Chapter 8 Budgets and Financial Records v Budgeting

Chapter 8 Budgets and Financial Records v. Budgeting and Record Keeping v. Legal Documents and Filing Systems © South-Western Educational Publishing

Lesson 8. 1 Budgeting and Record Keeping GOALS v Describe and prepare personal budgets. v Explain the purpose of record keeping. v Prepare a personal net worth statement and a personal property inventory. © South-Western Educational Publishing

Importance of Financial Planning v. Disposable income § Money left after taxes v. Financial plan § Set of goals for spending, saving, and investing © South-Western Educational Publishing

Preparing a Budget 1. Estimate your income. 2. Decide how much to save. 3. Estimate your expenses. 4. Balance your budget § Income = Saving + Spending © South-Western Educational Publishing

Simple Budget Income Work $320 Allowance 20 Lunch money 40 Total income $380 Expenses Lunches Supplies Snacks Entertainment $ 80 20 40 120 Total expenses $280 Savings To credit union $100 Total expenses plus savings $380 © South-Western Educational Publishing

Monthly Budget v Fixed expenses § Costs you must pay on a regular basis Rent, mortgage, car loan o Not easy to change o v Variable expenses § Costs that vary in amount depending on your choices Cable, groceries, clothing, gas § v Period expenses § Amounts that occur periodically § Insurance, magazines © South-Western Educational Publishing

Personal Records v. Records of income and expenses § Income taxes v. Net worth statement § Solvent/insolvent § Getting a loan v. Personal property inventory § Insurance v. Tax records § Keep for 3 years © South-Western Educational Publishing

Net Worth Statement Assets – Liabilities Net worth © South-Western Educational Publishing

Personal Property Inventory Item Year Purchased Purchase Price © South-Western Educational Publishing Approximate Current Value

Lesson 8. 2 Legal Documents and Filing Systems GOALS v Discuss the elements of legal contracts and your responsibilities regarding contracts. v Describe negotiable instruments and warranties. v Discuss ways to set up a filing system for personal records. © South-Western Educational Publishing

Types of Contracts v Contract § Legally enforceable agreement between two or more parties v Express contracts § Stated agreement in words Oral o Written o v Implied contracts § Part of our daily life Alterations, riding a bike, driving a car, children © South-Western Educational Publishing o

Elements of an Enforceable Contract v Legality § Must be for v Agreement § Offer and acceptance something legal v Consideration v Genuine assent § Something of value § Both parties agree v Contractual capacityv Legal form § Legal ability § Must be in writing § competent parties o More than a year Property o Over a certain amount © South-Western Educational Publishing o

Consumer Responsibilities in Agreements v Understand agreement. v Be sure all dates, amounts, and other v Keep a copy of the numbers are correct and agreement. clearly written. v Be sure the agreement v Be sure proper disclosure is dated correctly. is made by the seller. v Be sure all blank spaces v Be sure all cancellations are filled in or marked and adjustments are out. made in accordance with v Be sure all terms agreed the contract. upon are written clearly. © South-Western Educational Publishing

Negotiable Instruments v Must be in writing and signed by the maker v Must contain an unconditional promise to pay a definite amount of money v Must be payable on demand or on a fixed or determinable future date v Must be payable to the order of a particular person or to the holder of the note v Must be delivered to the payee © South-Western Educational Publishing

Warranties v. Guarantee is a warranty § Guarantees a products performance § For all products o Tennis ball must bounce v. Limited warranty § Time constraint © South-Western Educational Publishing

Filing Systems for Personal Records v. Paper filing system § Envelopes of folders v. Electronic record keeping § Spreadsheet Excel o Used for calulations o § Database Access o Used for data retrieval o © South-Western Educational Publishing

Home Filing System Medical Warranties Insurance Utilities Household Entertainment Automobile Travel Taxes Subscriptions © South-Western Educational Publishing