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Mastering Budgeting: Building a $25,000 Annual Financial Plan

This resource explores the fundamentals of budgeting, emphasizing its importance in personal finance. You'll learn what a budget is, why it matters, and how to create a successful one. The resource features a study of Harvard alumni and goal-setting techniques to illustrate the power of written financial plans. Through practical activities, students will assess their spending habits, establish short- and long-term goals, and understand necessary financial management skills. Prepare for a brighter financial future by developing a personalized budgeting plan!

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Mastering Budgeting: Building a $25,000 Annual Financial Plan

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Presentation Transcript

  1. BUDGETING!!!!!

  2. $25,000 a year…a lot of $$$??? • 1. what is a budget? • 2. do any of you have a WRITTEN budget? • 3. Why are budgets important to have?

  3. AFTER WATCHING COSBY CLIP • 1. Why are Theo’s parents worried about his grades? • 2. What does DR. Huxtable know that his son does not know? • How much money does the “regular” person in this video clip make? • What would this be as an annul salary? (1985) ($25,000 in 2013) • On what and how much did Theo say he would spend his “regular” person’s salary? • How much money was left over after all the bills were paid? • How realistic was Theo being in the clip? • How many of you would be willing to live on “bologna and cereal”? • How many of you occasionally eat fast food meals? How much does a meal cost? How much would a month of those meals cost? • Do you think Theo’s “Regular” person can live a rewarding lifestyle on this budget? Why/why not?

  4. Why We Need Money Management Skills • 1.) To provide for and protect yourself and your family. • 2.) To plan for the future. • 3.) To reach your goals.

  5. Goal Setting Survey of Harvard Graduates A study was done of Harvard alumni 10 years after they had graduated. The survey found that: • 83% had NO specific personal or business goals. • 14% had specific goals but they were NOT written down. • 3% had specific goals that were written down.

  6. PAYOFF: • Those with goals not written down earned 3 times as much as those with no goals. • Those who had written their goals down earned • 10 times as much as those with no goals.

  7. No Goals Ignorance Debt Poor investments Inflation Taxes Procrastination – the most common! Roadblocks to financial success

  8. Set GoalsWhat do you want out of life? • 1.) Short Term Goals (1-2 years) Emergency fund • 2.) Medium Term Goals (5 years or less) Buy a home • 3.) Long Term Goals ( 5 years and longer) Children’s Education Retirement

  9. Building Your Budget • 1.) Decide what you want to do with your money. • 2.) Make Your Plan and stick with it!

  10. Think-pair-share-write… • What do I want out of life… • 1. In 8-10 years, what goals will I want to have accomplished and how do I want to be living? • 2. What will I have to do to accomplish these goals? • 3. What roadblocks can I see possibly having to gaining these goals? • How might I overcome these roadblocks? • How can a budget / money management help me accomplish this?

  11. Lets look at you spending trackers… • 1. Can you categorize you purchases in any meaningful way… • 2. What were the total EXPENDITURES in each of these categories? What categories did you spend the most? / the least? • 3. What were your REVENUE sources? • 4. How many of these purchases gave you something permanent? (asset) How many are were used up immediately/ quickly? • Did everyone have the same answers in the class? Is that okay?

  12. How did you do financially? • 1. Did your actually spending habits fair well with you goals? • How can you better align your spending to what are priorities in your life? • Are there some spending that you could NOT avoid? • Are there some spending that you will try to avoid? • How?

  13. Lets model a simply budgetary plan… • Instead of thinking 8-10 years away, Lets fast forward your life to your senior year…(Prom, graduation, senior trip, driving, no more McAnulla’s class every other day..ahhhhhhh) • List everything you will need to spend money on in order to have a fabulous senior year…. • Activity at tables… 3.2.2..3.2.3..

  14. Reflection questions…on back of budget worksheet • 1. Where will the income (money) for these activities / expenses come from? • 2. How many think that they will be able to do all of these things with no cost to themselves? / Will you parents pay for everything? • 3. What will be some of the opportunities cost your parents will have to face because of your senior expenses? • 4. How could you increase your income? • 5. What strategies could you use to reduce your spending? • 6. How will a budget keep you on track for your goals?

  15. Congrats!!! (8-10 years later…) • You have just been hired for the fabulous career that you have been working for!!!!! • Your starting salary is……25,000 • -- $2084 a month • __ $480 a week… • Big money

  16. BUT… • Uncle Sam gets the first bite of your pay check… bwwahahahaha • Gross pay… Net Pay… Taxes • Deductions and Benefits • Required and optional deductions • Tax Tables… • The federal taxes:W2, 1040, 1040 EZ, • State/ local taxes… • Nicole’s and Jack’s tax situation…

  17. Question??? • Is it better to get a tax refund or have less taxes withheld? Support your answer!!!!

  18. A budget with NET • Now that you have a more accurate idea of how much money you actually get to take home…. • A monthly budget… John and Marcia’s stories… • ASSESSMENT: Now you have to do your own monthly budget!!!!

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