$ BUDGETING $

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BUDGETING

• A Penny Saved Is A Penny Earned

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Budget? What Budget!?

• A spending and savings plan based on an estimate
  of income and expenses.

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Where does our money go???

• A budget can
• Help a person live within their means
• Help a person save toward important goals.
• Forces a person to constantly evaluate their
  spending and savings plan.
• Provide the financial records you need for tax
  and investment purposes.
• Give, at any point in time, a clear picture of
  your financial health and habits.

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Five Easy Steps to Plan a Budget

• Consider Financial Goals
• Estimate Income
• Estimate Expenses
• Plan for Savings
• Develop a Trial Budget

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What is a Percentage?

• Top part of a fraction whose bottom part
  (denominator) is 100
• Examples
• 50 50/100 1/2
• 25 25/100 1/4
• 100 100/100 1

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Why do we use s

• Percentages are useful because they allow us to
  compare things.
• Example
• Test Scores of 67/80 and 51/60
• It is not easy to say which of these scores is
  the best.

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Changing a Decimal to a

• Rule
• Multiply the decimal number by 100.
• Ex.
• 0.27 x 100 27
• Shortcut
• Move the decimal place 2 places to the
  right and add a percentage symbol.

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Changing a to a Decimal

• Rule
• Divide the percentage by 100
• Example
• 27 0.27
• Shortcut
• Move decimal point 2 places to the left

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Percentage Problems

• 1 apple compared to 3 apples
• 2 basketballs out of 5 basketballs
• 3 out of 100
• 3 out of 20
• 157 out of 1200

• 33
• 40
• 3
• 15
• 13

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Budgeting - Income

• Income
• Gross Income/Pay
• before taxes
• Taxable Income
• Net Income/Pay
• after taxes
• Take-Home Pay
• Formula
• Gross Income - Taxes Net Income

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Calculating Monthly Income

• 10 x 8hrs 80/day
• 80 x 5 days 400/week
• 400 x 4 weeks 1600
• A Better Way
• 400 x 52 weeks 20,800/year
• 20,800 / 12 months 1733.33
• Difference of 133.33 a month (1,599.96/yr)
• Rule Never multiply by 4 always multiply by
  52 weeks, and then divide by 12 months.

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Rounding Numbers

• When dealing with money, always round to the
  nearest cent (7.34)
• Examples
• 7.34457
• 7.34
• 7.34597
• 7.35
• 7.34797
• 7.35

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Budgeting - Expenses

• Three Types
• Savings
• Fixed
• Flexible (Variable)

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Expenses - Savings

• set aside to be used later.
• Every budget should have a savings plan.
• Examples
• Savings Account
• Emergency Fund
• College Fund
• Holiday Fund

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Expenses - Fixed

• Expenses that you have already promised to pay on
  a certain date and in certain amounts.
• Examples
• Rent/Mortgage Payments
• Loans - Car, Boat, Education
• Insurance - any type

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Expenses - Flexible

• Expenses that vary in amount and usually in
  frequency.
• Examples
• Food (dining in and out)
• Utilities (Cable, phone, electric, etc.)
• Clothing (work/play)
• Transportation (gas/bus/MAX)
• Entertainment (movies, CDs)
• Personal (haircut, hygiene, etc.)
• Gifts (birthday, anniversary, holidays)
• Credit Cards (Visa, Mastercard, etc.)

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Properly Formatted Budget Sheet
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Budget Sheet Outcomes

• Income should be equal.
• Every dollar should be accounted for

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Calculating Overtime Pay

• Time-and-a-half 150
• Take hourly wage and multiply by 150
• Round answer to the nearest cent (12.23)
• Multiply hourly overtime wage by number of
  overtime hours worked in a month.

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Calculating Overtime Pay

• Example
• 8.15 x 1.5 or 150
• 12.225
• 12.23
• 12.23 x 8 hours worked
• 97.84

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Stop Here
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Balance Sheet

• Asset
• Item of monetary value that one owns,
  including saved money.
• Examples
• Car
• Home
• Clothes
• Stereo/CD/DVD/TV

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Balance Sheet

• Liability
• Debt owed by an individual, family, or
  company
• Examples
• Mortgage
• Loans
• Credit Cards

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Budget Sheet vs. Balance Sheet

• A Budget Sheet
• Compares a persons monthly income against
  their monthly expenses
• A Balance Sheet
• Compares an individuals total assets
  against their total liabilities.
• Difference between total assets and total
  liabilities is known as a persons Net
  Worth.
• Formula
• Assets - Liabilities Net Worth

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Properly Formatted Balance Sheet
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FIN
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