unit 2 budgeting making the most of your money. examine spending habits how does your spending...

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Unit 2 Unit 2 Budgeting Budgeting Making the Most of Your Making the Most of Your Money Money

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Page 1: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Unit 2Unit 2BudgetingBudgetingMaking the Most of Your MoneyMaking the Most of Your Money

Page 2: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Examine spending habitsExamine spending habits

How does your spending measure up?How does your spending measure up? Spending Plan / BudgetSpending Plan / Budget

A plan for managing your money during a given A plan for managing your money during a given period of time.period of time.

Will change as your income grows.Will change as your income grows.

Page 3: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

SMART SPENDINGSMART SPENDING Spending a $1 a day on a bottle of waterSpending a $1 a day on a bottle of water

In one month—you would have spent $30In one month—you would have spent $30

VERSUSVERSUS

Spending $30 on something you really Spending $30 on something you really need or wantneed or want

Page 4: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Part 1 - INCOMEPart 1 - INCOME

Cash Flow- refers to the money you have Cash Flow- refers to the money you have coming in, as well as the money you coming in, as well as the money you have going outhave going out

Income-Income-anyany money you receive money you receive AllowanceAllowance Birthday $Birthday $ Working a jobWorking a job

Page 5: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Paycheck IncomePaycheck Income

Paycheck will be for less than the money Paycheck will be for less than the money you actually earned.you actually earned. WHY?WHY?

Payroll Deductions- items that you must pay for Payroll Deductions- items that you must pay for and that your employer must withhold from youand that your employer must withhold from you

TaxesTaxes InsuranceInsurance

Page 6: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

TaxesTaxes

Fees that support government programs Fees that support government programs and are required by law to be applied to and are required by law to be applied to income, property, or goods.income, property, or goods.

Page 7: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

What do our taxes pay What do our taxes pay for?for?

Public SchoolsPublic Schools

MilitaryMilitary

Road MaintenanceRoad Maintenance

Retirement Income -ElderlyRetirement Income -Elderly

Page 8: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

4 Most Common Tax 4 Most Common Tax DeductionsDeductions

Federal Income TaxFederal Income Tax

State Income TaxState Income Tax

Social Security TaxSocial Security Tax

Medicare TaxMedicare Tax

Page 9: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Federal Income Tax- a fee collected Federal Income Tax- a fee collected by the federal government to by the federal government to support its programs- sent to the support its programs- sent to the Internal Revenue Service (IRS)Internal Revenue Service (IRS)

Page 10: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

State Income TaxState Income Tax

Most states collect an income tax that helps pay for state services. Also collected by every employer on behalf of its employees and then sent to the state.

Page 11: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Social Security TaxSocial Security Tax

Provides a small income and other Provides a small income and other services to the elderly, disabled services to the elderly, disabled Americans, and orphaned minors.Americans, and orphaned minors.

Page 12: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Medicare TaxMedicare Tax

Provides medical insurance also to the Provides medical insurance also to the elderly and to some disabled Americans.elderly and to some disabled Americans.

Page 13: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

What you earn?

versus

What you actually get a check for?

Page 14: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Gross IncomeGross Income

The total Amount of income from your The total Amount of income from your wages wages

Before any Payroll DeductionsBefore any Payroll Deductions

# of hours you work time your hourly rate# of hours you work time your hourly rate Ex. If you work 15 hours a week and get Ex. If you work 15 hours a week and get

paid $10 an hour-your gross income would paid $10 an hour-your gross income would be $150 for the weekbe $150 for the week

Page 15: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Net Income / Take home payNet Income / Take home pay

The amount you’ll be able to deposit or The amount you’ll be able to deposit or cash. cash.

The amount the check is written to you The amount the check is written to you for.for.

