spending plansstaff.camas.wednet.edu/blogs/jenaelangston/files/2015/03/...received income from...
Post on 17-Aug-2020
0 Views
Preview:
TRANSCRIPT
Spending Plans Advanced Level
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 2 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Where’s My Dough?
What expenses do
you have?
How much do you spend on
each expense?
Play dough = income
Divide your play dough to
show how much is spent
on each expense
Write a personal
financial goal
Based upon your current
spending, is it realistic to
achieve your goal?
Adjust your play dough to
reach your goal
You have begun to develop a spending
plan!
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 3 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
What is a Spending Plan?
Spending Plan for: Time Period:
Planned Amount
Actual Amount
Income Earned Income
Wages or salary before deductions
Unearned Income Money from savings and investments to help pay expenses during this time period
Received Income from Government Programs Total Income $ $
Expenses Deductions Often Taken from Paychecks
Contributions to retirement programs (401k,
403b, pension, IRA)
Federal income tax and state income tax
Social Security and Medicare
Saving and Investing (Pay Yourself First) Contribution to savings and investments Insurance Premiums
Health, automobile, home or renters, life
Housing Costs Transportation Costs Food Costs Family Member Care Communication and Computers
Telephone landline, cell phone, Internet,
cable/satellite television
Medical Costs Not Covered by Insurance Clothing and Personal Care Educational Expenses Pet Care Entertainment Gifts and Charitable Contributions Credit Costs
Student loan, credit card, other loan payments
Total Expenses $ $ Net Gain or Net Loss (Income less Expenses) $ $
An income and expense statement sometimes referred to as a budget which records both planned and actual income and expenses over a period of time
A budget
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 4 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Why is a Spending Plan an important part of financial planning?
Analyze the opportunity costs of your trade-offs
to maximize financial well-
being
Helps set and reach goals
Help manage your money in a positive manner
Increase net worth
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 5 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Money Management Tools
Statement of Financial Position
Income & Expense Statement
Spending Plan
What is my financial position
today?
What is my future money
management plan?
How have I managed my
money in the past?
Make changes
Determine what changes to make
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 6 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
A forward-looking Income and Expense Statement
May use the same template for both the Income and
Expense Statement and the Spending Plan
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 7 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Spending Plan Development Process
Step 1 - Track Current Income and
Expense
Step 2 - Personalize Your Spending Plan
Step 3 - Allocate
Money to Each Category
Step 4 - Implement and
Control
Step 5 - Evaluate and Make
Adjustments
Develop the spending plan
Maintain the spending plan
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 8 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Track Current Income and Expenses
Completed by developing an
Income and Expense Statement
Step 1 - Track Current Income and
Expense
Step 2 - Personalize Your Spending Plan
Step 3 - Allocate
Money to Each Category
Step 4 - Implement and
Control
Step 5 - Evaluate and Make
Adjustments
Ensures spending plan is realistic
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 9 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Congratulations! You have been hired as a financial
advisor for John and Tia Brown
Financial Advisor Information
Your Job
• Developed a Statement of Financial Position and Income and Expense Statement
• Identified the following goals:
• Develop a spending plan for the Brown family
Increase the amount of their
emergency savings fund
Spend less money on
clothing every month
Pay more on their monthly car loan payment to pay
the loan off faster
Spend less money dining out at restaurants
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 10 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
The Brown Family Step One: Track Current Income and Expenses
Income and Expense Statement for: John and Tia Brown
Time Period: January
Amount
Income
Earned Income
Wages or salary before deductions 5500.00
Total Income $5,500.00
Expenses
Deductions Often Taken from Paychecks
*Contribution to a retirement program (401k, 403b) 385.00
*Federal income tax 1,100.00
*Social Security 317.13
*Medicare 74.17
Saving and Investing (Pay Yourself First)
Contribution to savings and investments 250.00
Insurance Premiums
*Health insurance, Medicaid and Medicare 250.00
*Renters or homeowners insurance 15.00
*Automobile insurance 70.00
Housing Costs
*Housing payment (rent or mortgage) 800.00
*Utilities (gas, electricity, water, garbage) 100.00
Transportation Costs
*Automobile payment 200.00
*Fuel (gasoline/diesel) 100.00
*Automobile repairs and maintenance 50.00
*Public transportation fees 50.00
*Automobile license and registration (yearly fee) 20.00
Food Costs
Food at the grocery store 300.00
Meals at restaurants 350.00
Snacks away from home (coffees, treats) 30.00
Non-food kitchen supplies (plastic wrap, dish soap) 30.00
Communication and Computers
*Cell phone 110.00
*Internet 60.00
*Cable/satellite television 40.00
Medical Costs Not Covered by Insurance
*Medical care 100.00
Clothing and Personal Care
Clothing 250.00
Personal care (shampoo, haircuts, cosmetics, laundry, etc.) 150.00
Entertainment
Movies, books, and other entertainment 200.00
Total Expenses $5,401.30
Net Gain or Net Loss (Income less Expenses) $98.70
Financial Advisor Information
Your Job
Kept all receipts for the month of January to create an Income and Expense Statement
Review John and Tia’s January Income and Expense Statement for a realistic view of their income and expenses
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 11 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Personalize Your Spending Plan
Step 1 - Track Current Income and
Expense
Step 2 - Personalize Your
Spending Plan
Step 3 - Allocate
Money to Each Category
Step 4 - Implement and
Control
Step 5 - Evaluate and Make
Adjustments
How will you develop a
spending plan?
What is the intended time period for your
spending plan?
What categories will your spending
plan include?
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 12 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
How will you develop a spending plan?
Any written method
that works for you
How would you develop a
spending plan?
