Personal Finance

Bishop Kearney High School

Dr. Steven M. Hays

What is a budget? A system that allows you to meet your personal

goals System of saving Wise spending

Allows individuals to make wise and rewarding personal economic decisions

Live within income Achieve financial goals Buy wisely Avoid credit problems Plan for financial emergencies Develop good money management skills

What is the key? Having a written budget

Four main steps Set financial goals Plan budget categories Maintain financial records Evaluate your budget

First step for any financial action Write down short term and long term goals

Points to where you would like to be financially Budget accordingly How to spend and save money

Set aside amount for savings as first part After savings, two types of living expenses

considered Fixed Variable

Fixed expenses Costs that occur on regular basis Same amount every time

rent, mortgage, car payment, life insurance premium

Variable expenses Differ each month

food, clothing, utilities

Savings Savings accounts, stocks, bonds, mutual funds, other

investments

Food At home and eating out

Clothing Clothes, shoes, dry cleaning, repairs, alterations

Household Rent, mortgage, property taxes, insurance, utilities,

furnishings, household supplies, painting, repairs

Transportation Auto payments, insurance, gas, maintenance, repairs,

public transportation

Health and Personal Care Medical and dental expenses, insurance, personal care

costs

Recreation and Education Books, theater and concert tickets, vacations, hobbies,

club dues, school expenses

Gifts and Contributions Charities, personal gifts

Record income and expenses Find out if plan is working References to prepare income and expense

summary? Check book Receipts Payroll statements

What is a budget variance? Any differences between budgeted amounts and

actual spending

Complete a category by category comparison Allows you to determine if changes are needed

Characteristics Must be realistic Should be flexible Should be evaluated regularly Must be planned Clearly communicated Simple format