money management -- budgets. after completing this unit, you should be able to: analyze &...
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MONEY MANAGEMENT --
BUDGETS
After completing this unit, you should be able to:Analyze & prepare a personal budget…Evaluate why and how debt occurs…Prepare & analyze personal short & long term goals…
Determine ways to increase personal income & avoid debt…
DON’T LET THIS HAPPEN TO YOU!!!
Theo doesn’t want to go to college – he wants to be “regular people”
http://www.youtube.com/watch?v=Td_rWR5CpBA
CREATING A PERSONAL BUDGET IS AN ONGOING, LIFELONG SKILL FOR
PERSONAL AND CAREER PURPOSES…
Financial Plan: set of goals for acquiring, saving & spending money…
Financial Goals: Measurable objectives related to acquiring or spending
money… Can be short- or long-term…
SMART Goals: Specific Measurable Attainable Relevant Timely http://www.youtube.com/watch?v=d2Tdxekvy7c&feature=related http://www.youtube.com/watch?v=3y0Jja52B2o http://www.youtube.com/watch?v=YmOS3dj9h0s&feature=related
How will you catch your dreams???
PERSONAL FINANCIAL GOALS
Needs
“must have’s”…survival…
Wants
desires…not necessary
for survival…
NEEDS / WANTS
http://www.youtube.com/watch?v=eVajZKcZBiU
Values (beliefs)• Different for everyone…
• Family, friends, experiences…• Affect how you think about money…
Consider your values, then prioritize your needs & wants to direct your financial future…
VALUES
Just because someone earns a million dollar salary doesn’t mean they are a millionaire!!!What is wealth???
A plentiful supply of money or valuable goods…Assets: things you own… monetary value…Liabilities: debts you owe…
Net Worth = Assets – Liabilitieshttp: / /www.celebr i tynetworth.com/
Disposable Income: (net pay/income) “take home” money used to pay expenses…
Discretionary Income: what is left after all expenses are paid…
BUILDING WEALTH
Oprah Winfrey http: / /www.celebr i tynetworth.com/r ichest-celebr i t ies/actors/oprah-net-worth/
Michael Jordan
http: / /www.celebr i tynetworth.com/r ichest-athletes/nba/michael - jordan-net-worth/
Mark Zuckerberg ht tp : / /www.ce lebr i tynetwor th .com/r i chest -bus inessmen/ceos /mark -zuckerberg-net -wor th /
Donald Trump h t tp : / / www.ce l eb r i t y ne twor th . com / r i ches t - bu s ines s m en / r i ches t - b i l l i ona i res /dona ld - t r ump - net - wo r t
h /
Bill Gates h t tp : / / www.ce l eb r i t y ne twor th . com / r i ches t - bu s ines s m en / r i ches t - b i l l i ona i res /b i l l - ga tes - ne t - wo r th/
LeBron James http : / /www.ce lebr i tynetworth.com/r ichest -ath letes /nba/ lebron- james-net -worth/
NET WORTH EXAMPLES
8
SAMPLES PAY CHECKS AND PAYSTUBS
9
WHO IS FICA AND WHAT IS IT FOR?
FICA (Federal Insurance Contributions Act) Which represents the tax that pays for retirees, people with disabilities, and children of deceased workers
The employer pays the same percentage into Social Security and Medicare
If self-employed, one is responsible to paying two times the Social Security and Medicare
10
10 MAJOR PAYROLL DEDUCTIONS
Some have fixed amounts while other change depending on type or work or location
1. Federal Income Tax: 10.00%-39.00%2. State Tax: 1.40%-8.97%3. Local Tax: 1.00%-4.00%4. Social Security/ Medicare (FICA):5.65% 5. Unemployment: <1.00%6. Emergency Services: $10.00-$20.007. Health Insurance : variable by employer8. Union or Association Dues: variable9. Pension Contribution: variable10. 401(k), 403(b), 457, etc. (voluntary): variable
Fixed ExpensesStay the same each month…
Variable ExpensesChange from month to month…
CATEGORIZING EXPENSES
Where does your money go???As teenagers, your expenses are limited…
Useful tool to track your money and spend wisely…
Created for a specific time period (usually 1 month)…
You will need to know: the amounts of income for the period & total… the fixed & variable expenses & total…
Subtract the total expenses from the total income (discretionary income)…
If discretionary income is negative, reduce expenses…
WHAT IS A BUDGET?
Personal Benefits???
Business Benefits???
Getting Your Teen on a Budget: http://www.youtube.com/watch?v=YNHbIoL2p-Q
BENEFITS TO CREATING A BUDGET
http://www.youtube.com/watch?v=LlJnq8YhhHw http://www.youtube.com/watch?v=FYox38Nuho4&feature=re
lated http://www.youtube.com/watch?v=bEfp0oxSIR0&feature=rel
ated
WHY DO WE NEED TO BUDGET???ASK BILL COSBY…