Warm-Up--What Do You Know About Budgets?

• Use a Word table to create a KWL Chart (or copy and paste one from an earlier activity).

• What do you know?

• What do you want to know?

• On Friday reflect what you have learned.

Objectives

• Identify sources of income

• Identify expenses

• Distinguish between fixed and variable expenses

• Develop a personal budget

• Use correct formulas in Excel

Hook

• How would you like $500 to spend on Prom? Well, if you saved $20 per week between now and Prom, you would have it. If you need more, them save a little more. Budgeting will help you do just this.

What Expenses Do I Have?

Food

Phone Entertainment

Car

Clothes

Expenses

Budgeting Your Financial Income

Calculate Take-Home Pay

• What would you do with a budget of $5,000 per month?

• If your gross salary is $5,000, would your take-home pay be the same?

• Justify your answer?

Know These Terms

• Budget

• Earned Income

• Unearned Income

• Fixed Expenses

• Variable Expenses

Definitions

• Earned income – wages, salaries, tips

• Unearned income – child support, interest income, gifts, allowances, prizes

• Budget – a planning tool that can be used to help individuals and families manage their money.

Expenses

• Money paid out of your monthly income – Fixed – the same every month (car payment)– Variable –may vary every month (clothing)

Why Budget?

Why Budget

• Financial planning helps you use your money to get the most out of life.

• Financial planning helps be prepared for emergencies.

• Financial planning helps you save for special items.

Monthly Salary Calculation

Payment Interval Multiply By Divide By

each week 52 12

every 2 weeks 26 12

twice a month 24 12

every 3 weeks 17.34 12

*Include other income such as interest or other.

• Paid $1600 bimonthly

• 1600 X 24 = 38,400/12 = 3200

Establish Estimates for Your Monthly Expenses

Category %

Housing 28.3

Transportation 23.9

Food 10.8

Personal insurance and pensions 9.1

Personal taxes 5.7

Entertainment 5.2

Clothing and services 4.3

Health care 3.9

Miscellaneous expenses 2.3

Education 2.1

Personal care products and services 1.0

Cash Contributions .6

Reading .5

Savings 2.3

Total 100.

Typical Budget Percentages

Income   3000

Savings Interest Earned   50

Total Income   3050

     

Fixed Expenses    

Housing   500

Telephone   150

Transportation   500

Credit/Student Loan   400

Savings   100

Total Fixed Expenses   1650

     

Variable Expenses    

Clothing/Personal Care   250

Food   400

Household Supplies   100

Medicine/Health   200

Insurance   300

Entertainment   150

Total Variable Expenses   1400

     

Comparison    

Total Cash Available   3050

Less Total Expenses   3050

Cash Balance   0

Sony Cruz

Budget

What other expenses might you have that are not on Sony’s

budget?

Assignment

• 1 – Create a personal budget in Excel based on your current financial status.

• 2 – Create a personal budget in Excel based on the salary for a single person for a profession that you are exploring

• 3 – Create a family budget in Excel

• 4 – Create a chart for each spreadsheet

Website for Personal Budget

• http://www.personalbudgeting.com/sample/sample.html

http://www.salary.com/home/layoutscripts/homl_display.asp

Begin the Assignments

• Open Excel

• Create Sample problem

• Make a chart of your income (column)

• Make a chart of your expenses. (pie)