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Money Management -- Budgets

Money Management -- Budgets. Creating a personal budget is an ongoing, lifelong skill for personal and career purposes…. After completing this unit, you should be able to: Analyze & prepare a personal budget… Evaluate why and how debt occurs…

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Money Management -- Budgets

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  1. Money Management -- Budgets

  2. Creating a personal budget is an ongoing, lifelong skill for personal and career purposes… • After completing this unit, you should be able to: • Analyze & prepare a personal budget… • Evaluate why and how debt occurs… • Prepare & analyze personal short & long term goals… • Determine ways to increase personal income & avoid debt… • DON’T LET THIS HAPPEN TO YOU!!! • Theo doesn’t want to go to college – he wants to be “regular people” • http://www.youtube.com/watch?v=Td_rWR5CpBA

  3. PERSONAL FINANCIAL GOALS • Financial Plan: set of goals for acquiring, saving & spending money… • Financial Goals: • Measurable objectives related to acquiring or spending money… • Can be short- or long-term… • SMART Goals: • Specific • Measurable • Attainable • Relevant • Timely • http://www.youtube.com/watch?v=d2Tdxekvy7c&feature=related • http://www.youtube.com/watch?v=3y0Jja52B2o • http://www.youtube.com/watch?v=YmOS3dj9h0s&feature=related • How will you catch your dreams???

  4. Needs / wants Needs Wants desires… not necessary for survival… • “must have’s”… • survival… http://www.youtube.com/watch?v=eVajZKcZBiU

  5. values Values (beliefs) • Different for everyone… • Family, friends, experiences… • Affect how you think about money… Consider your values, then prioritize your needs & wants to direct your financial future…

  6. Building wealth Just because someone earns a million dollar salary doesn’t mean they are a millionaire!!! • What is wealth??? • A plentiful supply of money or valuable goods… • Assets: things you own… monetary value… • Liabilities: debts you owe… Net Worth = Assets – Liabilities http://www.celebritynetworth.com/ • Disposable Income: (net pay/income) “take home” money used to pay expenses… • Discretionary Income: what is left after all expenses are paid…

  7. NET WORTH EXAMPLES • Oprah Winfrey • http://www.celebritynetworth.com/richest-celebrities/actors/oprah-net-worth/ • Michael Jordan • http://www.celebritynetworth.com/richest-athletes/nba/michael-jordan-net-worth/ • Mark Zuckerberg • http://www.celebritynetworth.com/richest-businessmen/ceos/mark-zuckerberg-net-worth/ • Donald Trump • http://www.celebritynetworth.com/richest-businessmen/richest-billionaires/donald-trump-net-worth/ • Bill Gates • http://www.celebritynetworth.com/richest-businessmen/richest-billionaires/bill-gates-net-worth/ • LeBron James • http://www.celebritynetworth.com/richest-athletes/nba/lebron-james-net-worth/

  8. Samples Pay Checks and Paystubs

  9. Who is FICA and What is it for? • FICA (Federal Insurance Contributions Act) • Which represents the tax that pays for retirees, people with disabilities, and children of deceased workers • The employer pays the same percentage into Social Security and Medicare • If self-employed, one is responsible to paying two times the Social Security and Medicare

  10. 10 Major Payroll Deductions • Some have fixed amounts while other change depending on type or work or location • Federal Income Tax: 10.00%-39.00% • State Tax: 1.40%-8.97% • Local Tax: 1.00%-4.00% • Social Security/ Medicare (FICA):5.65% • Unemployment: <1.00% • Emergency Services: $10.00-$20.00 • Health Insurance : variable by employer • Union or Association Dues: variable • Pension Contribution: variable • 401(k), 403(b), 457, etc. (voluntary): variable

  11. Categorizing expenses Fixed Expenses Stay the same each month… Variable Expenses Change from month to month… Where does your money go??? As teenagers, your expenses are limited…

  12. What is a budget? • Useful tool to track your money and spend wisely… • Created for a specific time period (usually 1 month)… • You will need to know: • the amounts of income for the period & total… • the fixed & variable expenses & total… • Subtract the total expenses from the total income (discretionary income)… • If discretionary income is negative, reduce expenses…

  13. Benefits to creating a budget • Personal Benefits??? • Business Benefits??? • Getting Your Teen on a Budget: • http://www.youtube.com/watch?v=YNHbIoL2p-Q

  14. Why Do We Need to budget??? Ask Bill Cosby… • http://www.youtube.com/watch?v=LlJnq8YhhHw • http://www.youtube.com/watch?v=FYox38Nuho4&feature=related • http://www.youtube.com/watch?v=bEfp0oxSIR0&feature=related

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