Budgeting Concepts

1
Budgeting Concepts

• An Introduction to Building a Personal Budget

2
What You See Is NOT Always What You Get!!!

• Gross annual income your salary for a year
  BEFORE they take out taxes
• Taxes money collected by government agencies to
  fund government programs (roads, courts,
  retirement, welfare, etc.)

3
Taxes NOT an option!!!

• Federal Income Tax depends on how much you make
  per year and your family situation (link)
• Social Security Tax retirement (.062 income)
• Medicare Tax medical benefits for retirement
  (.0145 income)
• State Income Tax depends on how much you make
  per year and your family situation (link)

4
What Goes in Your Pocket???

• Net annual income the money you get to deposit
  in the bank after taxes are taken out
• Monthly budget net annual income divided by 12
  the money you can save and spend

5
What Must You Spend It On? - TRANSPORTATION

• Car payment your monthly payment to the bank
  for loaning you money to buy a car
• Insurance premium your monthly payment to the
  insurance company so you can drive your car
• Fuel costs paying for gas for your car

6
What Must You Spend It On? - HOUSING

• Rent your monthly share of housing costs for a
  home you do not own
• Security deposit returnable money paid when
  renting for possible damages
• First and last money paid to cover first and
  last month of rent, in case you skip out without
  notice

7
What Must You Spend It On? - UTILITIES

• Utilities payments to a variety of companies
  that provide services to your home (e.g., trash
  pick up, electricity, cell phone, etc.)
• Included when renting, the landlord may pay
  some of the utilities, especially if in an
  apartment or condo look for ads that mention
  this perk

8
What Must You Spend It On? OTHER EXPENSES

• Groceries food you buy regularly at the market
  to live on
• Clothing what you wear to work, to play, to go
  out dont forget essentials
• Savings money set aside for future use or for
  emergencies
• Entertainment going out funds, video rental,
  concerts, etc.

9
The king of all expenses DISPOSABLE INCOME

• Any money you have left over after all other
  expenses have been accounted for, including
  REQUIRED savings, is called disposable income
• Spend it on anything you want!!! stock market,
  vacations, gifts for your friends, a shopping
  spree, donations to charity

10
The Nitty-Gritty of the Budget

• Budget percent the percentage out of 100 you
  allocate to an expense
• 28 to housing costs (of 1,000) 280
• Budget dollars the dollars represented by the
  percentage
• 28 to housing costs (of 1,000) 280
• Actual dollars what you actually spend on an
  expense
• Rent per month for 2 bdrm condo 350
• Difference difference when comparing budget to
  actual dollars
• 350.00 - 280.00 70.00 OVER BUDGET

11
Guidelines for Getting Started

• Job depends on GPA
• You wont know salary until you have chosen job
  from online list
• You may share housing with friends (same gender
  only)
• You may split utilities with roommates
• You will need to find REAL housing available at
  this time

12
Whats Next

• Read through the assignment sheet CAREFULLY
• Quiz (10 points) on content at end of period!!!
• Choose job and get salary
• Review template for presentationsee sample
  online and start when ready!!!

13
Next class period

• Starting the budget spreadsheet
  TOGETHER!!!!!!!!!!!!!!!!!!!!!!!!!!!!