Unit 6 PP

1. Unit 2 – B udgeting
 E mine SpendingHa s
xa bit
 Sour ofIncome
ces
T ypes ofExpenses
 Impora ofSa ing (PY )
t nce v F
 Const uctaBudget
r
 F ms ofRecor Keeping
or d
 HowBudget Cha t oughoutL
s nge hr ife

2. S pending Plan/B udget
 Ta yourspending show you w e yourmoneyis r ly
r cking s her eal
going. T tinfor t becomes ev mor v l bl w you
ha maion en e aua e hen
use itt cr t as pending plan or budg et.
o eae
 Seeing alyouropt a ma smat choices so you ca gett
l ions nd king rer n he
st you r lyw nt It lhel you find mor moneyfort impora
uff eal a . ’l p e he t nt
things.

3. S pending Plan/B udget
 Y budgetw lcha a yourincome gr s a yourpr it cha
our il nge s ow nd ior ies nge.
 R nowyou pr bl spend mostofyourmoneyon food, cl hes,
ight oba y ot
ent t inment
era .
 In 10yeas you’l pr bl spend mostofyourmoneyon r ing a
r l oba y ent n
a rmentorpa on ahome morga a ca pa s.
pat ying t ge nd r yment
 In a her10yeas, in a ion t t pr ious expenses, you’l pr bl
not r ddit o he ev l oba y
st r t sa e foryourchil en’s educaion a ar ir
at o v dr t nd et ementfund.

4. S mart S pending
 Aspendingpl n al s you t pr it yourspending a
a low o ior ize nd
sa ing
v
 Ifyourspendingl show t tyou boughtabotl ofsodafor
og s ha te
$1 ev yda t t $3 amont M ybe you ca l e w hout
er y, ha’s 0 h. a n’t iv it
yoursoda butma t e’s somet el you’d r t spend
, ybe her hing se aher
$3 on.
0

5. How Do You S pend Your
Money?
 Use yourspendingl fr t pr ious unitt caegor your
og om he ev o t ize
expenses a det mine t per you spend on ea caegor
nd er he cent ch t y.
 Cr t apie chatt tr esent howyou spend yourmoney?
eae r ha epr s

6. Part 1 of the E quation:
Income
 Income: al a birhda money, selingyourst
low nce, t y l uff,
int esteaned on sa ings a
er r v ccount j
, ob
 Payroll deduc tions – biggestae t xes, 4most
r a
common
• F a Income T x
eder l a
• St t Income T x
ae a
• Socia Secur yT x
l it a
• M r Tx
edicae a
• T xes pa forav r yofser ices w use, r d ma ena publ
a y aiet v e oa int nce, ic
school amed ser ices, a r ir
s, r v nd et ementincome fort el l
he dery

7. Payroll deductions
 Federal Income Tax
 F colect byt feder lgov nmentt suppor it pr a – Sentt t IR (Int na
ee l ed he a er o t s ogr ms o he S er l
R enue Ser ice)
ev v
 S tate Income Tax
 F colect bymostst t t hel pa forst t ser ices – Sentt st t r enue
ee l ed aes o p y ae v o ae ev
depat
rment
 S ocial S ecurity Tax
 A ied byt F a Insur nce Contibut A (FICA – Pr ides asmalincome a
ppl he eder l a r ions ct ) ov l nd
ot ser ices t t el l disa ed A ica a or ned minor
her v o he dery, bl mer ns, nd pha s
 Medic are Tax
 A ied byFICA– Pr ides medica insur nce t t el l a some disa ed A ica
ppl ov l a o he dery nd bl mer ns

8. Gros s Income vs . Net
Income
 Gros s income
 T aa
ot l mountofincome fr yourw ges orbefor a pa ol deduct
om a e ny yr l ions.
• Numberofhour you w k t yourhouryr t
s or imes l ae
 Net Income
 Once yourt xes ae deduct fr yourgr income you r
a r ed om oss eceiv your“t ke- pa
e a home y.”
 W4For
- m
 F l outw you st r aj it howt feder lgov nmentcacul t yourt x
iled hen at ob, ’s he a er l aes a
deductions.
 KeypatofaW4for
r - m
• Line 5 “t a numberofal a
ot l low nces”
• M r a st t mor t n one j numberofchil en
ait l aus, e ha ob, dr
• T l ert numbert highert a
he ow he he he mountoft xes w hhel a v v sa
a it d, nd ice er .
• Ift much t x is deduct fr yourpa you’l pr bl getar w you fil yourincome t xes in A il
oo a ed om y, l oba y efund hen e a pr ,
ot w you’l end up pa al r a .
her ise l ying age mount

