Budgeting: Making
the Most of Your
Money
Unit 2
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Examine your spending habits.
Know the benefits of having a spending plan, or budget.
Identify various source of income.
Indentify types of expenses
Knowing the importance of saving (paying yourself first)
Be able to construct a budget.
Examine forms of recording involved with budgeting and cash
management.
• Consider how a budget will change throughout your life.
NEFE High School Fiancial Planning
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Budgeting : Making the Most of the Money
Mr. Dave Schmidt
Objectives for Unit 2
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NEFE High School Fiancial Planning
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• Money mangers should know what to count on
as income. From that spend on the money on
bills, and day-to-day purchases. Money is set
aside for big expenditures for operations of the
company.
• This unit is to learn to be smart with your money.
Where it goes and decide when bills get paid and
deal with large expenditures.
Mr. Dave Schmidt
Where should all my money
go?
Did you know?
Almost 60% of millionaires use a budget to
manage their money.
-Millionaire Next Door. Surprising Secrets of
America's Wealthy
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• What did you learn from your spending habits?
• Where there any expenditures you regretted?
• Budget is a plan for managing your money during a period a
time.
• Its not to deprive yourself, but to be able to reach your financial
“SMART” goals.
• Every business have budgets for everything, payroll,
expenditures, capital improvements, inventory, and supplies.
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• Review your Spending log from Unit 1
Mr. Dave Schmidt
How Does Your Spending Measure Up?
• “Every dollar saved is a dollar to the net profit.”
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• At the end of the month you spent $33.80 or $304.20 for the
entire school year (180 days).
• Could you be smarter with your money?
• Avoid spending on things you really don’t need.
• This way you have the money for the things you really want.
• If you received a prize of $50, how will you spend it? Due to
values of each person each person will have different ideas to
spend it.
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• In your spending log you have a habit to buy a soft drink on
the way home at the convenient store for $1.69.
Mr. Dave Schmidt
Smart Spending
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NEFE High School Fiancial Planning
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• Compare your spending log from Unit 1 with your financial
plan. How well your current spending habits represents your
financial goals?
• If not what type of budget (spending plan) are we going to
have to reach your financial goals?
• What do you think the benefits you will have in having a
personal budget?
Mr. Dave Schmidt
Assignment 2-1 How am I Doing?
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Matches Goals
(Yes or No)
Adjustments Needed
NEFE High School Fiancial Planning
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Expenses
Mr. Dave Schmidt
Assignment 2-1
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NEFE High School Fiancial Planning
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• Cash flow: The money coming in as it relates to going out.
• Income: Money you received for a period of time. Your job,
gifts, personal things that you sell.
• Taxes: payroll deductions to pay for government programs.
Local, state, and federal level.
• Social Security Tax (FICA)
• Medicare Taxes
Mr. Dave Schmidt
Part 1 of the Equation: Income
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Income
Marital Status
Dependence (children, or other people you financially support)
Any other deductions you want to add.
NEFE High School Fiancial Planning
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• There is a saying that goes “The really certainly in life is death
and taxes.”
• The government uses the W-4 form to figure out you financial
tax obligations. The following factors deal with the amount of
tax you pay:
Mr. Dave Schmidt
What’s a W-4 For?
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• Fixed expenses: The same cost each period of time, such as rent,
car payments, etc.
• Variable expenses: fluctuates in amount of usage. These
expenses are easier to control, such as utilities, telephone, food,
etc.
• Periodic or occasional expenses: These expenses are not paid
every month such as car insurance is paid every 6 months, water
and sewage every 3 months, etc.
NEFE High School Fiancial Planning
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• Expenses are what you spend money on your needs and
wants.
Mr. Dave Schmidt
Part 2 of the Equation: Expenses
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Groceries
Piano lesson fee
Cable TV bill
Fixed?
Variable?
Periodic?
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Description
Mr. Dave Schmidt
Exercise 2C: What type of Expense
Is It?
Magazine
subscription renewal
Car loan payment
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Variable Expenses
Periodic/Occassional
Expenses
NEFE High School Fiancial Planning
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Fixed Expenses
Mr. Dave Schmidt
Assignment 2-2
My Fixed and Variable Expenses
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NEFE High School Fiancial Planning
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• The average person spends money three times a day.
• Putting aside every coin you touch results in saving about $50
a month
• A $5 sandwich usually have less than $1 worth of ingredients.
