- BUDGETING “Most people don’t plan to fail.
They simply fail to plan.”
After your test correction do “Test your $$ sense”
“Some Money Facts”
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The average person spends money three times a day.
A movie with popcorn and a soft drink can easily cost $20
Just one soft drink a day for .99c adds up to $361.35 in a year
The biggest expense item for teenagers is FOOD!
Teens spend collectively $172 billion annually - $104 per week
Using a credit or debit card causes a person to spend 34% more
– There are about 502 million credit cards in use today with $406 billion balance
 Banks and credit companies make 51% profit from fees and penalties
 UTAH, New York, and California buy the most “name brands”
 Utah is #1 in Bankruptcy , Foreclosures, and Default on Mortgages
 2001 in Utah
– Nearly 94,000 people under 25 yo filed for bankruptcy
– Average in the US is 1 in 69 file for bankruptcy and in Utah is 1 in 34 filed
– Rise in 18-25 year olds moving back in with parents
BE PREPARED
How do you build a
house?
 Floor plan
 Gather resources
 Consider options
 Take action
How would you go on a
trip?
 Map it out
 Gather resources
 Consider options
 Take action
When you operate without a personal budget, you are
spending your money without a guideline or plan.
BUDGET
A plan for managing your income
and expenses
“A Rich man knows exactly how much $
he makes and where it is going.
A poor man has no idea!”
Budget Buster
(off to side)
 Give yourself five points if you have a budget.
 2. Give yourself five points if you have a checkbook.
 3. Deduct a point if you have ever bounced a check.
 4. Deduct a point if you bought something this week without comparison
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
shopping.
5. Give yourself a point if you bought a store brand, rather than a name
brand item this week.
6. Give yourself five points if you have a savings account.
7. Give yourself five points if you added any money to your savings account
this week.
8. Give yourself five points if you pay your own car insurance (or part of it).
9. Deduct five points if you routinely carry more than $10.00 in your purse or
wallet.
10. Give yourself five points if you have a method of recording what you
spend.
–
Total your points. The winner is the person with the most points.
Gross Income
The total amount of income
earned before deductions are
made.
• You must earn $15.00 to buy a
$10.00 item.
Letter and Cookie Monster
= = = "Understanding Your Paycheck" = = =
 Gross pay: $1,222.02
Deductions: ----------- Income Tax: 244.40 Outgo Tax: 45.21
State Tax: 61.10 Interstate Tax: 5.89 County Tax: 6.11 City Tax:
12.22 Rural Tax: 4.44 Back Tax: 1.11 Front Tax: 1.16 Side Tax:
1.61 Up Tax: 2.22 Down Tax: 1.11 Tic-Tacs: 1.98 Thumbtacks:
3.93 Carpet Tacks: 0.98 Stadium Tax: 0.69 Flat Tax: 8.32 Surtax:
3.46 Ma'am Tax: 2.60 Parking Fee: 5.00 No Parking Fee: 10.00
F.I.C.A.: 81.88 T.G.I.F.: 9.95 Life Insurance: 5.85 Health
Insurance: 16.23 Disability: 2.50 Ability: .25 Liability Insurance:
3.41 Dental Insurance: 4.50 Mental Insurance: 4.33
Reassurance: 0.11 Coffee: 6.85 Coffee Cups: 66.51 Calendar:
3.06 Floor Rental: 16.85 Chair Rental: 4.32 Desk Rental: 4.43
Union Dues: 5.85 Union Dont's: 3.77 Cash Advances: 0.69 Cash
Retreats: 121.35 Overtime: 1.26 Undertime: 54.83 Eastern Time:
9.00 Central Time: 8.00 Mountain Time: 7.00 Pacific Time: 6.00
Grenwich Mean Time: 24.00 Bathroom Time: 6.05 Time Out:
12.21 Oxygen: 10.02 Water: 16.54 Electricity: 38.23 Heat: 51.42
Misc.: 144.38 Air Conditioning: 46.83 --------- Total, all
Deductions $1,222.00
Take Home Pay: $0,000.02
Net Income
The amount of income left after
deductions are taken out.