Page 16: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

ExpensesExpenses

What you spend money onWhat you spend money onNeeds and WantsNeeds and Wants

Page 17: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

ExpensesExpenses

1. Fixed 1. Fixed

2. Variable2. Variable

3. Periodic or Occasional3. Periodic or Occasional

Page 18: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Fixed ExpensesFixed Expenses

Cost the same amount every timeCost the same amount every time Home Loan (Mortgage)Home Loan (Mortgage) Car LoanCar Loan

Example- $250 every month to pay off a car loanExample- $250 every month to pay off a car loan

Page 19: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Variable ExpensesVariable Expenses

Fluctuate in amount, so you usually have Fluctuate in amount, so you usually have more control over how much they will be.more control over how much they will be. Food / GroceriesFood / Groceries

EntertainmentEntertainment

Page 20: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Most Important ExpenseMost Important Expense

P.Y.F.P.Y.F.PayPay

YourselfYourselfFirstFirst

Page 21: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Pay yourself firstPay yourself first

Saving is an important part of reaching Saving is an important part of reaching your financial goals.your financial goals.

Whenever you receive $, you should Whenever you receive $, you should immediately put aside a certain amount immediately put aside a certain amount into an account that you will use later to into an account that you will use later to reach a long-term financial goal.reach a long-term financial goal.

Page 22: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Creating a BudgetCreating a Budget

1. Decide the time frame for tracking your 1. Decide the time frame for tracking your income and expenses. Weekly or income and expenses. Weekly or Monthly?Monthly?

2. List all the money you have coming in. 2. List all the money you have coming in. Then total your income.Then total your income.

3. Make categories for each of your 3. Make categories for each of your expenses. Don’t forget P.Y.F. Then total expenses. Don’t forget P.Y.F. Then total your expenses.your expenses.

Page 23: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Creating A BudgetCreating A Budget

4. Subtract your total expenses from 4. Subtract your total expenses from your total income. If the # is negative—your total income. If the # is negative—you must adjust your expenses. If the # you must adjust your expenses. If the # is positive, you might want to add more to is positive, you might want to add more to P.Y.F.P.Y.F.

Page 24: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Creating a BudgetCreating a Budget

5. Step back and look at your budget 5. Step back and look at your budget and your financial plan.and your financial plan. Does it need tweaking?Does it need tweaking?

Page 25: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Stay on TrackStay on Track

Page 26: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Documents associated Documents associated with earnings/incomewith earnings/income

W-4W-4

Pay stubsPay stubs

W-2W-2

Page 27: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

W-4W-4

It is almost impossible to avoid paying any It is almost impossible to avoid paying any taxes.taxes.

You do have You do have some some control over the amount control over the amount taken out of your paycheck.taken out of your paycheck.

The federal gov’t calculates your tax The federal gov’t calculates your tax decutions from the information on the Form decutions from the information on the Form W-4.W-4.

W-4 form is filled out when you started your W-4 form is filled out when you started your job.job.

Page 28: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Sample Form W-4Sample Form W-4

Page 29: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Form W-4 ..continuedForm W-4 ..continued

Key part of W-4 is on line 5 where you fill Key part of W-4 is on line 5 where you fill in the total number of “allowances”.in the total number of “allowances”.

These allowances determine how much These allowances determine how much tax will be withheld from each paycheck.tax will be withheld from each paycheck. ExamplesExamples

Martial StatusMartial Status # of children# of children

Page 30: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Documents– pay stubsDocuments– pay stubs

Pay stub- portion of paper that is Pay stub- portion of paper that is attached to your actual paycheck.attached to your actual paycheck.

Double check your stub when you Double check your stub when you receive it.receive it.

Page 31: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Sample Pay StubSample Pay Stub

Page 32: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Documents –W-2 FormDocuments –W-2 Form

When you receive your last pay stub for When you receive your last pay stub for the the year- year- double check it against your double check it against your W-2 that you will receive from your W-2 that you will receive from your employer in January. employer in January.

The information should match! The information should match! If it If it does not match, ask your employer for a does not match, ask your employer for a corrected W-2 form.corrected W-2 form.

Page 33: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

Sample W-2 FormSample W-2 Form

Page 34: Unit 2 Budgeting Making the Most of Your Money. Examine spending habits  How does your spending measure up?  Spending Plan / Budget  A plan for managing

SummarySummary

3 types of documents associated with our 3 types of documents associated with our earnings/incomeearnings/income W-4W-4 Pay StubsPay Stubs W-2W-2

QUESTIONS????QUESTIONS????