What do you spend money on in What do you spend money on in one month?one month?

Chapter 8 - BudgetsChapter 8 - Budgets

8-1 Average Monthly Expenses8-1 Average Monthly ExpensesA.A. Tracking Expenses – many people have trouble Tracking Expenses – many people have trouble

managing their money because they don’t keep managing their money because they don’t keep track of all their expenses.track of all their expenses.

If Amy spent $2.50 each day for lunch at school, If Amy spent $2.50 each day for lunch at school, how much did she spend in a month?how much did she spend in a month?

$2.50 * 20 = $50$2.50 * 20 = $50

B.B. Average Monthly Expenses – you can group Average Monthly Expenses – you can group your expenses together and then find the average.your expenses together and then find the average.

Average Monthly Expense = Average Monthly Expense = Total ExpensesTotal Expenses Number of MonthsNumber of Months

Page 107 Answers:Page 107 Answers:

1.1. $1,781$1,781

2.2. $1,248$1,248

3.3. $99.45$99.45

4.4. $1,542.08$1,542.08

5.5. $45.81$45.81

6.6. $88.05$88.05

8-2 Creating a Budget8-2 Creating a Budget

Evaluate spendingEvaluate spending - Before you create a - Before you create a budget, you need to evaluate your current budget, you need to evaluate your current spending and ask…spending and ask…Am I spending more than I earn?Am I spending more than I earn?Am I spending too much in a certain area?Am I spending too much in a certain area?Am I saving at a rate that will meet my financial Am I saving at a rate that will meet my financial goals?goals?

Do Example 1 on page 343 and A. and B.Do Example 1 on page 343 and A. and B.

Budgets – are spending plansBudgets – are spending plansBudgetingBudgeting

A budget should reflect your average monthly A budget should reflect your average monthly spending analysis as well as incorporate any spending analysis as well as incorporate any changes that you want to make in your spending changes that you want to make in your spending based on your evaluation of your spending habits.based on your evaluation of your spending habits.

Ex: Tri-county supply budgets 5% of the previous Ex: Tri-county supply budgets 5% of the previous years total revenue for utilities. The receipts from years total revenue for utilities. The receipts from last year showed revenue of $4,500,000. How last year showed revenue of $4,500,000. How much will be budgets for utilities for the year?much will be budgets for utilities for the year?

$4,500,000 * .05 = $225,000 …..$4,725,000$4,500,000 * .05 = $225,000 …..$4,725,000

Budgeting – rule of thumbs…Budgeting – rule of thumbs…• Save Save 10-20%10-20% of your income in a of your income in a

savings accountsavings account• Spend Spend no moreno more than 25-30% of your than 25-30% of your

NET pay on housingNET pay on housing• Spend Spend no moreno more than 20% of your than 20% of your

NET pay on transportation, including NET pay on transportation, including car payment, insurance, service, gas car payment, insurance, service, gas tolls and parking.tolls and parking.

If you make $500 a month and you set the If you make $500 a month and you set the following for your expenses, how much following for your expenses, how much money will you be putting aside for each money will you be putting aside for each expense?expense?

Housing – 30%Housing – 30%

Entertainment- 15%Entertainment- 15%

Car/Transportation – 20%Car/Transportation – 20%

Savings – 10%Savings – 10%

Food – 20%Food – 20%

Utilities – 15%Utilities – 15%

$150$150

$75$75

$100$100

$50$50

$100$100

$75$75

Total = $550 – you are over budget…make changes

We have two types of expenses….We have two types of expenses….Fixed Expenses – expenses that are generally the same every month…such as:

Variable/Flexible Expenses – expenses that are generally different every month due to what you charge or use…such as

car paymentlife insurancecar insurance

mortgagerent

student loans

** These bills remain constant every month

foodgas/heat

waterelectricitytelephone

clothes/shoes/apparelentertainment –movies,

bowling…etc.

** These bills vary month to month depending on usage or

consumption.