Now you get to spend!
–How do your values influence
your spending habits?
You just got a surprise gift $100!
What will you do with it? (off to side)
1. Spend it right away for something I want—“A shirt in that new shade of blue will
look great on me!”
2. Spend it right away for something I need— “My running shoes are falling apart.
Now I can get a new pair to break in before track season starts!”
3. Use it to get more money out of Mom or Dad—“That MP3 player I’ve been
wanting is $200. I wonder if Mom or Dad will give me the extra $100?”
4. Spend some/save some—“College is in my future, so I want to be sure to have
some money to get me started. But it also is important to have a little fun, like taking
in a movie and having dinner with my friend.”
5. Help someone out— “Our rent went up $50 a month. Mom doesn’t know how she’s
going to pay for it. This money could help her out for a couple of months.”
6. Save it all— “A penny saved is a penny earned. If I put this into my bank account it
will earn interest and I’ll have money when I really need it. My car insurance is due in
a few weeks.”
What do you value?
1. Spend it right away for something I want
– (you want a lot of stuff and you want it now)
2. Spend it right away for something I need
- (money is unimportant, but it helps you get the things you want
and need)
3. Use it to get more money out of Mom or Dad
-
(you use money to make you feel important)
4. Spend some/save some
-
(you value money for the security it gives you)
5. Help someone out
-
(you are not concerned with money, no reason to worry about it)
6. Save it all
(you value money for the security it gives you)
Identify your Needs vs wants
NEEDS
–Essentials…the basics
of life
–Food
–Clothing
–Shelter
For the rest of your life you cannot
spend money on…. (sit down if they cannot go
with out spending money)
 Opening day for
movies
 Manicure/pedicure
 Athletics/gym
memberships
 Hairstyles that have
expensive treatments
(color, perms, etc.)
 Cell phones
 Going out to dinner
3x a week
 Vacations in high
seasons
 Name brand clothes
Identify your Needs vs wants
WANTS
–Simply increases the
quality of living
POSSIBLE BUDGET ITEMS
*auto—fuel and maintenance or
transportation
cable TV
car payment
clothing
clubs or organization fees
cosmetics
credit card or loan payments
Donations
eating out
*electricity
entertainment
*food
Hair cuts
hobbies
Holidays/birthdays/gifts
home interior/exterior (yard)
* house payment or rent
household supplies (cleaners,
paper products)
insurance
* medical bills
* medication
natural gas
pet care
phone
savings
schooling
vacation
Expenses
Fixed
Variable
 Expenses which usually
 Expenses which vary
do not vary in amount
and must be paid on a
regular basis
(mortgage, car payment,
insurance…)
Video
from week to week or
month to month
(clothing, food,
entertainment…)
Make A Budget
BUDGET JAR
 1. Track your spending to find out where your money is going
 2. Add up your monthly income
($750.00)
 3. List all of your monthly expenses
($612.00)
 4. Balance your monthly expenses to match your monthly
income. Rework the expense amounts until these 2 areas
balance. This is your budget. ($138.00 left)
 5. Track the money that you spend throughout the month both
variable and fixed. Update your budget as expenses change.
 6. Monthly review your budget to see where changes need to
be made. Evaluate how well you are meeting your financial
goals.
Budgeting % allowance
for each month
Housing 20-35%
Savings 5-10%
Food 15-35%
Insurance 2-8%
Personal care/clothing 2-4%
Recreation/entertainment 2-6%
Transportation 5-10%
Charity
Misc./unexpected 3-10%
Utilities/phone 4-7%
Study Guide Figures
Vanessa’s Budget
 Vanessa's monthly student worker paycheck earnings after
taxes is $412. She also has a part-time waitress job on the
weekends and earns $168 per month after taxes. Her parents
supplement her earnings with $200 a month. She adds that to
her monthly paycheck earnings to get a total monthly income of
$780.
 Next, Vanessa adds up her fixed expenses: rent (she shares an
apartment with two others and pays 1/3 of the rent) $200, and
she is responsible for her car insurance which is $128 per
month. She has a car that her parents have given her, so she
does not have a car loan. She is very lucky that her parents pay
her tuition and fees for school each semester. She is also on
her parent’s health insurance and that takes care of any doctor
visits when she gets sick as well as visits to the dentist.
