diving into spending plans! how to budget your money properly
TRANSCRIPT
Diving Into Spending Plans!
How to budget your money properly
© Take Charge Today – Edited April 2007– Diving Into Spending Plans – Slide 2Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
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Today We’ll Talk About
Spending Plan/Budget - What is it? Why use it?
Income and Expense
© Take Charge Today – Edited April 2007– Diving Into Spending Plans – Slide 3Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
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Why do you think this happens? People do not make enough money People spend too much money
Almost half of all American families spend more money than they
make.
© Take Charge Today – Edited April 2007– Diving Into Spending Plans – Slide 4Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
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Values, Needs, & Wants What is a need?
Something that is a necessity Food, water, shelter...
What is a want? Something that is not a necessity but is desired Coffee from Starbucks, skis
© Take Charge Today – Edited April 2007– Diving Into Spending Plans – Slide 5Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
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Why do needs and wants matter?
Trade-Offs and Opportunity Costs
Trade-off - giving up one
thing for another
Opportunity cost – the
value of the next best
alternative that must be
forgone as a result of a decision
Use trade-offs and
opportunity costs to help
you make these
decisions
Is the trade-off to your decision a need or a want? What is the value (opportunity cost) of that trade-
off to you?
© Take Charge Today – Edited April 2007– Diving Into Spending Plans – Slide 6Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.2.41.G1
Spending Plan/Budget - What is it?
A spending plan/budget is A tool to help people manage their money
© Take Charge Today – Edited April 2007– Diving Into Spending Plans – Slide 7Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.2.41.G1
Spending Plan/Budget - Why use it?Why would you want to know where your
money is going?
Spending plans/budgets are used to help people Track where their money is going Identify income and expenses Meet financial goals
© Take Charge Today – Edited April 2007– Diving Into Spending Plans – Slide 8Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
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A Spending Plan/Budget Tracks…..
Income Money earned
Expense Money spent
Variable: Changes each month Fixed: Remains the same each
month
© Take Charge Today – Edited April 2007– Diving Into Spending Plans – Slide 9Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
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Spending Plan/Budget Contents Income Expenses: Fixed or
variable? Housing Utilities Transportation Savings Food Insurance Clothing
© Take Charge Today – Edited April 2007– Diving Into Spending Plans – Slide 10Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
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Lee’s Spending Plan Example
Income ExpensesItem Amount Item Amount
Mowing a lawn
$10.00 Movie ticket and popcorn
$15.00
Birthday gift
$15.00 Snack and drink
$5.00
Total $25.00 Total $20.00
Does Lee have enough income to pay his expenses?
If he would like to buy a new shirt for $15, does he have enough money?
© Take Charge Today – Edited April 2007– Diving Into Spending Plans – Slide 11Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.2.41.G1
In Conclusion A spending plan is
A tool to help people track their money A spending plan is based on
Values, wants, and needs A spending plan tracks
Income and expenses
The End!