Tracer Family BudgetTracer Family Budget CategoryCategory Percent of IncomePercent of IncomeHousing Housing 25%25%Utilities Utilities 5%5%Life Insurance Life Insurance 10%10%Transportation Transportation 15%15%Food Food 15%15%Clothing Clothing 2% 2%Entertainment Entertainment 3% 3%Savings Savings 15%15%health Care health Care 5%5%Miscellaneous Miscellaneous 10%10%Income Income $3,000 $3,000

What amount of money is budgeted for clothing?

What amount of money is budgeted for food?

$450

$60

If we know what we spent (on an If we know what we spent (on an average) for 4 months on food, we average) for 4 months on food, we can budget our food expense for the can budget our food expense for the following month.following month.

Joe spent the following on food during Joe spent the following on food during June, June, JulyJuly, , AugustAugust and and SeptSept..$100, $100, $120$120, , $123 $123 and and $97$97

How much should he budget for How much should he budget for October?October?

100 +120+123+97=440 …440/4 = $110100 +120+123+97=440 …440/4 = $110

Calculating a % increase or Calculating a % increase or decrease….decrease….

If Sue saved $500 this year, but only saved $360 last If Sue saved $500 this year, but only saved $360 last year, what was her % increase in her savings?year, what was her % increase in her savings?

How do we figure this???How do we figure this???

DifferenceDifferenceOriginal amountOriginal amount

(Known as difference divided by original)(Known as difference divided by original)

($500-$360)($500-$360)$360$360

.388888 = 39%.388888 = 39%

Please get out:Please get out:calculatorcalculator

whiteboardwhiteboardragrag

markermarker

If last year I made $200 If last year I made $200 profit on my lemonade profit on my lemonade stand and this year I made stand and this year I made $245, what % increase did $245, what % increase did I have?I have?

DifferenceDifferenceOriginal amountOriginal amount

$245-200$200

.225 = 22.5%

Now, using your Now, using your whiteboard…whiteboard…

draw this draw this graphicallygraphically

$200$200

$245The difference is $45 OR a 22.5% increase

How do we figure How do we figure out a best buy?out a best buy?

Before calculating Before calculating your best buy, you your best buy, you MUSTMUST know your know your

weights and weights and measurements.measurements.

8-3 Best Buys8-3 Best Buys

In order to compare two In order to compare two products, you must make sure products, you must make sure you are comparing their unit you are comparing their unit prices…compare oranges to prices…compare oranges to oranges….ounces to ouncesoranges….ounces to ounces

Many items are sold in units that are not Many items are sold in units that are not singular…ie: eggs in a dozen, soft drinks in singular…ie: eggs in a dozen, soft drinks in 2- liters, nails by the 100’s.2- liters, nails by the 100’s.

  Sometimes items are sold as:Sometimes items are sold as: A. Fractional quantities…. ½ dozenA. Fractional quantities…. ½ dozen B. Mixed number quantities…3 ½ yards.B. Mixed number quantities…3 ½ yards. C. Large quantities, such as a hundred or a C. Large quantities, such as a hundred or a

thousandthousand

Finding the cost of a fraction unit…IE: what is the Finding the cost of a fraction unit…IE: what is the cost of 2/3 yards at 63 cents a yard?cost of 2/3 yards at 63 cents a yard?

IE: What is the cost of 2/3 yards at $.63 a yard?IE: What is the cost of 2/3 yards at $.63 a yard?

63 x 2/3 = 21 x 2/1 = 42 cents63 x 2/3 = 21 x 2/1 = 42 cents

OROR

Turn your fraction into a decimal, multiply and then Turn your fraction into a decimal, multiply and then round to the nearest cent…such asround to the nearest cent…such as

2/3 = .66666662/3 = .6666666

Then take .66666 x .63 and you will still get .42 Then take .66666 x .63 and you will still get .42 (rounded)(rounded)

  

**** Some stores treat any fraction of a cent **** Some stores treat any fraction of a cent as an added cent. Other stores round as an added cent. Other stores round fractions to the nearest cent and drop fractions to the nearest cent and drop fractions of less than ½ cent and raise fractions of less than ½ cent and raise fractions of ½ cent or more to the next full fractions of ½ cent or more to the next full cent.cent.

