Transcript Budgeting Power Point

Budgeting
Creating a Plan for Your Spending
$50.00
What would you do if someone gave you $50?
Would you spend it on something, would you
save it?
What would you do?
Vocabulary
• Budget: a plan for managing your money
during a given period of time
• Expense: things you pay for each month with
your income
• Fixed Expense: expenses that are the same
each month (same amount, pay every month)
• Variable Expense: expenses that are not the
same each month, they fluctuate
What Type of Expense Is It?
Description
Fixed
Variable
Periodic
Groceries
Piano Lesson Fee
Cable TV Bill
Magazine Renewal
Car Loan Payment
***Periodic Expense: expenses that you don’t pay for each month, pay on as needed
basis***
P.Y.F.
• Pay Yourself First!
Do the Math!
• The Simpson family wants to buy a new
refrigerator for the kitchen. Mr. Simpson has
visited several stores and estimates that it will
cost around $700 to buy and install the type of
refrigerator the family wants. If their goal is to
buy it in six months, how much do they need
to save a month?
Do the Math!
• The Mencias want to buy their oldest
daughter a computer to take to college next
year. They’ve shopped around and think they
can get a good desktop computer with all the
software and a printer for about $1,100. With
15 months to save, how much do they need to
set aside a month?
Steps to Create a Budget
• Decide time frame for tracking
income/expenses
– Jackson’s Monthly Budget
• Identify your total income
Jackson’s Estimated Income:
Paycheck (after taxes)
$2,100
Interest Earned:
$50
Total Income:
$2,150
Steps to Create a Budget
• Identify all your expenses (fixed or variable)
Jackson’s Fixed Expenses
Savings (PYF)
$500
Car Payment
$325
Rent
$750
Cable TV/Internet
$75
Jackson’s Variable Expenses
Utilities
$150
Food
$200
Gas
$100
Jackson’s Periodic Expenses
Car Insurance ($300/6mo)
$50
Steps to Create a Budget
• Do the math (subtract total expenses from
income)
Jackson’sTotal Expenses
$2,150
Total Income
$2,150
-Total Expenses
$2,150
$0
• Evaluate your budget
Build a Budget
Jessica is a Senior in high school. She earns $8
an hour working approximately 25 hours a week
at the local grocery store. About 30% of her pay
is deducted for taxes. Jessica also earns
approximately $15 each month in interest on
savings.
What is Jessica’s monthly income?
Build a Budget
Jessica’s Monthly Expenses
Savings: 10% of her income
Car payment: $235
Cell Phone: $35-$45
Gas: $40-$60
Auto Insurance: $50
Frequently buys games and music $25-$45
Typically buys her own clothes $30-$50
List Jessica’s monthly expenses, identify if each expense
if fixed or variable, estimate cost of variable expenses
Build a Budget
• One of Jessica’s short term goals is to take a
trip to visit her grandparents right after
graduation (in June). She expects this to cost
$1,000 and she has already saved $500.
Add this expense under her savings category
(which already has 10% of her income listed)
It is October, Jessica has 8 months to save $500
Build a Budget
• Add the fixed expenses together
– Total Fixed Expenses:
• Add the variable expenses together
– Total Variable Expenses:
• Add the Fixed and Variable expenses together
– Total Expenses:
• Subtract Expenses from Total Income
– Are we within our limit?