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Budgeting 101 PART 1-Discussion PART 2-Use page 67

Budgeting 101 PART 1-Discussion PART 2-Use page 67. What role does a budget play in personal finance planning? Part 1. What you need to know about budgeting?. It is a plan for spending money Budget sizes differ Federal Government to your family Budgeting concerns income and expenses

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Budgeting 101 PART 1-Discussion PART 2-Use page 67

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  1. Budgeting 101PART 1-DiscussionPART 2-Use page 67 What role does a budget play in personal finance planning? Part 1

  2. What you need to know about budgeting? • It is a plan for spending money • Budget sizes differ • Federal Government to your family • Budgeting concerns income and expenses • Household budgets have categories • Budgets have to be calculated so you know what you have to spend and save • Your goals and the things you want affect your budget decisions

  3. Who uses a budget? • Anyone who decides how to spend money and deciding if they have enough has used a budget • Federal Government, Schools, hair salons, any business and your household

  4. Where would I find a budget? • Many families have written budgets showing how much will be spent in categories • Rent, utilities, food, clothing • Some keep exact records of all expenses and income • Frequently adjusting • Others fly by the seat of their pants

  5. How do you plan a budget? • Have to make decisions on needs and wants • Have to think of opportunity costs • Buy a large house-electric bill will be very high-keeping you from getting something you may want.

  6. Why do I need to know about budgeting? • Will have to plan your own budget eventually • Need to know categories in budgets and the % of income people usually spend in each category • Ensure a sound financial future requires it • Helps outline income and planned expenditures for a time period

  7. When would I use a budget? • Anytime you have to plan how you will spend money • With responsibilities (car, job, rent, family) come the need to know how to spend your money wisely • JA Finance Park!

  8. Budgeting 101PART 1-DiscussionPART 2-Use page 67 Budgeting Scavenger Hunt Part 2

  9. Before you Budget • What's your goal? • To get a new outfit? • Get a PS3? • Get a car? • When you think about spending and saving money, you probably think about your goals. But before you can go to college, get your own place, or go on vacation, you have to have the money to pay for it.

  10. Rules of Thumb • Step 1: Identify Goals • Step 2: Record Income • Step 3: Determine Expenses • Step 4: Develop a Saving Plan

  11. Successful Budget • Depending on the lifestyle you chose, know how much money you need to earn. • Record your known and expected expenses. • monthly bills, miscellaneous expenses • Know how much additional money is available to savefor a long-term goal after you have already set aside 5% • Keep up with your budget by tracking all your actual expenses. • Make sure that you are not exceeding the budgetedamount for each category.

  12. Needs and Wants • Needs are the basic things that are required for your safety and health, including food to keep you alive, clothing to keep you warm, and a shelter to protect you • Wants, on the other hand, are items you desire but are not critical to life. These may include ice cream, designer jeans, or a new bike.

  13. Fixed and Variable Expenses • Fixed expenses tend to be about the same each month • rent.  • Variable expenses tend to fluctuate each month • clothing

  14. Spending Plans • A spending plan is a plan for spending and saving money. • Comparison of what you earn (income) and where the money goes (savings and household expenses). • A spending plan provides direction for future spending so that there is sufficient income with which to pay expenses.

  15. Saving • Saving and investing will give you the upper hand when faced with unexpected problems • can cushion the emotional and economic blow of a divorce or accident • Will enable you to take advantage of opportunities you may otherwise have missed out on • like actually buying a PS3 instead of just talking about it • In a word, saving and investing gives you options.

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