  How much is 1 orange at 3 for $1.00?… it How much is 1 orange at 3 for $1.00?… it should be $.33, but some stores will charge should be $.33, but some stores will charge the extra penny on the first item and make it the extra penny on the first item and make it $.34 $.34 

Finding the cost when quantities or prices are Finding the cost when quantities or prices are mixed numbers.mixed numbers.

IE: You want to buy 3 ¼ yards of fabric at IE: You want to buy 3 ¼ yards of fabric at $8.89 per yd. What is the cost?$8.89 per yd. What is the cost?

3.25 x $8.89 = $28.8925…or $28.89 3.25 x $8.89 = $28.8925…or $28.89 roundedrounded

  

Finding the cost for large quantities.Finding the cost for large quantities.Example #1:Example #1: If I went to Home Depot to buy If I went to Home Depot to buy

5,500 nails, and the nails were priced at $22.50 5,500 nails, and the nails were priced at $22.50 per thousand, what would the cost be?per thousand, what would the cost be?

5,500 divided by 1,000 = 5.55,500 divided by 1,000 = 5.5

5.5 times $22.50 = $123.755.5 times $22.50 = $123.75

    

Example #2:Example #2: Find the cost of a 9,000 lbs. rock at Find the cost of a 9,000 lbs. rock at $88 per ton$88 per ton

9,000 divided by 2,000 = 4.5 tons9,000 divided by 2,000 = 4.5 tons

4.5 x $88 = $3964.5 x $88 = $396

Finding the cost for large quantities.Finding the cost for large quantities.

Example #3:Example #3: Find the cost of 2,560 computer Find the cost of 2,560 computer diskettes at $89 per hundreddiskettes at $89 per hundred

2,560 divided by 100 = 25.6 2,560 divided by 100 = 25.6

25.6 x $89 = $2,278.4025.6 x $89 = $2,278.40  

  Finding a Unit Price from a Group PriceIE: Soup is 89 cents a can or 3 for $2.60. If you buy 3 cans, IE: Soup is 89 cents a can or 3 for $2.60. If you buy 3 cans,

what is the price per can? _____what is the price per can? _____

Why do vendors do this? _______________________Why do vendors do this? _______________________

  

  Finding the Unit Price When the Item Price is for a fraction of a Unit.

IE: a 5 oz tube of toothpaste costs $1.50. How can we find IE: a 5 oz tube of toothpaste costs $1.50. How can we find out the price per pound? (remember 16 oz = 1 lb.)out the price per pound? (remember 16 oz = 1 lb.)

5 oz = 5/16 lb5 oz = 5/16 lb

$1.50 divided by 15/16 = $4.80 price per pound.$1.50 divided by 15/16 = $4.80 price per pound.

Finding the Unit Price When the Item Price is for a Mixed Number Quantity

  

IE: A 1 ¼ qt bottle of bleach sells for $2.29. IE: A 1 ¼ qt bottle of bleach sells for $2.29. What is the price per quart?What is the price per quart?

  

$2.29 divided by 1.25 = $1.832 per quart$2.29 divided by 1.25 = $1.832 per quart

  

Questions…Questions…

1.1. A store sells an 18-oz box of Cheerios for A store sells an 18-oz box of Cheerios for $3.29 and a 24- oz box of Keller’s O’s for $3.29 and a 24- oz box of Keller’s O’s for $3.99. Which box sells for less per $3.99. Which box sells for less per ounce? How much less per ounce?ounce? How much less per ounce?

2.2. You can buy a package of four D batteries You can buy a package of four D batteries for $5.99 or a package of two D batteries for $5.99 or a package of two D batteries for $3.49. Which package costs less per for $3.49. Which package costs less per battery? How much less per battery?battery? How much less per battery?

Questions…Questions…

1.1. How much will you save by buying 12 How much will you save by buying 12 rolls of film now at $3.98 rather than rolls of film now at $3.98 rather than buying 12 rolls buying 1 roll at $4.39 at a buying 12 rolls buying 1 roll at $4.39 at a time?time?

