Transcript Budgeting and Wise Spending - Staunton River High School
3
rd
9 weeks
• • No Journal sections in the 3 rd 9 weeks More practice questions instead. • More math based questions
Budgeting and Wise Spending
Personal Budget Financial Reserves Keeping your financial records Tax and Gratuities Discounts Unit Prices Smart Shopper Mr. Lorenz
Holiday shopper
• How much of an a paycheck do you spend on holiday shopping?
• 35% • 10% • 50% • 25% • Mike works at Sam’s Club for $10.25 per hour and works 25 hours each week. What would be his annual salary?
• $13,325per year
Personal Budget Vocabulary
• Budget • Income • Expense • Assets > liabilities = Profit • Revenue > Expenses = Profit • Revenue < Expenses = Loss
Personal Budget
• Income affects our decision to spend money. Usually a percentage.
• Write down • Style of living • • Earnings Estimate expenses (SPREADSHEET) • These decision help avoid financial hardships. • Once you identify how you are spending your money, you may see that you have wasteful spending habits.”
Personal Budget
Income Expenses
Personal Budget
• Fixed expenses are those that stay relatively the same each month, whereas variable expenses are the type that will change from month to month.
• Variable expenses are important when making adjustments to a budget.
FINANCIAL RESERVE
Financial Reserve
• Fixed expenses are expenses that remain the same from one period to the next. RENT • An expense that does not happen on a regular basis is referred to as a occasional expense.
• Video games • Flexible expenses are expenses that change from one period to the next. Like water, electric and gas utilities.
Financial Reserve
• Emergency Fund!!!
• emergency fund can be used for nearly anything but is generally used to cover sudden unemployment or a similarly abstract problem.
• An emergency fund is similar to insurance in that both represent a level of security to protect against an unexpected occurrence. Plan for at least 3 months of living expenses saved in your rainy day fund.
Financial Reserve
• Monthly expenses • Phone • • Rent Food • College savings • • Gas Entertainment • Predictable • Travel • • Auto maintance Home Maintenance • Retirement • Hobbies • Unexpected • Medical • Family • Unemployment • • Household repairs Auto repairs
Financial Reserve
• Discretionary spending and emergencies
Expense Items
Rent Utilities Food Savings Gas Video Games Snacks
Amounts
1/3 $75 $120 $100 $40 $120 $50
Financial Reserve
Alberto is making a budget. He owes a cell phone bill of $60 per month for 23 more months, plus the fees for any extra usage such as text messaging or extra minutes. Which of the following is the correct category for this expense?
a.
b.
c.
d.
Essential (flexible) expense Emergency fund Essential (fixed) expense Non-essential expense
Financial Reserve
Your monthly living expenses are $1500 on an income of $1,650 per month. Your goal is to have an emergency fund of 4 times your monthly living expenses. Your emergency fund savings account has $2,400 and you put the remainder of your monthly income into the emergency fund each month. How much more money would you have to save each month to complete your emergency fund in 12 months?
a.
b.
c.
d.
$300 per month $150 per month $75 per month $60 per month
KEEPING THE FINANCIAL RECORDS
Keeping financial records
• Keep a journal, notebook, or something other than electronic. • Utilities (CREDIT) • • Electric Water • Gas • Income (DEBIT) • Spend 30% of annual on rent $40,000 • Figure out how much you should be spending each month on rent…
Keeping financial records
Increase
Income/Cash (Debit)
decrease
Credit Card/Liability (Credit)
Decrease increase • Complete financial records make filing your tax return easier, and helps you avoid headaches at tax time. It also allows you to track your expenses and identify sources of income.
Keeping financial records
• Jason keeps a record of his transactions in a notebook. Looking over his records for the past two weeks, Jason finds that his bank statement does not match his notebook, and he actually has less money than he thought he did. • • However, Jason’s bank statement says that his ending balance is $473.33. Which of the following is a possible explanation for the discrepancy?
(microwave = 86.74)
Transaction Beginning Balance Rent Paycheck Charitable donation Keyboard Refund on purchase Groceries Microwave Ending Balance Debit ($) 275.60
-- 20.00
63.29
-- 44.08
68.74
Credit ($) 578.65
-- 363.20
-- -- 21.19
-- ---
491.33
Keeping financial records
• Mario spent $87.33 last week and kept track of all of his transactions but one… • Add oil, gas, and lunch together= $52.13
• • Take total spent minus the amounts recorded to get the price of the golf outing = 35.20 for golfing
TAX AND GRATUITIES
Tax and Gratuities
• Rules for tipping • Restaurant 15%-20% tip • High end Restaurant 20%-30% • Taxes • We looked at how to view federal (charts) • State tax is a % • Local tax is a % • • What is 15% of a bill costing $20?
So the new total of the check would be…
Tax and Gratuities
• To find the sales tax of an item, first change the sales tax to either a decimal or fraction.
• Multiply the decimal or fraction by the price to get the amount of sales tax.
• Next, add the sales tax to the price of the item(s) to get the total amount to be paid.
• • Zalia meets her friend at the science museum to see a special exhibition. The admission to the museum is $12.50 plus tax. Zalia pays for herself and her friend. They have lunch at the museum’s cafe. Zalia has a sandwich for $5.95, an apple for $1.25 and a drink for $1.69. • • She is charged tax and also tips her server 15%. If tax is 7.25%, how much did Zalia pay all total for her day at the science museum?
