Spending Plan
EssentialsIntroductory Level
The Essentials to Take Charge of Your
Finances
7.15.1.
G1
What is a spending plan?
A financial statement used to
assist with money management
Helps people manage money
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 2
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
7.15.1.
G1
Why is a spending plan
important to use?
Spending plans are used to help
people:
Track where their money is going
Identify income and expenses
Meet financial goals
Live within their income
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 3
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
7.15.1.
G1
LONG-TERM POSITIVE
IMPACT OF A SPENDING
PLAN?
To know where your money is going!
To build long-term wealth!
To create long-term financial security!
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 4
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
7.15.1.
G1
A Spending Plan Tracks..
Income
Money earned
Expense
Money spent
Fixed expenses vs. flexible
expenses vs. pop up expenses
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 5
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
7.15.1.
G1
Income, Fixed Expense, Flexible
Expense, or Pop up Expense?
Rent/House
payment
Sink backing up
Paycheck
Groceries
Internet bill
Winning the
lottery
Utilities
Putting money
Hobbies
Car repairs
Clothes
Birthday
money
Pet injury
iPod
Using
savings
Phone
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 6
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
7.15.1.
G1
The Costs Add up
Monthly haircut
$35.00 per month
$420 per year
Weekly date night
at the movies with
popcorn
$30 per week
$1,560
Daily Latt
Eating lunch out 5
days per week
$3.75 each time
$1,365 per year
$5-$10 each time
$1,300-$2,600 per
year
Daily sport drink
$2.00 each daily
$728 per year
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 7
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
7.15.1.
G1
Lees Spending Plan Example
Income
Item
Mowing a
lawn
Expenses
Amount
Item
Amount
$10.00 Movie
$15.00
ticket and
popcorn
Birthday
$15.00 Snack
$5.00
gift
and drink
$25.00
Total to pay for
$20.00
Total
Does Lee have
enough income
his
expenses?
If he would like to buy a new shirt for $15 does
he have enough money?
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 8
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
7.15.1.
G1
Summary
A financial statement used to assist with money
management
What are the benefits of creating a
spending
Gives a plan?
Helps meet financial
person an
understanding of where
goals
there money is going
Helps people live
Tracks income and
within their income
What
are the two main components of a
expenses
spending
plan?
Income- money
earned
Expense- money spent
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 9
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
7.15.1.
G1
Spending Plan Shake-Up!
Budget your beans to pay for the
things you need and want
Each square is worth one bean and
all the squares must be filled to have
that item
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 10
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
7.15.1.
G1
Education Levels
High school drop out = 8 beans
High school graduate = 10 beans
Associates degree = 12 beans
College degree = 16 beans
Graduate degree = 20 beans
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 11
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
7.15.1.
G1
Change in Plans!
You have a job interview next week in a
nearby town. Suddenly your needs have
changed!
Adjust your beans accordingly!
You need a vehicle to drive to work
Purchasing a new interview outfit is necessary
and you have found a great suit at a
department store
You recently dyed your hair purple and need to
have it professionally fixed
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 12
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
7.15.1.
G1
Spending Plan Shake-Up!
Could you afford everything that you
needed?
Could you afford everything that you
wanted?
How does Spending Plan Shake-Up
relate to real life?
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 13
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
7.15.1.
G1
Recommended Spending plan
category pie chart (after taxes)
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 14
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
7.15.1.
G1
Housing
Housing
Housing is the largest
of the four major
expenditures
Recommended 30% of
an individuals net
income
Monthly payment A
fee charged each
month to live in a home
Utilities include
electricity, water, and
garbage fees
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 15
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
7.15.1.
G1
Housing
Housing
Home or renters insurance
purchased to protect the home and
possessions inside from loss
Taxes paid by the owner of the home
Maintenance includes paying for the
upkeep of a home
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 16
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
7.15.1.
G1
Transportation
Transportation
The second largest
major expenditures
Recommended 20%
of an individuals
net income
Monthly payment
is made if a loan is
taken out to
purchase a vehicle
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 17
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
7.15.1.
G1
Transportation
Transportation
License and registration are required by
law to own a vehicle
Insurance required by law to protect the
vehicle and individuals if involved in an
accident
Maintenance costs keep automobiles
running smoothly
Fuel to operate the vehicle
Public transportation fees including bus,
metro pass, taxis or parking fees
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 18
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
7.15.1.
G1
Food
Food
The third most
expensive
category within
an individuals
spending plan
Recommended
15% of an
individuals net
income
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 19
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
7.15.1.
G1
Insurance
Insurance
Arrangement
between an
individual and an
insurance company
to protect the
individual against
risk
Risk is uncertainty
about a situations
outcome
Recommended 7%
of an individuals
income
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 20
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
7.15.1.
G1
Insurance
Includes the following:
Health pays a portion of health care
expenses if one is sick or injured
Disability provides financial support if an
individual is injured and cannot work
Life provides financial support to an
individuals beneficiaries upon death
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 21
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
7.15.1.
G1
Additional expenses
Savings and
investing
Save 3-6 months
of income that is
available in a
liquid account for
emergencies
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 22
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
7.15.1.
G1
Other
Fulfills additional
needs and accounts
for 18% of an
individuals net
income. Includes:
Gifts
TV/Internet
Cell Phone
Personal Care
Clothing
Entertainment
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 23
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