Paper and pencil
Spreadsheet
Money management computer software
Applications
2.2.5.G1
© Take Charge Today – August 2013– Spending Plans – Slide 13 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
What is the intended time period for your spending plan?
What categories will your spending plan include?
• Usually concurrent with pay period
• Reference tracking from the Income and Expense Statement
• Do any categories need added, changed, or removed?
What time period would you choose for your spending
plan?
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 14 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Income and Expense Statement for: John and Tia
Brown
Time Period: January
Amount Planned Amount
for February
Income
Earned Income
Wages or salary before deductions 5500.00
Total Income $5,500.00 $
Expenses
Deductions Often Taken from Paychecks
*Contribution to a retirement program (401k, 403b) 385.00
*Federal income tax 1,100.00
*Social Security 317.13
*Medicare 74.17
Saving and Investing (Pay Yourself First)
Contribution to savings and investments 250.00
Insurance Premiums
*Health insurance, Medicaid and Medicare 250.00
*Renters or homeowners insurance 15.00
*Automobile insurance 70.00
Housing Costs
*Housing payment (rent or mortgage) 800.00
*Utilities (gas, electricity, water, garbage) 100.00
Transportation Costs
*Automobile payment 200.00
*Fuel (gasoline/diesel) 100.00
*Automobile repairs and maintenance 50.00
*Public transportation fees 50.00
*Automobile license and registration (yearly fee) 20.00
Food Costs
Food at the grocery store 300.00
Meals at restaurants 350.00
Snacks away from home (coffees, treats) 30.00
Non-food kitchen supplies (plastic wrap, dish soap) 30.00
Communication and Computers
*Cell phone 110.00
*Internet 60.00
*Cable/satellite television 40.00
Medical Costs Not Covered by Insurance
*Medical care 100.00
Clothing and Personal Care
Clothing 250.00
Personal care (shampoo, haircuts, cosmetics, laundry, etc.) 150.00
Entertainment
Movies, books, and other entertainment 200.00
Total Expenses $5,401.30 $
Net Gain or Net Loss (Income less Expenses) $98.70 $
The Brown Family Step Two: Personalize Your Spending Plan
Financial Advisor Information
Your Job
• Requested a spending plan for the month of February
• Requested the same document and categories as the Income and Expense Statement
• Find the column on the Income and Expense Statement where the Spending plan will be created
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 15 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Allocate Money to Each Category
Reference tracking from Step One
Determine what changes to make
Step 1 - Track Current Income and
Expense
Step 2 - Personalize Your Spending Plan
Step 3 - Allocate
Money to Each Category
Step 4 - Implement and
Control
Step 5 - Evaluate and Make
Adjustments
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 16 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
When allocating money consider:
Contractual Non-contractual
Trade-offs and opportunity
costs Goals
Contractual expenses
Required to pay expense for a specific amount of time - not easy to reduce or eliminate
Easy to reduce or eliminate
Rent, Internet, Cell phone Food, entertainment
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 17 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Spending Plan Guide 10%
7%
30%
20%
15%
18%
Saving and Investing10%
Insurance 7%
Housing 30%
Transportation 20%
Food 15%
Other 18%
What variables may cause these percentages to be different?
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 18 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Net Gain or Net Loss?
Income Expenses Net Gain
or Net Loss
Net Gain? Net Loss?
• Add more money to savings or another expense
• Increase income
• Decrease expenses
• Both
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 19 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
The Brown Family Step Three: Allocate Money to Each Category
Financial Advisor Information
• Indicated a * next to expenses that are either contractual or they are unwilling to decrease
• Remember goals • Consider trade-offs • Must have a net gain or a zero
balance
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 20 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
The Brown Family Step Three: Allocate Money to Each Category
Your Job
• Develop a spending plan for the family
• Explain each change made • Re-write goals into SMART
goals using their new spending plan
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 21 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Implement and Control
Make your planned spending decisions
Step 1 - Track Current Income and
Expense
Step 2 - Personalize Your Spending Plan
Step 3 - Allocate
Money to Each Category
Step 4 - Implement and
Control
Step 5 - Evaluate and Make
Adjustments
Use a control system to stay on track
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 22 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Control Systems
Money management computer software
Which control system would
help you stick to your spending
plan? Internet-based spending plan program
Depository institution programs
Check register system
Envelope system
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 23 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
The Brown Family Step Four: Implement and Control
Your Job
•Recommend a control system for John and Tia
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 24 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Evaluate and Make Adjustments
How well did your spending plan
work?
Step 1 - Track Current Income and
Expense
Step 2 - Personalize Your Spending Plan
Step 3 - Allocate
Money to Each Category
Step 4 - Implement and
Control
Step 5 - Evaluate and Make
Adjustments
Is your spending plan helping you
reach goals?
Do you need to make any
adjustments?
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 25 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
The Brown Family Step Five: Evaluate and Make Adjustments
How could creating a
spending plan help you now
and in the future?
Financial Advisor Information
Your Job
• John and Tia realized that if they dine out at restaurants less often they will need to increase their monthly grocery expense
• Increase their grocery budget by $20.00
• How has developing a spending plan helped the Brown family?
2.2.5.G1
© Take Charge Today – August 2013 – Spending Plans – Slide 26 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Summary
• A spending plan is an important financial planning tool ▫ Helps achieve goals
• Make your spending plan work for you
• Make sure to control, evaluate, and adjust your spending plan
Step 1 - Track Current Income and
Expense
Step 2 - Personalize Your Spending Plan
Step 3 - Allocate
Money to Each Category
Step 4 - Implement and
Control
Step 5 - Evaluate and Make
Adjustments
top related