MONEY MANAGEME

NT28.2

OBJECTIVES

Discuss the importance of budgeting.

List the steps for preparing a budget.

THE MAIN IDEA

Meeting your financial goals requires

you to know your income and

expenses. A budget can enable you to

track your spending and make choices

about your money.

THE IMPORTANCE OF BUDGETING

Money management is necessary for

consumers, businesses, and governments.

A budget helps people set financial

priorities.

A budget is a recording of

Your expected income

Your expected expenses

Your planned savings

THE IMPORTANCE OF BUDGETING

Consumers, businesses, and

governments must figure out how to

utilize their income.

Most people want more goods and

service than they can afford

Budgeting helps you set priorities

AVERAGE HOUSEHOLD EXPENSES

If a family earns $3,000 a month, how much money would they likely spend on housing?

PREPARING A BUDGET

There are 7 steps in preparing a budget

1. Set Your Financial Goals

2. Estimate Your Income

3. Budget for Unexpected Expenses and

Savings

4. Budget for Fixed Expenses

5. Budget for Variable Expenses

6. Record What You Spend

7. Review Spending and Saving Patterns

STEP 1: SET YOUR FINANCIAL GOALS

As you prepare to set your financial goals,

you should consider several questions.

What do I want to accomplish in the next month, year, five years?

What is important to me?Are my goals practical?

You might find it helpful to separate your

goals into short-term, intermediate, and

long-term goals.

STEP 2: ESTIMATE YOUR INCOME Start your budget by recording your

estimated income for the next month. Include all sources of income that you know

you will receive Your gross pay is reduced by various

deductions. Deductions include:

Taxes InsuranceRetirement contributions

Your take-home pay (after deductions) is called your net pay

STEP 3: BUDGET FOR UNEXPECTED EXPENSES AND SAVINGS

You have to plan for expenses such as

food, rent, and clothing to satisfy your

basic needs

Unexpected expenses include medical

visits or accidents

Savings make it possible for you to meet

future wants and needs

STEP 3: BUDGET FOR UNEXPECTED EXPENSES AND SAVINGS

In your budget, make sure that the

total income figure is the same as

the total for planned expenses and

savings.

If your planned expenses and

savings are more than your

income, you will have to cut

expenses or find additional income

I WISH!!!

STEP 4: BUDGET FOR FIXED EXPENSES

Expenses that occur regularly

Fixed Expenses include:

Rent

Insurance

Car loan

STEP 5: BUDGET FOR VARIABLE EXPENSES

Expenses that change and can be

controlled more easily that fixed

expenses

Variable expenses include:

Food

Phone charges

Entertainment

Gifts

STEP 6: RECORD WHAT YOU SPEND

Keeping track of your expenses will

help you revise your budget if

necessary.

The budget variance is the

difference between your budgeted

amount and the actual amount you

spend

It can be a surplus (extra money)

or a deficit (not enough money)

STEP 7: REVIEW SPENDING AND SAVING PATTERNS

You need to review your budget each

month and consider making changes.

ASSIGNMENT

Think about what your financial goals are.

Do you want to go to college, buy a car

or go on a school trip? Write a 300 word

essay that explains how making a

budget can help you reach you goals.

How do you plan to save up enough

money to reach your goals?

ASSIGNMENT

Complete Worksheet Packet for 28.2

Complete questions 2-14 on page

508/509