Introduction to Budgeting

BUDGETING

A plan for saving and spending money.

Personal Budget

​Peter

Peter, 19 lives in a 2 bedroom apartment, which he shares with his roommate. They split the cost of rent ($800 per month) and utilities.

Multiple Choice

How much does Peter pay for rent?

• $400.00

• $800.00

• $200.00

• $500.00

Income

​How much does Peter earn?

Peter works full-time (40 hours a week) at Wawa and makes $7.50, which is about $300.00 a week ($1,200.00 per month/$14,400 a year before taxes). Based on the expectation that 33% of his salary will be deducted for taxes, Peter will have $804.00 to spend each month.

Fill in the Blank

If Peter spends $400 on rent each month and wants to save $100, how much does he have left to budget for his utility bills and other items?

$

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The Basics of Budgeting

By Aaron Walker

Learning Objective-

I can create a budget, by understanding wants and needs and using money savings tips.

Think of it as a road map for your personal finance ​

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WHAT IS A BUDGET?

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• a plan for spending and saving

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Wants vs. Needs

What is the difference between wants and needs?

Wants- Something that's just nice to have.

Needs- Something we have to have to survive.

Use SMART Goals setting to balance the scales​

​Starting out

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• Determine my income and expenses

• Identify my financial goals (immediate, short-term, long term)

WANTS

Phone

Eating out

Gym Membership

Haircuts

Entertainment

Your needs should always take priority

Wants vs Needs​

• Discretionary Expenses are wants

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• Non-discretionary Expenses are needs

NEEDS

Clothing

Rent

Gas

Emergency Saving

Car insurance

School Books

Groceries

Car maintenance

Unexpected expenses.

Link is on Blackboard

Poll

Can something be both a need and a want?

• Yes, there are examples of both

• No, you can either want or need you can do both

Multiple Choice

Want or Need?

You need a pair of shoes

​But you want a pair of Jordans

One shoe costs about 3x as much money, but they both protect your feet

Your values help to determine what's important

Multiple Choice

Want or Need?

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• FIXED Expenses that you pay every month and the amount stays the same.

  VARIABLE Expenses that you pay every month but the amount changes.

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BOTH can be non-discretionary

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​Fixed Expenses vs. Variable Expenses

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Multiple Choice

Want or Need?

How much money do you have coming in?

​​Determine Income

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How much is going out every week/bi-weekly/monthly?

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(Fixed/Variable/Discretionary)

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​​Determine Expenses

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​Make the two balance out!

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(Hopefully you got a little left to save)​

Do the math!​

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​STEPS TO CREATING A BUDGET

Multiple Choice

Want or Need?

Multiple Choice

An item that is necessary for life

• Value

• Want

• Need

• Well-Being

Fixed Vs Variable Expenses

- When setting up a budget their are two tyoes of expenses.

-Fixed Expenses- Expenses that come every moth no matter what

-Variable Expenses- Expenses that can change from month to month.

Multiple Choice

Something that is unnecessary to life, but desired.

• Value

• Want

• Need

• Well-Being

Budgeting

When setting up a budget it is good to determine what your fixed expenses are and what your variable expenses are. This will help you understand how much you have to spend on fixed expenses no matter what each month and how much money you have left over for variable expenses.

Multiple Choice

 

Which option is a need?

• Car

• Cell Phone

• Air pods

• Shoes

Link is on Blackboard.

Multiple Choice

 

What is an example of wants

• Food

• Cell Phone

• Water

• Shelter

Multiple Choice

Going to the Movies

• Variable Expense

• Fixed Expense

Multiple Choice

Eating out

• Fixed Expense

• Variable Expense

Poll

Where are Americans spending more money?

• Groceries

• Restaurants

Multiple Choice

Car Insurance

• Fixed Expense

• Variable Expense

Multiple Choice

Electric Bill

• Fixed Expense

• Variable Expense

• Can be both, debatable.

​The family gotta eat!

Let's put together a grocery budget!!​ Go to Google Classroom

Multiple Choice

Cable Bill

• Fixed Expense

• Variable Expense

Gross Vs. Net Pay

Both are considered income!

-Gross Income- Total amount earned before deductions

-Net Income- Is your "take home pay"

-Salary vs. Wages

To prepare a budget....

You need to know your income your expenses.