2.2. A 53.7 square foot roll of Country paper A 53.7 square foot roll of Country paper towels costs $1.49. An 80.6 square foot towels costs $1.49. An 80.6 square foot roll of the same paper towels costs $1.89 roll of the same paper towels costs $1.89 on sale. Which is less expensive?on sale. Which is less expensive?

Questions…Questions…

1.1. After the holidays you can buy boxes of After the holidays you can buy boxes of greeting cards@ 2 for $32. The same greeting cards@ 2 for $32. The same boxes sold during the season for $23.99 boxes sold during the season for $23.99 each. If you bought 6 boxes after the each. If you bought 6 boxes after the holidays, how much would you save?holidays, how much would you save?

Buying Wisely…Buying Wisely…   Often a product costs less when it is purchased in large Often a product costs less when it is purchased in large

amounts, combined with other items, or used with a amounts, combined with other items, or used with a discount. You can save money by buying products on discount. You can save money by buying products on sale or by shopping at stores that sell items at a discount. sale or by shopping at stores that sell items at a discount. In addition, you may save money by In addition, you may save money by rentingrenting items you items you do not use often.do not use often.

  

1.1.   A floor sander can be rented for $7 an hour or $40 a full A floor sander can be rented for $7 an hour or $40 a full day. If you estimate that it will take you 6 hours to sand day. If you estimate that it will take you 6 hours to sand the floors in two rooms, which rate would be the least the floors in two rooms, which rate would be the least expensive?expensive?

1.1. Cary wants to rent a large screen video projection Cary wants to rent a large screen video projection system to see games 3, 4, and 5 of the World Series. system to see games 3, 4, and 5 of the World Series. The projection system rental price by the day is $130 The projection system rental price by the day is $130 and by the week, it is $600. If the three games are and by the week, it is $600. If the three games are played over 4 days, which rental rate will be the least played over 4 days, which rental rate will be the least expensive for him?expensive for him?

2.2. Jill Sun plans to pain her garage and estimates that it Jill Sun plans to pain her garage and estimates that it will take about 5 hours to do it with a paint sprayer. She will take about 5 hours to do it with a paint sprayer. She can rent a sprayer at an hourly rate of $18, at a half-day can rent a sprayer at an hourly rate of $18, at a half-day (8 hours) rate of $56, or a full-day (24 hours) rate of (8 hours) rate of $56, or a full-day (24 hours) rate of $80. Which is the least expensive rental rate for the $80. Which is the least expensive rental rate for the task?task?

Do Example 2 on page 338 and C. and D.Do Example 2 on page 338 and C. and D.

Do Example 3 on page 339 and E. and F.Do Example 3 on page 339 and E. and F.Page 107 in workbook = homeworkPage 107 in workbook = homework

Page 340: Page 340: 13.13. $62.13 $62.13 14.14. $3,230.76 $3,230.76 15.15. $104.13$104.1316.16. $5,414.76$5,414.7617.17. $199.21$199.2121.21. $195.80 $195.80 27.27. $164.99$164.99

Page 341Page 341

41.41. $487.20 $487.20

42.42. $13,500; $121,500; $15,275 $13,500; $121,500; $15,275

43.43. $24.10$24.10

44.44. $18,040$18,040

45.45. $884.25$884.25

46.46. $643$643

Ch 8 – Budgets8-1 Average Monthly Expenses

A. ___________________ – many people have trouble managing their money because they don’t keep track of all their expenses.

If Amy spent $2.50 each day for lunch at school, how much did she spend in a month?

B. ___________________ – you can group your expenses together and then find the average.

Average Monthly Expense = Total Expenses Number of Months

Budgets – are spending plansBudgeting

A budget should reflect your ________ ________ spending analysis as well as incorporate any ________that you want to make in your spending based on your evaluation of your spending habits.

Ex: Tri-county supply budgets 5% of the previous years total revenue for utilities. The receipts from last year showed revenue of $4,500,000. How much will be budgets for utilities for the year?