• If you purchase a soda a day at the store, you can easily spend
over $400 a year.
Mr. Dave Schmidt
Did You Know?
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NEFE High School Fiancial Planning
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• Your financial goal should be the highest of any expense that you
have. You are earning the money, you should earn the right to
achieve your goals.
• “Pay Yourself first” (PYF): Money you put aside for your financial
goals (retirement, trips, new car) something that is important to
you.
• Use of Roth IRAs, and other investments that employer can put
directly money each paycheck into it.
Mr. Dave Schmidt
The Most Important Expense
• If you don’t see it you don’t miss it.
• Set up an emergency fund, to take care of unexpected expenses,
such as car repairs, tires, unexpected unemployment.
• This should be about 6 months of salary.
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• The Simpson family wants to buy a new refrigerator for the
kitchen. Mr. Simpson has visited several stores and
estimates that it will cost $700 to buy and install the type of
refrigerator the family wants. The goal is to buy the
refrigerator in 6 months. How much do the Simpsons need
to save each month?
• The Mencias want to buy their oldest daughter a computer
to take to college next year. They’ve shopped around and
think they can get a good desktop computer, software, and
a printer for about $1,100. With 15 months to save how
much money they need to set aside each month?
Mr. Dave Schmidt
Exercise 2D:
Saving to Meet Goals
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•$1,100 ÷ 15 =
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•$700 ÷ 6 =
Mr. Dave Schmidt
Exercise 2D:
Saving to Meet Goals- Answer
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Amount to Save
Each Month or
Week
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Smart Goals
Total Amount
Needed
Mr. Dave Schmidt
Assignment 2-3: Saving My Goals
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Get SMART Goals
Analyze Information
Create a Plan
Implement the Plan
Monitor and Modify the Plan
• Creating a spending plan or budget works the same way. Your
financial goals is instilled in your budget. If you follow your
budget you will reach your goal
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• The five steps of Financial Planning.
Mr. Dave Schmidt
The 411 on Creating a Budget
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• Decide a time frame
• List the money received
each time period.
• Total Income
• Categorize your expenses.
• Total Expenses
• Budget
Overruns/Shortages.
Mr. Dave Schmidt
Building a Budget
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NEFE High School Fiancial Planning
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• Please read the
information about
Jessica.
• Use data provided to
outline a personal
budget for Jessica.
• Make sure that
Jessica’s total
expenses don’t
exceed her total
income.
Mr. Dave Schmidt
Assignment 2-4:
Build a Budget
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• Go to page 23 of the
workbook and
complete your
personal budget,
using Microsoft Excel
and use the format
as shown before.
Mr. Dave Schmidt
Assessment 2-1
My Personal Budget
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• Loan and Credit Card
Statements
• Credit Card Fraud
• Receipts and
warranties for big
ticket items.
NEFE High School Fiancial Planning
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• Check bank account
statements
• Saving and
Investment
statements
• Paystubs
• Tax Deductions
• Insurance Statements
Mr. Dave Schmidt
Keeping Track
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• QuickBooks
• Peachtree
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• The Envelope System
• The Tally System
• Track with checking
account register,
• Budget Spreadsheet
• Personal Finance
Software:
Mr. Dave Schmidt
Staying on Track
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• Budget are not written in stone.
• Adjustments are made when income
increases or decreases.
• Increases and decreases in your Expenses.
• Changes in saving goals will be necessary
to change your budget.
Mr. Dave Schmidt
The Living Budget
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• Page 25 Take Jessica’s budget and make
the adjustments with the new information
provided.
Mr. Dave Schmidt
Exercise 2E:
Jessica’s Budget Needs Adjusting
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For more tips , tools, and articles about
budgets, visit hafpp.nefe.org
NEFE High School Fiancial Planning
Program
• A financial plan makes you personal life easier,
because you have a plan on the what you make
and you have a plan to spend the money to meet
your requirements and goals.
• It takes the stress out of your life of financial
worries.
• You learned about Paying Yourself First. Make
sure that the money you earned reaches to your
financial goal.
Mr. Dave Schmidt
Adding it Up
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• Anticipated income, savings, and expenses for a month based
on your current situation.
• An explanation of how the budget supports each of your
personal goals.
NEFE High School Fiancial Planning
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• On page 26 Using Microsoft Excel prepare your personal
budget.
• Include the following information in your budget:
Mr. Dave Schmidt
Unit Assessment 2-1
My Personal Budget
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