 Now Vanessa adds up her variable expenses. Her share of
utilities is usually $100 per month and that includes cable. She
spends about $40 per month on her cell phone calls. Groceries
average around $80 per month, Gasoline is another $40 per
month. And she figures she’ll be able to spend $40 per month
on clothing, movies and going out with her friends. She adds all
these up and sees that her variable expenses total $300 per
month.
 Vanessa subtracts her total expenses of $628 from her income
of $780 to get $152. Vanessa knows that she will need
probably about $20 per week for snacks, incidental school
supplies, etc. That leaves $72. Since Vanessa will have some
money left over after taking care of her expenses, she decides
to put at least $60 per month into savings for unexpected
expenses, e.g., repairs to car, additional materials required for
class, etc.
Is Vanessa’s
spending
within the
budget
guidelines?
http://www.selu.edu/acad_resea
rch/programs/cse/finance/budget
/
15%
other expenses
Recreation
30%
5%
6%
12%
8%
Medical
Clothing
Transportation
Housing
THE BEAN GAME
Living on a “20 Bean Salary”
 Purpose
Managing money means making choices. There is never
enough money available for all of the things we’d like to have or
do. This game will help you decide what is most important to
you.
 How to Play
Each individual receives 20 beans and a spending
category sheets. The individual must decide how to
spend their “income” based on life circumstances,
values and goals. Each item has a set number of squares
which indicates how many beans are needed to “pay”
for that item.
How does the typical family
spend their pay check?
Remember living expenses vary
depending on where you live, age,
14%
and personal goals.
$2500 pay check
$600 (30%) Housing
10%
$440 (22%) Food
$200 (10%) Clothing
8%
$40 (2%) Personal
$180 ( 9%) Other
$140 (7%) Recreation
22%
$160 (8%) Insurance
$280 (14%) Transportation
$280 (14%) Utilities, home repairs
30%
Housing
Recreation
Food
Insurance
Clothing
7%
Transportation
Budgeting Tips
1. Create and Update your budget
Create a plan on how you will spend and save money. Update
it regularly and evaluate your goals. Think about your financial
situation, where you need to be, and determine how you're
going to get there.
2. Rule of Percentages —
A good rule of thumb for
budgeting your salary is: 70% pay current bills, 20% save for
future purchases, 10% invest for long term.
3. Plan ahead - Write down your goals and objectives.
It's important to be realistic. Right now when you are in school,
will you more likely be able to afford a $10,000 car or one that
costs $30,000? Review your goals and objectives regularly to
see if you are on track.
4. Pay Yourself First —
After budgeting for
necessities and before spending anything for wants, always
tuck away some money from each paycheck for emergencies
into a rainy day savings account or investments
-- Rule of 72 (to double your money) — If you know
the interest rate you can get, divide 72 by the known interest
rate and it will give you how many years it will take to double
your money. If you know how many years you have, divide 72
by the number of years and it will tell you what interest rate
you must have to double your money.
Examples: If interest rate is 6%. 72 ÷ 6 = 12 years. If time is 10
years. 72 ÷ 10 = 7.2% interest rate needed.
5. Fixed, Variable, or Needs, Wants, and
Luxury? – Categorize and prioritize the expenses in your
budget. Is it fixed, such as rent or a car payment? Is it variable
such as groceries, gas or long distance use? Or is it luxury, such
as entertainment or going out to eat?
6. Stay insured
Purchase health insurance to avoid being hard hit by a
financial loss due to accident or illness. It is an important part
of your financial plan. Depending on your circumstances, look
into renter’s insurance, car insurance, home owner’s
insurance, or flood insurance.
7. Before Charging —
Ask yourself: 1) Do I really
need it? And 2) Will I still have this 5 years from now? If the
answers are No, then wait until you can pay cash.
8. Stay focused
You'll need patience and discipline to start your financial plan
and to follow it through. Don't be tempted to overspend or to
spend without thinking about it first..