________________________________________

Budgeting – rule of thumbs…• Save _________ of your income in a

savings account• Spend _______ than ______ of your

NET pay on housing• Spend _______ than ______ of your

NET pay on transportation, including car payment, insurance, service, gas tolls and parking.

8-2 Creating a BudgetIf you make $500 a month and you set the

following for your expenses, how much money will you be putting aside for each expense?

Housing – 30%Entertainment- 15%Car/Transportation – 20%Savings – 10%Food – 20%Utilities – 15%

$___$___

$___

$___

$___

$___

Total = ______ – ________________________________________

We have two types of expenses…._______________– expenses that are generally the same every month…such as:

___________________– expenses that are generally different every month due to what you charge or use…such as

____________________________ ______________ __________________________________________

** These bills remain constant every month

____________________________ ____________________________ ______________ ______________

** These bills vary month to month depending on usage or

consumption.

Tracer Family Budget Category Percent of IncomeHousing 25%Utilities 5%Life Insurance 10%Transportation 15%Food 15%Clothing 2%Entertainment 3%Savings 15%Health Care 5%Miscellaneous 10%Income $3,000

What amount of money is budgeted for clothing?

________

What amount of money is budgeted for food?

________

Calculating a % increase or decrease….

If Sue saved $500 this year, but only saved $360 last year, what was her % increase in her savings?

How do we figure this???

DifferenceOriginal amount

(Known as difference divided by original)

($500-$360)$360

.388888 = 39%

8-3 Best Buys

In order to compare two products, you must make sure you are comparing their unit prices ** Compare oranges to oranges….ounces to ounces

Many items are sold in units that are not singular…ie: eggs in a dozen, soft drinks in 2- liters, nails by the 100’s.

Sometimes items are sold as:• A. Fractional quantities…. ___________• B. Mixed number quantities…______ yards.• C. Large quantities, such as a _________ or

a _______________.

Finding the cost of a fraction unit…IE: what is the cost of 2/3 yards at 63 cents a yard?IE: What is the cost of 2/3 yards at $.63 a yard?

___________________________________

OR

__________________________________________

__________________________________________

**** Some stores treat any fraction of a cent as an added cent. Other stores round fractions to the nearest cent and drop fractions of less than ½ cent and raise fractions of ½ cent or more to the next full cent.

How much is 1 orange at 3 for $1.00?… ______________________________________________________________________________

Finding the cost when quantities or prices are mixed numbers.

IE: You want to buy 3 ¼ yards of fabric at $8.89 per yd. What is the cost?

____________________________________

Finding the cost for large quantities.

Example #1: If I went to Home Depot to buy 5,500 nails, and the nails were priced at $22.50 per thousand, what would the cost be?

_________________________________ _________________________________

Example #2: Find the cost of a 9,000 rock at $88 per ton

_________________________________ _________________________________

Finding the cost for large quantities.

Example #3: Find the cost of 2,560 computer diskettes at $89 per hundred

_________________________________ _________________________________

Finding a Unit Price from a Group PriceIE: Soup is 89 cents a can or 3 for $2.60. If you buy 3 cans,

what is the price per can? _____Why do vendors do this? _______________________

Finding the Unit Price When the Item Price is for a fraction of a Unit.

IE: a 5 oz. tube of toothpaste costs $1.50. How can we find out the price per pound? (remember _____ oz. = 1 lb.)

_______________________________________ _______________________________________

Finding the Unit Price When the Item Price is for a Mixed Number Quantity

IE: A 1 ¼ qt bottle of bleach sells for $2.29. What is the price per quart?

________________________________________

Buying Wisely… Often a product costs less when it is purchased in large

amounts, combined with other items, or used with a discount. You can save money by buying products on sale or by shopping at stores that sell items at a discount. In addition, you may save money by __________ items you do not use often.

1. A floor sander can be rented for $7 an hour or $40 a full day. If you estimate that it will take you 6 hours to sand the floors in two rooms, which rate would be the lest expensive?

________________________________________