Transcript Document

BUDGETING
Personal Finance
2.6.7.G1
Spending Plan Guide
18%
10%
7%
Saving and
Investing 10%
Insurance 7%
Housing 30%
15%
30%
20%
Transportation
20%
Food 15%
Other 18%
What variables may cause these
percentages to be different?
© Take Charge Today – August 2013– Major Expenditures – Slide 2
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
2.6.7.G1
Spending Plan Development Process
Develop the
spending plan
Step 5 - Evaluate
and Make
Adjustments
Step 1 - Track
Current Income and
Expense
Step 4 Implement and
Control
Maintain the
spending plan
Step 2 Personalize Your
Spending Plan
Step 3 Allocate
Money to
Each Category
© Take Charge Today – August 2013– Major Expenditures – Slide 3
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
HOUSING
(RENTING AND OWNING)
2.6.7.G1
Housing: Largest Expense for Most
Prices vary
greatly
Size
Location
Amenities
Choose housing that fits your personal needs
and spending plan
© Take Charge Today – August 2013– Major Expenditures – Slide 5
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
2.6.7.G1
What are common rental expenses?
The cost of housing is more than rent!
Utilities
(all or some may be
included in rent)
Household
furnishings
(some may be
furnished)
Renters Insurance –
provides payment to
renters to cover the
damage and loss of
property in addition
to liability losses
Communications
(internet, television,
phone)
© Take Charge Today – August 2013– Major Expenditures – Slide 6
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
2.6.7.G1
What initial expenses may be required
to rent a property?
One or both expenses may be required:
Pre-payment
• First and last month’s
rent
Security Deposit
• Money paid to a
landlord to cover
cleaning costs and
damage repairs
beyond normal wear
and tear
© Take Charge Today – August 2013– Major Expenditures – Slide 7
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
2.6.7.G1
Significant Initial Home Loan Expenses
Down Payment
• Portion of the purchase
price not borrowed
• Typically 5-20% of
purchase price
• Mortgage insurance –
protecting the lender if
the borrower provides
less than 20% down
payment
Closing Costs
• Fees and charges
associated with the
purchase of a property
• Typically 1-4% of
purchase price
© Take Charge Today – August 2013– Major Expenditures – Slide 8
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
2.6.7.G1
Mortgage Payment
A payment to pay off the loan used to purchase housing
Mortgage
payments
typically include:
Cost of the home
Interest
Funds to pay
property taxes
Funds to pay
homeowners
insurance
© Take Charge Today – August 2013– Major Expenditures – Slide 9
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
2.6.7.G1
What are typical home ownership
expenses?
Housing expenses are more than a
mortgage!
Utilities
Homeowner’s
Association Dues
Household
Furnishings
Special
Assessments
Maintenance
and repairs
Communications
(Internet,
television,
phone)
© Take Charge Today – August 2013– Major Expenditures – Slide 10
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
TRANSPORTATION
2.6.7.G1
Do Your Research!
Before working
with sales
personnel
Evaluate your
needs and wants
Identify the right
type of vehicle
for you and
desired features
Research
expected costs
You are responsible for yourself!
Advance research will maximize your satisfaction with the purchase!
© Take Charge Today – August 2013– Major Expenditures – Slide 12
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
2.6.7.G1
What are typical automobile
ownership expenses?
Automobile
payment
(if credit is used)
Fuel
Maintenance
and Repairs
License and
Registration
(yearly fee)
Insurance
Parking
(in some
locations)
© Take Charge Today – August 2013– Major Expenditures – Slide 13
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Before purchasing a vehicle, be sure you can afford the total cost of ownership
2.6.7.G1
Marina’s Out-of-Pocket Expenses
Marina purchased a 2013 Honda Accord
Monthly Payment
5-Year Average Out-of-Pocket
(15,000 miles driven per year)
Purchase Price
$21,548
Down Payment
$2,154.80
Fuel
$9,852
Interest Rate
2.84%
Insurance
$3,915
Monthly Payment
$347.09
State fees (licensing)
$1,932
Total Paid
$22,980.20
Maintenance
$1,945
Repairs
$1,758
5 Year Total
$19,402
Monthly Amount
$323.37
(down payment + loan)
Marina’s monthly loan is $347.09, but on average, the car will cost her,
$670.46 per month to own!
© Take Charge Today – August 2013– Major Expenditures – Slide 14
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Source: bankrate.com
Source: kbb.com
2.6.7.G1
What features would you look for in
an automobile?
Cost
Size
Usage
Gas mileage
Safety Ratings
Reliability
Environmental
Impact
Depreciation
Upgraded
features
© Take Charge Today – August 2013– Major Expenditures – Slide 15
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
FOOD
2.6.7.G1
Two Primary Sources
Prepare Food at Home
Least Expensive
Scratch
Food Away from Home
Most Expensive
Fast-casual
restaurants
Ready-to-eat
Convenience
Fast-food
restaurants
Full-service
restaurants
© Take Charge Today – August 2013– Major Expenditures – Slide 17
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
2.6.7.G1
Burger Night - Family of Four
Food Away From Home
Food Prepared at Home
McDonalds Quarter Pounder with
Cheese Combo Meal
Burger with bun, condiments, 5lb bag
of potatoes (for fries) and a 12 pack of
Coke
Cost per person
$6.29
Cost per person
$5.84
Family of 4
$25.16
Family of 4
$23.36
The meal prepared at home is less expensive
and will result in left-overs
What are ways to reduce the cost for either option?
© Take Charge Today – August 2013– Major Expenditures – Slide 18
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
2.6.7.G1
Summary
Housing, transportation,
and food
Over 60% of spending
Determine if renting or
owning a home is best for
you
Housing
Consider the total cost of
owning a vehicle
Eat well-balanced meals
high in nutrition that fit
into your spending plan
Transportation
© Take Charge Today – August 2013– Major Expenditures – Slide 19
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Food
2.6.7.G1
What else to think about?
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Electricity
Water
Gas
Phone
Sewer/Trash
Cable
Groceries and
Necessities
Clothing
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Cleaning/Laundry
Health Costs
Insurance
Recreation
Gas
Credit Cards
Student Loans
Savings
Blow Money
© Take Charge Today – August 2013– Major Expenditures – Slide 20
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
2.6.7.G1
What % are you spending?
ITEM
RECOMMENDED %
Charitable Gift
10-15%
Saving
5-10%
Housing
25-35%
Utilities
5-10%
Food
5-15%
Transportation
10-15%
Clothing
2-7%
Medical/Health
5-10%
Personal
5-10%
Recreation
5-10%
Debts
5-10%
© Take Charge Today – August 2013– Major Expenditures – Slide 21
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona