, needs, and wants Major expenditures make up the majority of a spending plan Savings, insurance, housing, transportation, and food Percentages are provided for guidance Actual amounts should be adjusted to meet individual values, needs and wants Should choose an expenditure option that meets needs and wants but also fits spending plan