Budget

1. Budget How to budget your money?

2. Give yourself five points if you have a budget. Give yourself five points if you have a checkbook. Deduct a point if you have ever bounced a check. Deduct a point if you bought something this week without comparison shopping. Give yourself a point if you bought a store brand, rather than a name brand item this week. Give yourself five points if you have a savings account. Give yourself five points if you added any money to your savings account this week. Give yourself five points if you pay your own car insurance (or part of it) Deduct five points if you routinely carry more than $10.00 in your purse or wallet. Give yourself five points if you have a method of recording what you spend. “Budget Busters”

3. “Some Money Facts” • 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 • What’s the biggest expense item for teenagers? FOOD!

4. Money Matters: • How many times a day do you spend money? • The average person spends money 3 times a day. • Money brings happiness – Money problems bring unhappiness • Money problems stay with you for the rest of your life. • Top reason for divorce is financial. Finances affects everything else in your life.

5. 2010 in Missouri • Nearly 100,000 people under 25 filed for bankruptcy • Average in the US is 1 in 65 file for bankruptcy • Average in Missouri is 1 in 30 file for bankruptcy • Rise in 18-25 year olds moving back in with parents • College students have $3,000 in credit card debt • 10% owe $10,000 or more in credit card debt • Chapter 7 bankruptcy – no payment necessary • Chapter 13 bankruptcy – set up payment plan to pay back • 5,539 in 2013 filed for bankruptcy by April

6. Missouri had the 16th lowest cost of living in the United States for the year. • The median household income for Missouri in 2010 was $44,306 • United States median is $50,046 • Adair County is $32,015 • Macon County is $37,130 • Teens Today – Spend and Influence $172 billion annually ($105 of own money, $48 of family money) • Average of $104 per week • Without a monthly check most families would last 1 to 2 mos.

9. Personal Savings • Does not include 401 K, retirement, etc. • This is for emergency, unplanned bills. • A lot of people turn to their retirement which is penalized and taxed heavily and you end up owing more money.

10. 87% of retires are retiring with $10,000 or less • Wealth is not what you spend but your net worth or accumulative wealth, what you have. • 80% of millionaires have accumulated slow and steady • What is the portrait of a millionaire? • Live in same city/town for over 20 years • Live below their means • Married 1 time and still married • Usually owns a chain of stores or similar • At age 20 if you save $200.00 a month at 10% interest you will be a millionaire by the age of 55.

11. Ways to improve your finances • Make more money • Cut your expenses • “Wait and win the lottery” system • Have a budget

12. Discussion: • What is a Budget? • Why do you have a budget?

13. Budgeting Terms • Budgeting • Money management • the process of managing money which includes investment, budgeting, banking and taxes. • Gross income • How much you make before taxes. • Net income • Gross income minus taxes, allowances, and deductions. An individual's net income is used to determine how much income tax is owed.

14. Banking Terms • Bank accounts • an arrangement made with a bank whereby one may deposit and withdraw money and in some cases be paid interest. • Joint bank account • is a bank account shared by two or more individuals. • Separate bank account • A privately managed investment account opened through a brokerage or financial advisor that uses pooled money to buy individual assets.

15. Banking Terms Cont’d… • Withdrawal: • Taking money OUT of a bank account • Deposit: • Adding money to a bank account • Savings account: • a bank account that earns interest • Checking account: • an account at a bank against which checks can be drawn by the account depositor

16. Interest & Interest Rates • Interest: • money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt • Interest rate: • the percentage of a sum of money charged for its use • Compound interest: • interest calculated on both the principal and the accrued interest • Where are interest rates applied? Give examples Principal x Rate x Time

18. Interest Rates Cont’d… • Annual Percentage Yield (APY) • Evaluates how much a deposit earns you - or how much a loan costs you • Includes compound interest • Annual Percentage Rate (APR) • Charge for borrowing or money made by investing, per year • Why would you look at APY as opposed to APR? • Because it is a standardized way of comparing investments. • Borrowing = Lowest APY • Lending (by depositing money in the bank) = Highest APY

19. Good v. Bad Interest Rates • Varies by state • Credit Cards - (want low) • Average = 15% • 10.99-22.00% • 0%? • Savings Account - (want high) • Average = .17% • .01-4.0%

20. Good v. Bad Interest Rates cont’d… • Loans – (want low) • School loans = 3-8% • Average student loans $29,400 http://money.cnn.com/2013/12/04/pf/college/student-loan-debt/ • Set by Congress • Car loans = 6-18% • What's your credit history and credit score like? • Are you buying a new or used vehicle? • How long will you take to pay off this loan?

21. Budgeting Terms cont’d… • Fixed expenses: • Expenses that DO NOT change month to month • Ex. Rent, cable bill, insurance • Variable expenses: • Expenses that change month to month • Groceries, gas bill, electricity • What is fixed INCOME and variable INCOME? • What is a “census”? • an official count or survey of a population, typically recording various details of individuals.

22. http://www.creditloan.com/blog/how-the-average-us-consumer-spends-their-paycheck/http://www.creditloan.com/blog/how-the-average-us-consumer-spends-their-paycheck/

23. Family Budget Activity: • For the next four days you will create a monthly budget project for a family using the monthly income of $4,000 per month (1 day=1 week, so groups get installments of $1,000 each day (week), which you will have to deposit in order to use.)