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Unit 2 - Budgeting: Making the Most of Your Money Did you Know? In 2014, the average American teen spent $104 per week. Did you Know? In 2014, the average American teen spent $104 per week.
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Unit Two – Budgeting: Making the Most of Your Money What is in the store window to get you to walk in? What techniques are used to get you into the door? What is the first thing you see when you walk into the store? Are you ever tempted to buy it? What do you have to walk past in order to get to the object you want to buy? Did you ever pick up anything on the way? When standing in line at the register, have your ever picked up anything on display to buy? When you get your item, do you receive any coupons or flyers that will encourage you to come back? Do they have expiration dates?
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Unit Two – Budgeting: Making the Most of Your Money ?
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What does the repair or replacement cost? 1. Break flat-screen TV 2. Break laptop 3. Download virus on computer 4. Fender bender 5. Flat tire 6. Fractured/broken bone 7. Lost cell phone 8. Lost iPad 9. Run out of gas
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Unit Two – Budgeting: Making the Most of Your Money Establish priorities; plan in advance to: Make progress to achieve goals Avoid “traps” and buyer’s remorse Deal with unexpected costly events Have money on hand when you need it Put you in control of how your money is used By failing to prepare, you are preparing to fail. Benjamin Franklin
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Unit Two – Budgeting: Making the Most of Your Money …Helps you determine where you are spending your money currently. …Helps you decide where to spend your money in the future. …You have an organized way to save for things that cost more. …Puts you in control of your financial future, beginning NOW.
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Unit Two – Budgeting: Making the Most of Your Money Helps you create a BUDGET What is a Budget? A plan for managing your money during a given period of time Understanding your Income and Expenses
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Unit Two – Budgeting: Making the Most of Your Money Any money you receive Where do most teens get their money? 62% part-time employment, summer job, or neighborhood jobs (i.e. babysitting)
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Unit Two – Budgeting: Making the Most of Your Money Tips to Predict: Use what is known: Pay Regular allowance Average interest earned Be conservative: When estimating, aim lower rather than higher Don’t count on windfalls Sources of Income: Paycheck Allowance Interest Gift money Sales
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Unit Two – Budgeting: Making the Most of Your Money If you earn $12.00/hour and work for 40 hours a week, how much money will you take home? Expect at least 20% to be taken out for taxes!
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Unit Two – Budgeting: Making the Most of Your Money Federal and State Income Taxes – fees collected by the federal/state government to support its programs; sent to the IRS/state revenue department Social Security – provides a small income and other services to the elderly Medicare – provides medical insurance to the elderly
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Unit Two – Budgeting: Making the Most of Your Money Gross Income Total amount of income from your wages, before any payroll deductions taken out # of hours worked x rate per hour Net Income Gross Income minus taxes or other deductions Take-home pay
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Unit Two – Budgeting: Making the Most of Your Money
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What you spend money on; your needs and wants 3 main types of expenses: Fixed Variable Periodic or Occasional
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Unit Two – Budgeting: Making the Most of Your Money Fixed - costs the same amount every time Rent, Car Payment, Cable bill, etc. Variable – fluctuate in amount; usually have more control over how much they’ll be Food, Electric bill, etc. Periodic or Occasional expenses – you don’t pay every month, and can be either fixed or variable Car Insurance due every 6 months Auto repairs
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Unit Two – Budgeting: Making the Most of Your Money P.Y.F. – Pay Yourself First! Saving is an all-important part of reaching your financial goals Whenever you receive money, you should immediately put a certain amount into an account that you will set aside to use later to meet a long- term financial goal
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Unit Two – Budgeting: Making the Most of Your Money
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If Expenses > Income Variable expenses Income Unnecessary expenses If Income > Expenses P.Y.F. Savings funds Any loan obligations Ideal Situation: Spend at or Below your Means Income > or = Expenses
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Unit Two – Budgeting: Making the Most of Your Money 1. You need a budget, even if you don’t want one. B udgets are the most practical way to regain control of your finances. They take some work and disciple, but they pay off in spades. 2. You can make a budget in 3 steps. ▪ Keep track of your current spending for a time, categorize and total your spending, and then track it to make sure it doesn’t exceed the limits you impose.
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Unit Two – Budgeting: Making the Most of Your Money 3. Be careful with cash If you find that you have no idea where your cash is going after you visit the ATM, consider tracking cash spending better. 4. Live within your means It may seem simple, but don’t spend more than you make
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Unit Two – Budgeting: Making the Most of Your Money 5. Understand the difference between a want & a need Sometimes the things we think we “need” are better classified as luxuries. ie) drinking a mocha latte every morning when you could brew coffee at home. 6. Take 10% off the top. Pay yourself first. Every paycheck, put 10% aside for you. This way, you will never spend more than 90% of your income.
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Unit Two – Budgeting: Making the Most of Your Money 7. Let your computer do the work. There are great software programs out there to make budgeting less of a chore. 8. Don’t obsess. Focus on the big picture.
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Unit Two – Budgeting: Making the Most of Your Money 9. Don’t count your eggs before they’re hatched. Windfalls are nice, but you can’t depend on them. Big tax refunds, end-of-year bonuses, or investment returns are not guaranteed. 10. Don’t let your spending creep up. As you make more money, don’t spend more.
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Unit Two – Budgeting: Making the Most of Your Money May come up short on money before the next paycheck or allowance payment More likely to not reach long-term spending goals Added stress if struggling to keep up with payments May need to give up something you planned if money needs to be used for unexpected emergencies Give up independence if you need to rely on others for financial help
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Unit Two – Budgeting: Making the Most of Your Money Does it makes sense to create and live within a budget when you don’t have a lot of money? What if you find that you are consistently spending more in one area than you had planned to? What if you find that you can’t live within your budget?
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