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)
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