9. Money Tracking — We often spend money
without thinking about it. Keep track of all your
expenditures (cash, checks, debit cards, ATM withdrawals
and credit cards, transactions - even the smallest ones).
Record them every time in a notebook or register. Review
them regularly to make yourself aware of where your money
goes. Keep a file box /notebook to put all of your records in.
10. Educate yourself - No one can protect you from
your own bad judgment. Get the information you need to avoid
financial trouble and make thoughtful decisions that can
improve your financial security.
11. Take money time - Set aside time each month to
work on your money management. Monthly reconcile your
bank statement. You will find that it's time well spent.
12. Set Financial Goals
 Goal setting is an important part of success, whether you are
aspiring to reach objectives in school, career, or your personal
life. Aim too high and you may get frustrated and give up; aim
too low and you might not push yourself to reach your full
potential.
 Think about your financial goals and how you plan to reach
them.
– • What do you want your financial picture to look like in one year? Five
years? Ten years?
– • Do you want to buy a car, buy a house, start a family, or pay off student
loans?
– • What do you need to change to reach your goals?
– • Think about your financial goals and how you plan to reach them.
Handling a Budget
Pro’s and Con’s
 Joint Bank Accounts
– Money is available to either the husband or the wife. Both are
free to make deposits and withdrawals at will.
 Separate Accounts
– The two may each have their own account. In this method,
the couple divides the expenses up between the two.
 One Spouse Manages
– One spouse gives the other money, as it is needed.
 Envelope Method
– In this method several envelopes represents the budget
categories. Each pay period money is placed in the assigned
envelope until it is time for it to be spent/paid.
It is said that money brings happiness, BUT (behold the
ultimate truth) Money problems bring unhappiness that can
stay with you for the rest of your life and affect your
relationships. Finances affects everything!
We are in a Anti Dowry period – you take debt into a
marriage instead of a dowry.
Grandma's Advice
 Fix it up
 Wear it out
 Make it due or
 Due without.
Dave Ramsey Says:
 “Live like no other today
so that one day you will
live like no other.”
MONEY, MONEY, MONEY
Continue keeping track of your
spending and income for 5 days
Complete the 5 questions.
Record your budget spending
Create a new budget
Write an analysis for this
STATE #7 GROUPS
Smith Family Budget
 Barbara Smith was tired. She had no idea that merging wants, needs and
desires in marriage would be such a challenge. She and her husband had
overcome many challenges, but their greatest ongoing problems surrounded
money. Her spouse was a spender, she was a saver; she liked to balance the
checkbook to the last penny, her husband hadn’t entered anything in the
register in years. The result was numerous volatile eruptions and conflict that
both she and her spouse wanted to avoid. It shouldn’t have been a surprise.
 Experts agree that finances can be the number one cause of marital strain.
It’s understandable that financial struggles can cause strain because how
people spend money is never
EXTRA INFO SLIDES
Financial Planning Process thinking
process that help achieve goals.
STEP 1
Set Goals
Specific
Measurable
Attainable
Realistic
Time-bound
SMART Goals Timelines
Short Term
– Up to three months
Intermediate Term
– Three months to one year
Long Term
– Longer than one year
• DELAYED GRATIFICATION
Assignment 1.3
My SMART Goals
Page 7
Save $25 so
I can take
my friend
out for
pizza.
1st of next
month
Short term
$25.00
$25.00
$7.50
$7.50
Step 2
Analyze Information
Cash Flow
A measure of
the money you
receive and the
money you
spend.
Assignment 1.4
Personal Spending Record Page 8
Step 3
Create A Plan
Decision Making
The process of considering and
analyzing information in order
to make a decision.
Opportunity Cost
Choosing one option may mean
giving up altogether another
goal.
It’s a tradeoff!
Assignment 1.5
My Decision
Pros
Cons
Step 4
Implement the Plan
Three Rs of Money
Reality
Responsibility
Restraint
Step 5
Monitor and Modify
the Plan
Monitor and Modify
Are your existing goals still
worth doing?
Is there a new goal to add to
your list?
Is there an existing goal you
want to drop or change?