Warm-Up--What Do You Know
About Budgets?
• Use a Word table to create a KWL
Chart (or copy and paste one from an
earlier activity).
• What do you know?
• What do you want to know?
• On Friday reflect what you have
learned.
Objectives
• Identify sources of income
• Identify expenses
• Distinguish between fixed and variable
expenses
• Develop a personal budget
• Use correct formulas in Excel
Hook
• How would you like $500 to spend on
Prom? Well, if you saved $20 per week
between now and Prom, you would have
it. If you need more, them save a little
more. Budgeting will help you do just this.
What Expenses Do I Have?
Clothes
Food
Car
Expenses
Phone
Entertainment
Budgeting Your Financial
Income
Calculate Take-Home Pay
• What would you do with a budget of
$5,000 per month?
• If your gross salary is $5,000, would your
take-home pay be the same?
• Justify your answer?
Know These Terms
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•
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•
•
Budget
Earned Income
Unearned Income
Fixed Expenses
Variable Expenses
Definitions
• Earned income – wages, salaries, tips
• Unearned income – child support, interest
income, gifts, allowances, prizes
• Budget – a planning tool that can be used
to help individuals and families manage
their money.
Expenses
• Money paid out of your monthly income
– Fixed – the same every month (car payment)
– Variable –may vary every month (clothing)
Why Budget?
Why Budget
• Financial planning helps you use your
money to get the most out of life.
• Financial planning helps be prepared for
emergencies.
• Financial planning helps you save for
special items.
Monthly Salary Calculation
Payment Interval
Multiply By
Divide By
each week
52
12
every 2 weeks
26
12
twice a month
24
12
every 3 weeks
17.34
12
*Include other income such as interest or other.
• Paid $1600 bimonthly
• 1600 X 24 = 38,400/12 = 3200
Establish Estimates for Your
Monthly Expenses
Typical Budget Percentages
Category
%
Housing
28.3
Transportation
23.9
Food
10.8
Personal insurance and pensions
9.1
Personal taxes
5.7
Entertainment
5.2
Clothing and services
4.3
Health care
3.9
Miscellaneous expenses
2.3
Education
2.1
Personal care products and services
1.0
Cash Contributions
.6
Reading
.5
Savings
2.3
Total
100.
Income
Savings Interest Earned
Total Income
3000
50
3050
Sony Cruz
Budget
Fixed Expenses
Housing
500
Telephone
150
Transportation
500
Credit/Student Loan
400
Savings
100
Total Fixed Expenses
1650
Variable Expenses
Clothing/Personal Care
250
Food
400
Household Supplies
100
Medicine/Health
200
Insurance
300
Entertainment
150
Total Variable Expenses
1400
Comparison
Total Cash Available
3050
Less Total Expenses
3050
Cash Balance
0
What other expenses might you
have that are not on Sony’s
budget?
Assignment
• 1 – Create a personal budget in Excel
based on your current financial status.
• 2 – Create a personal budget in Excel
based on the salary for a single person for
a profession that you are exploring
• 3 – Create a family budget in Excel
• 4 – Create a chart for each spreadsheet
Website for Personal Budget
• http://www.personalbudgeting.com/sample
/sample.html
http://www.salary.com/home/layoutscripts/homl_display.asp
Begin the Assignments
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Open Excel
Create Sample problem
Make a chart of your income (column)
Make a chart of your expenses. (pie)