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Monday January 30 th Personal Finance

Monday January 30 th Personal Finance . Journal : 5 reasons you need to budget Which reason is most important to you and why? How can you start budgeting now? Self Assessment Net Cash Flow Activity Budgeting PowerPoint Notes . Budgeting Essential Questions.

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Monday January 30 th Personal Finance

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  1. Monday January 30thPersonal Finance • Journal: 5 reasons you need to budget • Which reason is most important to you and why? • How can you start budgeting now? • Self Assessment • Net Cash Flow Activity • Budgeting PowerPoint Notes

  2. BudgetingEssential Questions • Why is it important to have a balanced budget? • How does evaluation play a role in the budgeting process?

  3. Budget • A budget is a plan for managing your money for a given period of time • A successful budget is • Carefully planned • Practical • Flexible • Written

  4. Where is the money coming from? • Income: money you receive as payment for goods or services • Hourly • Salary • Interest • Capital gains • Commission • Discretionary Income: money left after paying essentials

  5. Gross Income vs. Net Income Gross Income – Payroll Deductions = Net Income

  6. Where is your money going? • Expenses: what you spend money on (needs and wants) • Fixed expenses: cost the same amount every time • Variable expenses: fluctuate in amount • Periodic or occasional: don’t pay every month, can be fixed or variable • Cash Flow: movement of money in and out • Income – Expenses = Cash Flow

  7. What type of expense is it? • Groceries? • Cable TV Bill? • Car loan payment? • Gifts? • Auto repair bill?

  8. The Most Important Expense • PYF: Pay Yourself First! • Immediately setting aside money into savings whenever you receive money • Used to meet long-term finance goals • Built into your budget

  9. Net Worth • Assets – Liabilities = Net Worth • Asset: item that has economic value • Market Value: price at which an asset would sell • Liquidity: Ability to convert an asset to cash and maintain value • Liability: Financial obligations (debts) that must be paid • Personal Balance Sheet: List of assets, liabilities, and net worth

  10. Analyze your budget • 0 Balance: income is equal to expenses • Variance: difference between estimated and actual expenses • Surplus: An amount left over when requirements have been met (if you spend less than you had expected) • Deficit: the amount by which a sum of money is less than the required amount (spending more than expected)

  11. Things to remember • Set SMART goals • Analyze information (expenses, income, etc) • Create a plan (realistic and flexible) • Implement the plan (follow your budget!) • Monitor and modify the plan (it is not set in stone, if it is not working then change it!)

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