BUDGETINGPersonal Finance

© Take Charge Today – August 2013– Major Expenditures – Slide 2Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

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Spending Plan Guide

10%

7%

30%

20%

15%

18% Saving and Invest-ing 10%

Insurance 7%

Housing 30%

Transportation 20%

Food 15%

Other 18%

What variables may cause these percentages to be different?

© Take Charge Today – August 2013– Major Expenditures – Slide 3Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

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Spending Plan Development Process

Step 1 - Track Current Income and

Expense

Step 2 - Personalize Your Spending Plan

Step 3 - Allocate

Money to Each Category

Step 4 - Implement and

Control

Step 5 - Evaluate and Make

AdjustmentsDevelop the spending plan

Maintain the spending plan

HOUSING (RENTING AND OWNING)

© Take Charge Today – August 2013– Major Expenditures – Slide 5Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

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Housing: Largest Expense for Most

Prices vary greatly

Size Location Amenities

Choose housing that fits your personal needs and spending plan

© Take Charge Today – August 2013– Major Expenditures – Slide 6Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

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What are common rental expenses?

Utilities (all or some may be

included in rent)

Household furnishings

(some may be furnished)

Renters Insurance – provides payment to renters to cover the damage and loss of property in addition

to liability losses

Communications(internet, television,

phone)

The cost of housing is more than rent!

© Take Charge Today – August 2013– Major Expenditures – Slide 7Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

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What initial expenses may be required to rent a property?

Pre-payment

• First and last month’s rent

Security Deposit

• Money paid to a landlord to cover cleaning costs and damage repairs beyond normal wear and tear

One or both expenses may be required:

© Take Charge Today – August 2013– Major Expenditures – Slide 8Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

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Significant Initial Home Loan Expenses

Down Payment

• Portion of the purchase price not borrowed

• Typically 5-20% of purchase price

• Mortgage insurance – protecting the lender if the borrower provides less than 20% down payment

Closing Costs

• Fees and charges associated with the purchase of a property

• Typically 1-4% of purchase price

© Take Charge Today – August 2013– Major Expenditures – Slide 9Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

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Mortgage Payment

Mortgage payments

typically include:

Cost of the home Interest Funds to pay property taxes

Funds to pay homeowners

insurance

A payment to pay off the loan used to purchase housing

© Take Charge Today – August 2013– Major Expenditures – Slide 10Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

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What are typical home ownership expenses?

Utilities Household Furnishings

Special Assessments

Homeowner’s Association Dues

Maintenance and repairs

Communications(Internet, television,

phone)

Housing expenses are more than a mortgage!

TRANSPORTATION

© Take Charge Today – August 2013– Major Expenditures – Slide 12Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

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Do Your Research!

Before working with sales personnel

Evaluate your needs and wants

Identify the right type of vehicle

for you and desired features

Research expected costs

You are responsible for yourself!Advance research will maximize your satisfaction with the purchase!

© Take Charge Today – August 2013– Major Expenditures – Slide 13Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

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What are typical automobile ownership expenses?

Automobile payment

(if credit is used)Fuel

Maintenance and Repairs

License and Registration (yearly fee)

InsuranceParking (in some

locations)

Before purchasing a vehicle, be sure you can afford the total cost of ownership

© Take Charge Today – August 2013– Major Expenditures – Slide 14Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

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Marina’s Out-of-Pocket Expenses

5-Year Average Out-of-Pocket(15,000 miles driven per year)

Fuel $9,852

Insurance $3,915

State fees (licensing) $1,932

Maintenance $1,945

Repairs $1,758

5 Year Total $19,402

Monthly Amount $323.37

Monthly Payment

Purchase Price $21,548

Down Payment $2,154.80

Interest Rate 2.84%

Monthly Payment $347.09

Total Paid (down payment + loan)

$22,980.20

Marina’s monthly loan is $347.09, but on average, the car will cost her, $670.46 per month to own!

Marina purchased a 2013 Honda Accord

Source: bankrate.com Source: kbb.com

© Take Charge Today – August 2013– Major Expenditures – Slide 15Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

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What features would you look for in an automobile?

Cost Size Usage

Gas mileage Safety Ratings Reliability

Environmental Impact Depreciation Upgraded

features

FOOD

© Take Charge Today – August 2013– Major Expenditures – Slide 17Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

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Two Primary Sources

Scratch

Convenience

Ready-to-eat

Fast-food restaurants

Fast-casual restaurants

Full-service restaurants

Prepare Food at HomeLeast Expensive

Food Away from HomeMost Expensive

© Take Charge Today – August 2013– Major Expenditures – Slide 18Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

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Burger Night - Family of Four

Cost per person $6.29

Family of 4 $25.16

Cost per person $5.84

Family of 4 $23.36

Food Away From Home Food Prepared at Home

McDonalds Quarter Pounder with Cheese Combo Meal

Burger with bun, condiments, 5lb bag of potatoes (for fries) and a 12 pack of

Coke

The meal prepared at home is less expensive and will result in left-overs

What are ways to reduce the cost for either option?

© Take Charge Today – August 2013– Major Expenditures – Slide 19Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

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Summary

Housing, transportation, and food

Over 60% of spending

Determine if renting or owning a home is best for

you

Housing

Consider the total cost of owning a vehicle

Transportation

Eat well-balanced meals high in nutrition that fit into your spending plan

Food

© Take Charge Today – August 2013– Major Expenditures – Slide 20Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

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What else to think about?

Electricity Water Gas Phone Sewer/Trash Cable Groceries and

Necessities Clothing

Cleaning/Laundry Health Costs Insurance Recreation Gas Credit Cards Student Loans Savings Blow Money

© Take Charge Today – August 2013– Major Expenditures – Slide 21Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

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What % are you spending?

ITEM RECOMMENDED %

Charitable Gift 10-15%

Saving 5-10%

Housing 25-35%

Utilities 5-10%

Food 5-15%

Transportation 10-15%

Clothing 2-7%

Medical/Health 5-10%

Personal 5-10%

Recreation 5-10%

Debts 5-10%