Chapter 7
Budgeting 101
Principles of Investing
Before We Begin
Please
have your notebook and
your Chapter 7 Packet on your
desk
Ch 7 Essential Questions
1.
How is money active?
2. What are the reasons why people do not
budget?
3. What are some common problems
associated with budget failures?
4. What are the benefits of a budget?
5. What is a zero-based budget and how
does one complete it?
Lesson 1
1. How is money active?
Explain why money is “active”
Define cash flow plan and state when a
cash flow plan should be developed
State and explain 5 ways money can be
utilized
2.
What are the reasons why people do not
budget?
State and explain 4 reasons why people do
not budget
DO NOW
Write
down 3-5 different ways
you use your money.
Write down what you think are
the 3 most important categories
in a budget.
Listen to Dave
Dave
Ramsey Part 1 Video
How Money is Active
Money
is always moving
Money can be utilized in many ways
including the following: earn it,
spend it, save it, invest it, and give it
Listen to Dave
Dave
Ramsey Part 2 Video
Reasons Why People Do
Not Budget
A budget
has a negative connotation
because it has been used to control
them.
You fear what you may find so you don’t
create a budget.
It has been used to abuse them
Most people have never had one that
really worked so they don’t want to try
another budget.
Lesson 1
 1.
How is money active?
State and explain 3 ways to use a check
Identify and explain 4 advantages of using checks
Identify and explain 4 disadvantages of using checks
Identify and define the parts of a check
Practice writing 3 checks
Identify and define the parts of a checkbook register
Practice recording 3 checks into a checkbook
register
 2. What are the reasons why people do not budget?
DO NOW
List
3 ways you use a check
List 3 advantages of using
checks
List 3 disadvantages of using
checks
Ways to Use a Check
1.
Make a payment
2. Cash it
3. Write it out as cash
This can be done in one of two ways
Advantages of Using
Checks
1.
Safety or Security
2. Convenience
3. Records of your Transactions
4. Proof
Disadvantages of Using
Checks
1.
Security Concerns
2. Time
3. Recordkeeping
4. Not being able to use them all the
time or everywhere
Activity 1
How
to Write a Check
Definition- an order to a bank to pay
a specified sum to the person or
business named on the check
Only 51% of teens know how to write
a check
I explained the parts of a check. Then I
modeled and demonstrated how to write
a check by using the one below
Activity 1 - How to Write a Check
 All
of you are now going to practice writing checks by
writing 3 checks on your own or with the person sitting
next to you
 Check Number 1
 Check amount: $70.00 Date: January 10, 2015
Who the check is being paid to: AT&T
 Check Number 2
 Check amount: $90.00 Date: January 21, 2015
Who the check is being paid to: Comcast
 Check Number 3
 Check amount: $125.00 Date: February 11, 2015
Who the check is being paid to: ShopRite
Students volunteer to
demonstrate how they
wrote their 3 checks
Activity 1- How to Write a Check
 After
you write a check you then have to
record the check information into your
checkbook register
 This is very important!
 All of you are now going to practice recording
the checks into a checkbook register
On your own or with the person sitting next
to you, record the 3 checks you just wrote
into the checkbook register
Students volunteer to
demonstrate how they
recorded the 3 checks
they wrote in the
checkbook register
Lesson 1
 1.
How is money active?
State and explain 4 reasons why it is important to
budget one’s checkbook
Explain the process of fixing an error/s in one’s
bank statement
Describe how to balance or reconcile (think scale!)
one’s account after receiving one’s bank statement
Practice recording 14 transactions into a checkbook
register and then balancing or reconciling a
checkbook
 2. What are the reasons why people do not budget?
DO NOW
List
3 reasons why it is important to
balance your checkbook
What should you do if you find an error
in your bank statement? (A record,
usually sent to the account holder once
per month, summarizing all transactions
in an account)
Reasons to Balance your
Checkbook
1.
To keep track of your money
2. To catch mistakes
3. To avoid overdrafts
4. To help with budgeting
Your Bank Statement
1.
