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Spending Plan

Discover the importance of a spending plan, setting financial goals, income sources, expense types, and the 6-step spending plan process for better money management. Learn to evaluate, control, and make necessary changes to your spending plan.

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Spending Plan

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  1. Spending Plan February 3, 2011

  2. Spending Plan • A spending plan is a financial statement you can use to assist in money management • also known as a budget

  3. Set Financial Goals Set financial goals. A financial goal should include the following elements- SMART • Specific • Measurable • Attainable • Realistic • Time bound

  4. Why is a Spending Plan important? • Giving a person an understanding of where their money is going • Tracking income and expenses • Help meet financial goals • Help people live within their income and make ends meet • Reduce the need for using credit

  5. Sources of Income • Wages or Salaries • Tips • Withdrawal from savings • Interest earned on savings accounts • Scholarships • Monetary gifts

  6. 2 Main Components Income: money earned Expense: money spent 2 types of Expenses • Fixed- have to be paid by specific date • (Food, housing, electricity) • Flexible- have to be paid off but often not by certain date • (Food, goals, etc.)

  7. Activity • With your table I will give you a set of Spending Plan Game Cards • You will have 3 cards that say • Income • Flexible Expense • Fixed Expense • I will read a list of things and you have to hold up the card with the right word that matches it

  8. Rent

  9. Rent Fixed Expense

  10. Wages

  11. Wages Income

  12. Groceries

  13. Groceries Flexible Expense

  14. Internet Bill

  15. Internet Bill Fixed Expense

  16. Tips

  17. Tips Income

  18. Utilities

  19. Utilities Fixed Expense

  20. Gifts from Family

  21. Gifts from Family Income

  22. Savings

  23. Savings Fixed Expense

  24. Car Registration

  25. Car Registration Fixed Expense

  26. Eating Out

  27. Eating Out Flexible Expense

  28. Scholarships

  29. Scholarships Income

  30. Hobbies

  31. Hobbies Flexible Expense

  32. Net Loss and Net Gain • Net Loss- have more expenses than income during that period on spending plan • Net Gain- more income than expenses

  33. Spending Plan Process 6 Steps to the Spending Plan Process • Set financial goals • Organize • Decide • Implement • Control • Evaluate

  34. 1. Set Financial Goals Set financial goals. A financial goal should include the following elements- SMART • Specific: State exactly what is to be done with the money involved • Measurable: write the exact dollar amount • Attainable: determine how it can be reached • Realistic: do not set the goal for something unattainable • Time bound: Specifically state when goal needs to be reached

  35. 2. Organize • determine the appropriate recording format to use • select categories for the spending plan • select a time period

  36. 3. Decide • make realistic decisions and estimates for the categories

  37. 4. Implement • put the spending plan into effect. • Keep records of all income and expense.

  38. 5. Control • Occurs simultaneously with implementation. • Record keeping allows you to realize potential problems.

  39. 6. Evaluate • determine if the previous steps in the spending plan have worked. • Compare estimated amounts to the actual amounts or received or spent. • Have goals been met? • Assess the progress made toward goals. • Make necessary changes

  40. Spending Plan Varies • Needs to have enough detail so a person knows where the money is going regardless of the amount • The categories listed on a spending plan will vary depending on your financial goals, values, needs and wants

  41. Changes A spending plan is something that is re-evaluated as lives and situations change

  42. www.salary.com How much will you get paid? Depends on where you live

  43. www.ksl.com or www.craigslist.com Apartment in Utah - KSL Outside of Utah - craigslist

  44. www.shaneco.com Major Purchase engagement ring

  45. www.mazdausa.com Major Purchase A car

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