Personal Budgeting

Objectives

Identify the components of a personal budget and strategies for staying within one’s budget

Describe the purpose for setting financial goals

Develop short-, mid-, and long-term financial goals

Evaluate the importance of financial planning

Key Vocabulary

Balance Sheet Budget Deficit Discretionary

Expenses Discretionary

Income Financial Health Financial Planner Fixed Expense Income Inflows

Insolvency Outflows SMART goal SMART strategy Surplus Take-home pay Variable Expense

Needs vs. Wants

Divide the words into needs vs. wants

Which items are the most difficult to classify? Why?

Can an individual’s financial situation change her views of what is considered a need and what is considered a want? Explain.

Would you classify most of your own purchases as needs or wants? Explain

Needs vs. Wants

Do you purchase a new pair of basic shoes or the new Jordan’s for $150?

Wants change into needs Want a car turns into need a car for work

to provide for family/ self Vary based on financial situation,

family, religious, or cultural values

Simulation

Imagine that you are a single father running a computer repair business from your home. Refer back to your list of 25 words. How would your classifications of your needs and wants change based upon your life circumstances?

Financial Goals

Responsible money management can help you achieve your goals

Who would like to someday purchase a new car?

Who would like a new pair of shoes? Who would like to purchase a

computer?

Financial Goals

Refers to something, an item or product, that they want to buy or even a state of financial well-being that they hope to achieve.

List three financial goals that you have for the future.

Financial Goals

Short-term- within 1 year Mid-term- 1-3 years Long-term- More than three years

New shoes-short term Buy special jewelry for you Mom’s 50th

anniversary- mid-term College tuition- long term Retirement- long term

Financial Goals

Offers inspiration and motivation Make goals specific and attainable Flexible and realistic for your life

Financial Goals

Download: Reading- SMART Financial Goals

What does the acronym SMART stand for?

S M A R T

Financial Goals

Share one of your goals that you wrote from before

Take turns evaluating each other’s goal against the SMART criteria. Verbally discuss your goals and offer advice on specific changes in language that should be made

Compare your SMART goal with your original goal. In what ways will your new SMART goal be easier to attain?

Writing SMART goals

Download: Worksheet- Writing SMART Goals

Write your original goals out before SMART was introduced

Transform all three goals to SMART goals

Decide whether your goals are short, mid or long-term

Writing SMART goals

Long-term important to start early because usually their the most expensive

Organize income, expenses, and savings to achieve your goal

Introduction to Personal Budgeting

Download: Anticipation Guide- Budgeting

Contemplate the four statements, agree or disagree why?

Download: Reading- Budgeting Review section headings and

highlighted terms Does reading change any of your

answers?

Budgeting

Develop your taxonomies further but with terms about budgeting

3 minutes by yourself 3 minutes at your table 4 minutes walking around the room

Budgeting

What information is needed to create a budget?

Accurate records of money in and money out

Keep financial documents Receipts, paycheck stubs, tax forms, etc

Budget Analysis

Scenario cards passed out1. Carefully read through the scenario2. Underline sources of income3. Circle all expenses

Download: Worksheet- Monthly Budget Example You will not be using all of then columns

and rows Fill in the information specific to your

scenario

Budget Analysis

What other financial information would have been helpful to complete the budget outline?

What seemed to stand out in your scenario?

Download: Directions- Budget Analysis Summary How does the example reflect the

specific requirements in the directions?

Budget Analysis

Pair up and share budget analysis Download: Worksheet- Monthly

Budget Example Of the two scenarios, which financial

situation would you most like to see yourself in? Why?

List one improvement that you would make for each financial situation

Budget Analysis

What are the most important principles of budgeting you learned that will help you to be successful in life? Explain your answers.

Enrichment

Give students the opportunity and experience to create a real budget. During the first class period, instruct students to track their spending for at least the next week and preferably longer. Students must be diligent and should track even the smallest of purchases. At the end of the time period, have students classify everything they purchased as a need or a want and create a personal budget based off of their findings.

Enrichment

Instruct students to research the career of a budget analyst, focusing on such aspects as job requirements and certifications, work environment, earnings, outlook, and companies that employ budget analysts. Students should present their findings to the class.

Cross-Curricular Integration

Social Studies: Compare and contrast different patterns of savings among various countries. Explain the variations.