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Unit 5

Budgeting. Unit 5. Financial Goals/Plans. Determine Career and earnings Living Arrangements-type? Where? Family Life Choices-Family or not Lifestyle Choices-Free time away from work Fiscal Plans-financial stability, retirement. Budgeting.

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Unit 5

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  1. Budgeting Unit 5

  2. Financial Goals/Plans • Determine Career and earnings • Living Arrangements-type? Where? • Family Life Choices-Family or not • Lifestyle Choices-Free time away from work • Fiscal Plans-financial stability, retirement

  3. Budgeting • Definition-is a plan for dividing income among spending and savings options.

  4. Reasons for Budget • To guide you in the right direction • Lets you control your money better than the other way a round • Will tell you if you live in your means • Helps you to met savings goals

  5. Reasons for Budget • Reveals where you spend money which may help you to revise your spending plans. • Keep you out of debt or help you to get out of debt.

  6. Reasons for Budget • Frees up cash to be used on desired wants • Focus on common goals for all • Prepare for emergencies

  7. Budgeting 3 Main Parts • Timeframe-the time that the budget is created for-weeks, months, years. • Income-money that is brought in • Expenses-money that is spent

  8. Income • Determine sources-job, other revenue • Determine amounts-using tax information • Determine frequency of payments

  9. Income Types • Gross Income-money earned before taxes • Your earn $10 an hour • Net Income-money earned after taxes • After taxes $10.00 • SS 6.2%, Fed 10-35%, Medicare 1.45%, IL 5% • Total Pay $7.23 per hour

  10. Expenses • Determine the various items where money is spent • Determine amounts • Determine categories

  11. Expenses-two types • Fixed Expense-the same amount each time it is spent • Ex: Mortgage (rent), Car payment • Variable Expense-will have various amount spent each time • Ex: Utilities-power, water

  12. Steps to Creating a Budget Chose financial goals. Track income and expenses. Prepare a budget worksheet. Review and adjust your budget worksheet.

  13. Steps to Creating a Budget Determine a timeframe of measurement List income and expense amounts Determine categories of expenses Put amounts in categories

  14. Debt • Credit Card Debt • Overextended loans • Paycheck to paycheck

  15. Bankruptcy • Chapter 7-Liquidation • Individuals-get to keep house-credit rating is poor for at least 7 years. • Businesses-Go completely out of business • Easiest and fastest way to settle debts • State Law determines what a debtor gets to keep-the rest of assets are sold to pay debts.

  16. Bankruptcy • Chapter 11: Reorganization • Individuals or Business • Payment plan for debts • Debtor gets to retain control of assets, but make plan that is approved by the court • Poor credit rating for 7 years


  17. Bankruptcy • Chapter 13: Wage Earner Plan • Individual or small businesses • Owes less than $807,750 in secured debt or less than $269, 250 in unsecured debt • Wage earner plans give debtors the chance to continue operation and get back on their feet. • Debtors do not give up their current assets and property to pay debts; • Agree to an established and monitored payment plan • Use their future income to pay creditors over time.

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