$37.68
Tax and Gratuities
• Calculate % tax on $1,540.
• $1540* 0.0725
You have a restaurant bill of $46.32. If you are taxed 7 ½ % and decide to tip your server 20%, how much is your total?
• = 111.65
• $46.32 * 0.075
• $49.79 * 9.95(or 10 even) • 59.74
Tax and Gratuities
DISCOUNTS
Discounts
• The amount deducted from the usual price is referred to as a discount.
• Successive discounts are when several discounts are taken one at a time from the usual price.
Discounts
• Original price – Discount = Sale Price • Original Price + % of tax= New sale price • Sale prices are never the final total you will see at the checkout line.
Discounts
• Save 25% • Marked down 10% • BOGO • Everything half off (but watch the minor details)
Discounts
• Save money ($200) • Price of a camera is $234.80
• Do you have enough if the camera is marked down 33%?
• $234.80 * 0.33= $77.48
• $234.80 - $77.48 = $157.32 YES
Discounts
• Combination discounts • • 25% off coupon 25% off in-store • Does this equal 50% off NO!!!
• when combining discounts, you have to apply them one at a time, not all together.
• In this case, the discount would have been 43.75% off, for a total of 56.25% of the base price.
Discounts
• Miscalculated discount • A savvy shopper combines a 25% off coupon with the store’s existing 25% off sale. Ignoring sales tax, how much of the base price should the shopper expect to pay?
a.
b.
c.
d.
75% 56.25% 50% 43.75%
Discounts
• A mini laptop computer is on sale for 40% off the regular price of $450. How much is the discount?
a.
b.
c.
d.
$18 $27 $180 $270
Discounts
• Claire purchases a new dress for the prom. The dress is priced $160, but it is on sale for 30% off. Claire’s aunt works at the store and can give her an additional 10% off. If the sales tax is 7.5%, how much does Claire pay for the dress?
• $160 for the dress • Sale 30% = • Extra 10% off • Add tax 7.5% • Total = $108.36
UNIT PRICES
Unit Prices
• What if… • • • No tax on clothes No tax on food items And you have these combines with other products.
• How would you calculate that? • Which would be the better buy?
• 64 oz. of beans $3.79 vs. 12 oz. $0.84
• • • Price per gallon (gas) Food per pound Fabric per yard
Unit Prices
• A unit rate describes how many units of the first type of quantity corresponds to one unit of the second type of quantity.
• The unit price of an item is the cost for each unit.
Group Price Units = Unit Rate • Comparison shopping is the process of shopping for bargains by comparing the prices of competing brands or stores.
Unit Prices
• Comparison shopping is the process of shopping for bargains by comparing the prices of competing brands or stores.
• Coke Vs. Pepsi • Name at least 4 other competitors in a grocery store… • To be useful in comparison to one another, unit prices must appear in terms of the same unit, but you can usually convert the units used into a common unit.
• For example, if one unit price is listed in ounces and another is listed in pounds, you can use the conversion rates for ounces to pounds to put each price in terms of ounces.
Unit Prices
Unit Prices
• Nelly is buying bird seed to put in her bird feeders. She uses about 10 pounds of bird seed each week, but has room to store any extra that she purchases. The bird seed comes in 3 different sizes as given below: A.
3.5 pounds for $2.52
B.
7.5 pounds for $5.40
C.
11 pounds for $7.92
• Nellie is trying to be a smart shopper and get the best deal on the bird seed. Which size bag of bird seed should Nellie buy?
A.
1.38 per pound B.
1.38 per pound C.
1.38 per pound
Unit Prices
• Using the following prices, calculate the unit price to determine how much it would cost for 5 containers of yogurt and 3 containers of applesauce.
• $4.29 for 6 containers of yogurt • $3.39 for 8 containers of applesauce • 5 Yogurt = $3.58
• 3 Applesauce = $1.26
• Total = 4.85
Unit Prices
SMART SHOPPER
Smart Shopper
• Bait and switch is a deceptive way of selling that involves advertising a product at a very low price in order to attract customers who are then persuaded to switch to a more expensive product.
• • Attractive Offers Product not available at time of purchase
Smart Shopper
• Pre sale of the: • PS$ • Xbox 360 • New Microsoft Office • • New Mac New iPad • Discounted prices • Black Friday Sale • New car Sales • Either way you are spending money
Smart Shopper
• The pyramid scheme is a deceptive advertising technique that has the buyer put money into a plan, agree to sign up subsequent members and potentially reap large benefits.
• • Buyer puts out certain amount of money The ones at the top get rich
Smart Shopper
• Various means to sell products and services.
• • Businesses get the message to the buyers Buyers purchase the product based off the information given • Advertisements • Description of products • Demo of features • Statement of difference • Details, availability, and terms of sale
Smart Shopper
• Buying Incentives • Coupons • • Rebates Contests • Prizes • Buyer • Don’t be deceived • Don’t be sidetracked • Type of Sales • Clearances • • Closeout Introductory offer • Liquidation • Guidelines • Needs vs. affordability • Budget • • Anticipation of sales Etc.
Smart Shopper
• Online shopping • Benefits?
• Benefits • Convenient • Online discounts • instant download • • Shipping Pick up • Disadvantages?
Smart Shopper
• If you are shopping online, why is it a good idea to pay by credit card?
• Easy Transaction • Protection • Credit Card • Charges/points