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Mastering Budgeting: Your Guide to Effective Money Management and Savings

In this unit, you'll dive into essential budgeting skills to better manage your finances. Examine your spending habits, explore the benefits of a budget, and understand various income sources and expenses. Learn the importance of saving—pay yourself first—and how to construct a personal budget. Discover record-keeping methods, stay on track with your financial goals, and adapt your budget as life changes. Whether using an envelope system or personal finance software, mastering budgeting will enable smarter decisions and a secure financial future.

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Mastering Budgeting: Your Guide to Effective Money Management and Savings

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Presentation Transcript

  1. Unit 2Budgeting

  2. In this unit, you will… • Examine your spending habits • Know the benefits of having a spending plan, or budget • Identify various sources of income • Identify types of expenses • Know the importance of saving (paying yourself first) • Be able to construct a budget • Examine forms of record keeping involved with budgeting and cash management • Consider how a budget will change throughout your life

  3. Budget • Budget: • A “spending plan” • Plan for managing your money during a given amount of time • Income vs. expenses • NOT about giving up favorite things • IS about seeing your options and making smarter decisions

  4. BudgetPart 1: income • Income • Money you receive • Examples: Job, allowance, birthday money, money from selling stuff, interest earned on your savings account

  5. BudgetPart 1: income • Example: • Paid $8/hour, work 20 hours/week • How much should your paycheck be each week? • Why isn’t your paycheck $160??? • TAXES! • Support govt programs • Schools, roads, armed services, retirement income for elderly • Applied to income, property, and goods

  6. BudgetPart 1: income • Four payroll deductions on a pay stub • Federal income tax • Fee collected by the federal govt to supports its programs • State income tax • Fee collected by state govt to support its programs • FICA (Federal Insurance Contributions Act) • Social security tax • Small income for elderly, disabled, and orphaned • Medicare tax • Provides medical insurance to elderly and some disabled • Later in life…health insurance, retirement savings

  7. BudgetPart 1: income • Gross income: • Income BEFORE deductions • Net income: • Income AFTER deductions • “Take home pay”

  8. Mind break… • The average person spends money ___ times a day. • A $5 sandwich usually has less than $__ worth of ingredients. • If you purchase a soda a day for a year, you will have spent approximately $____.

  9. BudgetPart 2: Expenses • Expenses: • What you spend your money on • Three types • Fixed: cost the same every time • Variable: fluctuate in amount • Periodic/occasional: don’t pay every month, can be fixed or variable

  10. BudgetPart 2: Expenses • Where do your expenses fall?

  11. BudgetPart 2: Expenses • The MOST important expense: • PYF: Pay Yourself First • Example: • From each paycheck ($150) you receive, you immediately save $20.00 for later • Should try to save ___% Think back to one of the SMART goals you set during Unit 1… How much do you need to save in order to meet your goal(s)?

  12. Building a budget • Time Frame • Money coming in • Categorize your expenses Group as fixed and variable Remember PYF! • Subtract your total expenses from total income. Adjust until 0. • Step back & take a look! Do you need to tweak your plan to be in line with your financial goals?

  13. Build a Budget for Jessica

  14. Keeping track… • Important documents to keep: • Checking acct statements • Savings and investment statements • Pay stubs • Tax documents • Insurance statements • Loan and credit card statements • Receipts and warranties for large items

  15. Staying on track • Methods to stay on track with your budget… • Envelope system • Checking Account Register • Budget Spreadsheet • Personal Finance Software • Online Programs • www.mint.com

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