Budgeting and Finance

1. Budgeting and Finance Introduction to Business and Technology

2. Describe situations that may occur as a result of poor budgeting. Bell Ringer: Be prepared to share your answers with the class

3. GPS Focus Standards • BCS-BE-26: The student explains the process in developing a budget. • BCS-BE-27: The student analyzes the financial statements of a business and utilizes those statements to make important business decisions. • BCS-BE-28: The student identifies financial aspects associated with opening a business. • BCS-BE-29: The student completes records which are fundamental for any business.

4. Essentials Questions • How can a budget increase your profits? • What documents do you need to make wise decisions concerning the financial health of your business? • How much does it cost to open a business? from where do those numbers come? • Why are your bank records and credit report so important? • How do you maintain a good credit score?

5. Budgeting Techniques • Lesson Objectives: • Identify the purpose of a budget • Describe steps for preparing a • budget • Describe characteristics of a • successful budget

6. Budget A plan for managing income and expenses over a certain period of time.

7. Purpose of Budgets • Live within your income. • Make wise buying decisions. • Avoid credit problems. • Plan for financial emergencies. • Develop money management • skills • Achieve your financial goals.

8. The Budget Process • Set Financial goals -What do you want to achieve? • Plan Budget Categories • Maintain financial records • Evaluate your budget

9. 1. Set Financial GOALS: (Affect what we spend our $$ on!) • Short-Term Goals • Long-Term Goals • SMART Approach

10. SMART Approach

11. SMART Goal Example I will save $100/month for 18 months from my part-time job to purchase a car by July 31, 2014. Specific-purchase a car Measurable-$100/month Action-oriented-I will save Realistic-from my part-time job Time-based-July 31, 2014

12. Income Paycheck Allowance Scholarships Borrowed Money Revenue Expenses Needs Wants 2. Plan Budget Categories Savings

13. Fixed Variable Two Types of Expenses

14. Fixed Expenses • Costs that occur on a regular basis and are the same amount each time • Rent • Mortgage payments • Insurance premiums

15. Variable Expenses • Costs that differ each time and may not be as easy to estimate • Food • Clothing • Utilities i.e., telephone, electricity, water

16. Savings Food Clothing Household Transportation Health and personal care Recreation and Education Gifts and contributions Personal Budget Categories

17. Allowance • The amount of money you plan to use for a certain budget category

18. 3. Maintain financial records • Record income and expense • checkbooks, bank statement • Prepare an income and expense • summary • spreadsheets, budgeting • software

19. 4. Evaluate Your Budget • Budget variance - difference between actual spending and budgeted amount • Deficit - Actual spending is greater than budgeted amount • Surplus - Actual spending is less than budgeted amount

20. Characteristics of an Effective Budget • Realistic – reflect current • income and planned spending • Flexible – adaptable to • unexpected expenses • Regular evaluation – every few • months • Well planned and clearly • communicated – involve all family • members • Simple format – user friendly

21. Review Questions • Which of the following is an example of a fixed cost? • clothing • accessories • car payment • entertainment

22. Review Questions 2. Which of the follow is an example of a variable cost? • rent • insurance premiums • water bill • mortgage payment

23. Review Questions • A major purpose of a budget is to: • assist with comparison shopping • achieve financial goals • reduce a person’s enjoyment of life d. gather data for using credit cards

24. Review Questions 4.The most uncertain aspect of the budgeting process involves: • estimating variable expense • determining net worth • estimating fixed expense d. setting financial goals

25. Review Questions 5.The following is a characteristic of an effective budget: • should be written in ink • limited to one page • should not change d. should be evaluated regularly