Chapter 7 Budgeting 101

Principles of Investing

Before We BeginPlease have your notebook and

your Chapter 7 Packet on your desk

Ch 7 Essential Questions 1. How is money active?2. What are the reasons why people do not

budget?3. What are some common problems

associated with budget failures?4. What are the benefits of a budget?5. What is a zero-based budget and how

does one complete it?

Lesson 11. How is money active?

Explain why money is “active”Define cash flow plan and state when a cash

flow plan should be developedState and explain 5 ways money can be utilized

2. What are the reasons why people do not budget?State and explain 4 reasons why people do not

budget

DO NOW Write down 3-5 different ways

you use your money. Write down what you think are

the 3 most important categories in a budget.

Listen to DaveDave Ramsey Part 1 Video

How Money is ActiveMoney is always moving Money can be utilized in many ways

including the following: earn it, spend it, save it, invest it, and give it

Dave Ramsey Part 2 Video

Listen to Dave

Reasons Why People Do Not Budget

A budget has a negative connotation because it has been used to control them.

You fear what you may find so you don’t create a budget.

It has been used to abuse themMost people have never had one that really

worked so they don’t want to try another budget.

Lesson 11. How is money active?

State and explain 3 ways to use a checkIdentify and explain 4 advantages of using checksIdentify and explain 4 disadvantages of using checksIdentify and define the parts of a check Practice writing 3 checks Identify and define the parts of a checkbook registerPractice recording 3 checks into a checkbook register

2. What are the reasons why people do not budget?

DO NOW List 3 ways you use a checkList 3 advantages of using

checksList 3 disadvantages of using

checks

Ways to Use a Check1. Make a payment2. Cash it3. Write it out as cash

This can be done in one of two ways

Advantages of Using Checks

1. Safety or Security2. Convenience 3. Records of your Transactions 4. Proof

Disadvantages of Using Checks

1. Security Concerns2. Time3. Recordkeeping4. Not being able to use them all the

time or everywhere

Activity 1How to Write a Check

Definition- an order to a bank to pay a specified sum to the person or business named on the check

Only 51% of teens know how to write a check

I explained the parts of a check. Then I modeled and demonstrated how to write a check by using the one below

Activity 1 - How to Write a Check All of you are now going to practice writing checks by

writing 3 checks on your own or with the person sitting next to you

Check Number 1Check amount: $70.00 Date: January 10, 2015

Who the check is being paid to: AT&T Check Number 2

Check amount: $90.00 Date: January 21, 2015 Who the check is being paid to: Comcast

Check Number 3Check amount: $125.00 Date: February 11, 2015

Who the check is being paid to: ShopRite

Students volunteer to demonstrate how they wrote their 3 checks

Activity 1- How to Write a Check After you write a check you then have to

record the check information into your checkbook register

This is very important! All of you are now going to practice recording

the checks into a checkbook registerOn your own or with the person sitting next

to you, record the 3 checks you just wrote into the checkbook register

Students volunteer to demonstrate how they recorded the 3 checks they wrote in the checkbook register

Lesson 11. How is money active?

State and explain 4 reasons why it is important to budget one’s checkbook

Explain the process of fixing an error/s in one’s bank statement

Describe how to balance or reconcile (think scale!) one’s account after receiving one’s bank statement

Practice recording 14 transactions into a checkbook register and then balancing or reconciling a checkbook

2. What are the reasons why people do not budget?

DO NOW List 3 reasons why it is important to

balance your checkbookWhat should you do if you find an error

in your bank statement? (A record, usually sent to the account holder once per month, summarizing all transactions in an account)

Reasons to Balance your Checkbook

1. To keep track of your money2. To catch mistakes3. To avoid overdrafts 4. To help with budgeting

Your Bank Statement1. When you receive your bank statement,

compare your check register to the bank statement to make sure that neither you nor your bank made a mistakeThis is called balancing or reconciling your account

If you find an error on your statement you must notify your bank within 60 days from the date of the statement

Activity 2- Balancing your Checkbook

Definition- a book of blank checks with a register for recording checks written

Only 34% of teens know how to balance a checkbook and reconcile an account register to a bank statement

Activity 2- Balancing your Checkbook

All of you are now going to practice filling out the check register and balancing or reconciling your checkbook

Students volunteer to demonstrate how they balanced their checkbook by recording all of their transactions and deposits into their checkbook register and calculating the correct adjustments to their balances.

Lesson 23. What are some common problems

associated with budget failures?State and examine 4 common problems associated with budget failures

4. What are the benefits of a budget?State and examine 6 benefits of a budget

DO NOW List 3 reasons why you think people fail

at maintaining or following a budgetList 3 benefits of having a budget

Listen to DaveDave Ramsey Part 3 Video

Common Problems Associated with Budget

Failures 1. The budget doesn’t work because

things are left out2. The budget is too complicated3. You don’t actually create a budget4. You write a budget, but don’t live on it

Benefits of a Budget1. Removes the management by crisis from your finances2. Managed money goes further than money that is not

managed3. Managed money removes many of the money fights

from your marriage4. Budgets remove guilt, shame, and fear from

relationships5. A written plan can remove many overdrafts and stress

from your life 6. A written plan can show you where you’re over

spending in certain areas of your life

Discussion Questions 1. Of the 5 ways one can utilize money, which 2 ways are the most

important and why? Please explain 2. Which advantage of using checks is the most important for

consumers and why? Please explain 3. Do the advantages of using checks outweigh the

disadvantages? Please explain 4. Due to the tech-savvy world we live in today, should paper

checks and checkbooks be a thing of the past? Please explain 5. Which advantage of a budget is the most important for families? 6. Only 32% of Americans, or nearly 1 in 3 Americans, put together

a budget each month. Why is this so and how can we convince more Americans to create a monthly budget? Please explain

Students wrote their thoughts down and then shared their thoughts with the class- interactive instruction

Lesson 34. What are the benefits of a budget?5. What is a zero-based budget and

how does one complete it? Define a zero-based budget and practice completing 2 zero-based budgets

DO NOW List 3 reasons why students should

learn how to budget.What age do expect your parents to

stop supporting you financially?How much do you think you spend a

month?

According to Dave…86% of teens agree with the following

statement: I expect and would like my parents to stop supporting me financially before age 25

On average, teens spend $19 per week

Activity 3Student Budget

Definition- cash flow plan; assigns every dollar to a specific category/expense at the beginning of each month.

Only 41% of teens know how to budget their money

Activity- Student Budget All of you are now going to read through the first scenario

(Marcus) and create a zero-based budget for MarcusBudgets will vary!Monthly Total

This column shows you how much you are spending on necessities each month.

If you do not know the amount, write down your best estimate.

AccountWrite in how this area is paid—by check, automatic bank

draft, cash, etc.

Students volunteer to demonstrate how they created a budget for Marcus

Activity- Student Budget All of you are now going to create your own personal

budget based on your income and expensesBudgets will vary! BUT must include Giving and

Saving as funded categoriesYou all need to get in the habit of putting something

away in these categories, even if it isn’t the full 10-15%. Teenagers tend to spend a lot of money on clothes

and entertainment, so make sure those categories are appropriately funded

Finally, Remember, the point is to spend every dollar on paper before the month begins!

Students volunteer to demonstrate how they created a budget for themselves