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What is a Budget?

What is a Budget?. CM 1.03 Analyze the impact of personal growth/development and change throughout life. What is a Budget?. A tool to help you prioritize your spending and manage your money—no matter how much or how little you have.

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What is a Budget?

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  1. What is a Budget? CM 1.03 Analyze the impact of personal growth/development and changethroughout life.

  2. What is a Budget? • A tool to help you prioritize your spending and manage your money—no matter how much or how little you have. • Itemized summary of probable expenses and income for a given period • Away to keep from running out of money before you run out of month!

  3. What is Earned Income? • Earned income includes all the taxable income and wages you get from working. • There are two ways to get earned income: • You work for someone who pays you                  orYou work in a business you own. (There are other forms of income like investment income, etc. but for now we are looking at earned income)

  4. Taxable earned income includes: • Wages, salaries, and tips; • Union strike benefits; • Long-term disability benefits received prior to minimum retirement age; • Net earnings from self-employment.

  5. Examples of Income that is Not Considered Earned: • Interest and dividends • Pensions • Social security • Unemployment benefits • Alimony • Child support.

  6. Payroll Deduction • Amount withheld by an employer from employee'searnings. • It typically includes: • income tax, national insurance or social securitycontributions, • and may also include group insurance or pension fund contributions, • unionor associationdues, authorized wage assignments, etc. Read more: http://www.businessdictionary.com/definition/payroll-deduction.html#ixzz11UOjB9BR

  7. Union Dues • Regular payment of money made by members of unions. • Dues are the cost of membership • used to fund the various activities which the union engages in. A Labor Union is an organization of workers that have banded together to achieve common goals such as better working conditions.

  8. What are fixed expenses? • To qualify as a fixed expense, something needs to remain the same throughout payment. • Classic examples of fixed expenses: • A loan payment, such as a payment on a mortgage or car loan—the expense is fixed for the life of the loan • Rent, for people who are not paying down a mortgage • A fixed bill. For example, people may be charged a flat fee for garbage service, lawn maintenance, or similar types of services • Can you think of some other fixed expenses?

  9. Flexible Expenses What Does it mean? Examples Cell Phones Name Brand clothing Entertainment Groceries Can you name others? • An expense that is easily altered or avoided by the person bearing the cost. Flexible expenses are costs that may be manipulated in amount or eliminated by not engaging in the activity that incurred the expense.

  10. Sources • Kristen’s Guide - http://www.kristensguide.com/Happiness/Life_Change/life_roles.asp • About.com - http://financialsoft.about.com/od/glossaryindexf/g/FixedExpns_def.htm • IRS.gov - http://www.irs.gov/individuals/article/0,,id=176508,00.html

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