Personal Finance Chapter 4
Name: Grace Davis
Topic/Objective:
Date: 9/25/18
Class: P.1.
Essential Question: How does budgeting help you achieve your financial goals?
Questions/Main Ideas
Notes
(2 per section)
4.1: Budgeting and Planning
● Financial Planning
Planning, budgeting, and good records lead to great financial security.
o Get Started
Always consider your income and your expenses.
Gross income is important but does not matter as
much as your disposable income.
V. Disposable Income: The money you have left
to spend/save after all taxes and other deductions
are taken. Understand your financial resources.
V. Financial Plan: A set of goals for spending,
saving, and investing the money you recieve.
o Visualize Your Future
What are the steps start and
finish a financial plan?
Keeping track of what comes in and what goes out
is a good way to help you realize the changes that
can be made. Prepare your budget.
o Prepare a Budget
The budget must balance
money out=money in
This helps to prevent borrowing money or taking
loans.
V. Budget: A spending and saving plan based on
your expected income and expenses.
▪ Steps in Preparing a Budget
1. Estimate expected total income for a
certain week.
2. . Estimate your expenses, or money
you’ll need day to day.
3. Decide how much of your income
you would like to save for future
needs.
4. Balance your budget.
▪ Budget Line Items
monthly budget=annual/12
V. Fixed Expenses: Are the costs that do
not change from month to month. You have
to pay them. Like rent on a house.
V. Variable Expenses: Are costs that vary
in amount and type, depending on the
choices you make.
V. Cash Surplus: When your income
exceeds your expenses.
V. Cash Deficit: When estimated expenses
are greater than estimated income.
▪ Balancing Your Budget
when your budget is not balanced, you can
cut your expenses, borrow money or dip
into savings, or you can increase your
income. Fixed cost are difficult to change.
Variable cost are easy to change.
● Tracking Your Progress
when you achieve goals, you can track what you’ve
accomplished and what remains to be done. This makes
long range planning easier.
o Income and Expense Records
W-2 forms show the money earned and deductions
from your paycheck. They also reveal taxes
withheld.
o Net Worth Statement
A person’s net worth based on his or hers assets
and liabilities.
V. Assets: Items of value that a person owns.
V. Wealth: The accumulation of assets.
V. Liabilities: Money or debts owed to others.
V. Net Worth: Asset-Liabilities= net worth
o Personal Property Inventory
Anything of value that you own, except real estate.
cars and clothing are just to examples.
o Tax Records
Always keep copies of tax records, A copy of the
signed form, W-2 forms, and other receipts
verifying income and expenses listed on each
return.
o Other Records
Some keep lists of credit card numbers and phone
numbers to call if cards are lost/stolen.
Summary(2-3 complete sentences): It helps by managing what you spend, only buy what you need
vs. what you want. If you can save money and put it towards something else like a vacation, and you
still pay all of your needed expenses with no problem then you have achieved a level of financial
success.