When you receive your bank statement,
compare your check register to the bank
statement to make sure that neither you
nor your bank made a mistake
This is called balancing or reconciling
your account
If you find an error on your statement you
must notify your bank within 60 days from
the date of the statement
Activity 2- Balancing your
Checkbook
Definition-
a book of blank checks
with a register for recording checks
written
Only 34% of teens know how to
balance a checkbook and
reconcile an account register to a
bank statement
Activity 2- Balancing your
Checkbook
All
of you are now going to practice
filling out the check register and
balancing or reconciling your
checkbook
Students volunteer to
demonstrate how they
balanced their checkbook
by recording all of their
transactions and deposits
into their checkbook
register and calculating
the correct adjustments
to their balances.
Lesson 2
3.
What are some common problems
associated with budget failures?
State and examine 4 common problems
associated with budget failures
4. What are the benefits of a budget?
State and examine 6 benefits of a
budget
DO NOW
List
3 reasons why you think people fail
at maintaining or following a budget
List 3 benefits of having a budget
Listen to Dave
Dave
Ramsey Part 3 Video
Common Problems
Associated with Budget
Failures
The budget doesn’t work because
things are left out
2. The budget is too complicated
3. You don’t actually create a budget
4. You write a budget, but don’t live on it
1.
Benefits of a Budget
 1.
Removes the management by crisis from your finances
 2.
Managed money goes further than money that is not
managed
 3.
Managed money removes many of the money fights
from your marriage
 4.
Budgets remove guilt, shame, and fear from
relationships
 5. A written
plan can remove many overdrafts and stress
from your life
plan can show you where you’re over spending
in certain areas of your life
 6. A written
Discussion Questions
 1.
Of the 5 ways one can utilize money, which 2 ways are the most
important and why? Please explain
 2.
Which advantage of using checks is the most important for
consumers and why? Please explain
 3.
Do the advantages of using checks outweigh the disadvantages?
wrote their thoughts down and then shared their
Please explain Students
thoughts with the class- interactive instruction
 4.
Due to the tech-savvy world we live in today, should paper
checks and checkbooks be a thing of the past? Please explain
 5.
 6.
Which advantage of a budget is the most important for families?
Only 32% of Americans, or nearly 1 in 3 Americans, put together
a budget each month. Why is this so and how can we convince
more Americans to create a monthly budget? Please explain
Lesson 3
4.
What are the benefits of a budget?
5. What is a zero-based budget and how
does one complete it?
Define a zero-based budget and
practice completing 2 zero-based
budgets
DO NOW
List
3 reasons why students should
learn how to budget.
What age do expect your parents to
stop supporting you financially?
How much do you think you spend a
month?
According to Dave…
86%
of teens agree with the following
statement: I expect and would like my
parents to stop supporting me
financially before age 25
On average, teens spend $19 per
week
Activity 3
Student
Budget
Definition- cash flow plan; assigns
every dollar to a specific
category/expense at the beginning of
each month.
Only 41% of teens know how to
budget their money
Activity- Student Budget
 All
of you are now going to read through the first
scenario (Marcus) and create a zero-based budget
for Marcus
 Budgets will vary!
 Monthly Total
This column shows you how much you are
spending on necessities each month.
If you do not know the amount, write down your
best estimate.
 Account
Write in how this area is paid—by check, automatic
bank draft, cash, etc.
Students
volunteer to
demonstrate
how they
created a
budget for
Marcus
Activity- Student Budget
 All
of you are now going to create your own personal
budget based on your income and expenses
 Budgets will vary! BUT must include Giving and
Saving as funded categories
You
all need to get in the habit of putting something
away in these categories, even if it isn’t the full 1015%.
 Teenagers
tend to spend a lot of money on clothes
and entertainment, so make sure those categories
are appropriately funded
 Finally, Remember, the point is to spend every dollar
on paper before the month begins!
Students
volunteer to
demonstrate
how they
created a
budget for
themselves