Budgeting and Savings Instructor www getkahoot com Students

Budgeting and Savings Instructor: www. getkahoot. com Students: www. kahoot. it PIN: XXXX

Budgeting and Savings A financial literacy program for students and young adults

A Budget is a written record of the money that flows in and out of your household (or pocket) each month

Why Budget? Achieve Financial Goals More Financial Freedom Avoid costly borrowing Reduce Stress

How Do You Start? Write down all the money that comes in and EVERYTHING you spend money on

Creating a Budget Track your expenses How much do you have to spend? How much do you REALLY spend? Things you spend on that aren’t necessary?

Monthly Tracking

Know the Difference between Needs and Wants Needs (Essential Expenses) Expenses you need to live Wants (NON-Essential Expenses) Expenses you DO NOT need to live

TRUE or FALSE A budget is a written record of the money you have coming in (called an "inflow") and going out (called an "outflow")

TRUE A budget is a written record of the money you have coming in (called an "inflow") and going out (called an "outflow")

What are the inflows and outflows of a budget called?

What are the inflows and outflows of a budget called? Income (Inflows) Expenses (Outflows)

Which refer to a “NEED? ” a. b. c. d. Not necessary Something you really want Absolutely required to live Something you can live without

Which of these is a “NEED? ” a. b. c. d. Not necessary Something you really want Absolutely required to live Something you can live without

How do you start tracking expenses? a. b. c. d. Review bank statements Log expenses regularly Use MINT and online services All of the above

How do you start tracking expenses? a. b. c. d. Review bank statements Log expenses regularly Use MINT and online services All of the above

Let’s: 1. create a budget and 2. label the expenses as “needs” and “wants. ”

There are TWO Types of Expenses FIXED Expenses vs. Variable Expenses

Needed (Essential) FIXED Expenses Rent or Mortgage Insurance (auto or home) Car Payments Taxes School Loans Other debt (including credit cards)

Needed (Essential) VARIABLE Expenses Car Maintenance Utilities (Gas, Electric, Water, Garbage) Food Phone Medical/Rx

Wants (NONEssential) Expenses Non-Essential Clothing Pets Gym Entertainment Video/Media Other items you want but don’t need

Balancing Income and Expenses At the end of the month, is Income > Expenses? (Do you have money left over? ) Yes! Great, you can save what’s left over! NO! There’s a problem! *Spend Less Than You Make!

An Unbalanced Budget Brings Trouble Income < Expenses Not saving Borrow Money = costly Not pay people you owe Income = Expenses Not saving Avoid borrowing costs

Are Expenses too High for your Income? What can you cut out? Determine how much you should save

What expenses are easy to predict? a. Fixed Expenses b. Variable Expenses c. Both

What expenses are easy to predict? a. Fixed Expenses b. Variable Expenses c. Both

In what situations can you start saving? a. b. c. d. Income = Expenses Income > Expenses Income < Expenses All of the above

In what situations can you start saving? a. b. c. d. Income = Expenses Income > Expenses Income < Expenses All of the above

What changes help saving? a. b. c. d. Increase Income Decrease Income Increase Expenses Decrease Expenses

What changes help saving? GOAL: Income > Expenses a. b. c. d. Increase Income Decrease Income Increase Expenses Decrease Expenses

How to Save Pay yourself first by setting aside money from every paycheck Automatic withdrawals from your paycheck Easy Effective

Financial Goals (Identify and Write Down) Vacation and travel College Downpayment for car Downpayment for a house Avoid Debt Pay off credit card debt Pay off student loans

Different Types of Financial Goals Short-Term Medium-Term Long-Term

The Tricks to Setting Financial Goals Specific Realistic Written Down

Setting Goals Takes MATH Goal: Buy $1, 000 Computer in 12 months Solution: $1, 000/12 = $83 Is saving $83/month REALISTIC? * Calculating interest on borrowed money is • more complex and • requires more money

Where to Put Your Savings Short Term (cash to spend) Bank account E-pay account Medium-Term Goals (cash to buy) Interest-paying bank account Long-Term Goals (retirement) Retirement Plan Investment account

What are some characteristics of effective goals? a. b. c. d. Specific Realistic Written Down All of the above

What are some characteristics of effective goals? a. b. c. d. Specific Realistic Written Down All of the above

Why Budget?

Why Budget? • • Achieve Financial Goals More Financial Freedom Avoid costly borrowing Reduce Stress