9. Part 2 of the E quation:
E xpens es
 E xpens e: w tyou spend moneyon – yourneeds a w nt
ha nd a s
 Fixed E xpens es – you knowexa l howmuch is needed ea
cty ch
mont
h
• M t ge/ent
orga r
• Ca l n
r oa
 Variable E xpens es – you ha e mor contolov howmuch
v e r er
t lbe
hey’l
• Gocer food
r ies/
 Periodic /Oc cas ional E xpens es – notpa ev ymont
id er h
• Ca insur nce (ev y6mont
r a er hs)
• A o r ir
ut epa s

10. What Type of E xpens e Is
It?
 Groceries ? periodic, variable
 Piano Les s on Fee? periodic/variable
 C able TV B ill? fixed
 Magazine S ubs cription Renewal?
periodic, fixed
 C ar Loan Payment? fixed
 E lectricity B ill? variable
 Lis t 5 of your expens es and
whether they are fixed, variable, or
periodic

11. Pay Yours elf Firs t – “ PYF”
 Y don’tmiss yourmoneybeca it l you nev ha itin t
ou use ’s ike er d he
fir pl ce.
st a
 Sa e 10 or10cent forev y$1 you ma
v % s er ke
• Ha e moneyfora emer
v n gencyfund
• Eectonical deposityourpa
l r ly ycheck a a foracera a / centgo
nd sk t in mountper
int yoursa ings a
o v ccount
 A omaic sa ings depositfor -ta s acera a
ut t v m r nsfer t in mountof
moneyfr yourchecking t yoursa ings a
om o v ccountonce amont h

12. S aving to Meet G oals
 The S imps on family wants to buy a new
refrigerator for their kitc hen. Mr. S imps on has
vis ited s everal s tores and es timates that it will c os t
around $700 to buy and ins tall the type of
refrigerator the family wants . If their goal is to buy
it in s ix months , how muc h do they need to s ave
eac h month?
 $700 / 6 = $116.67
 The Mencias want to buy their oldes t daughter a
c omputer to take to c ollege next year. They’ve
s hopped around and think they can get a good
des ktop computer with all the s oftware and a
printer for about $1,100. With 15 months to s ave,
how muc h do they need to s et as ide eac h month?
 $1,100 / 15 = $73.33

13. S aving for My Goals
 L a yourper lfina lpl n fr t pr ious unit
ook t sona ncia a om he ev ,
ident
ify:
 T t aa
he ot l mountyou need t sa e forea SM R goa.
o v ch A T l
 T a
he mountyou need t sa e ea mont w t meetea SM R
o v ch h/ eek o ch A T
goa.
l

14. Keeping Track – Getting
Organized
 Checking accountst t s: baa check book ev ymont w you r e your
aement l nce er h hen eceiv
st t
aement
 Sa ings a inv mentst t s
v nd est aement
 Pa st empl s ca ma mist kes, doubl check t sa e fort xes
y ubs: oyer n ke a e- hen v a
 T x document keep copies ofalt W2s you r e a a t x document forchecking,
a s: l he - eceiv nd ny a s
sa ings, a inv ment a
v nd est s ccount s.
 Insur nce st t s
a aement
 L n a cr cad st t s: showyourpur ses, pa s, fina chages, a
oa nd edit r aement cha yment nce r nd
curentbaa doubl check t sa e fora l stayea
r l nce, e- hen v t ea r
 R s a w ra ies forbig-icketit forexa e r s fr acomput , bike,
eceipt nd ar nt t ems: mpl eceipt om er
el r
ectonics, ca r ir et Keep alma l a w ra ybookl s t
r epa s, c. l nuas nd ar nt et oo

15. S teps to B uilding a
B udget
 Decide t t fr me – mont w
he ime a h, eek
 E imae yourincome – br k dow in t caegor
st t ea n o t ies
 Caegor yourexpenses – fixed, v r bl per
t ize aia e, iodic
 Subta expenses fr income – ifit negaiv r ev l t a a ust
r ct om ’s t e, e- auae nd dj
yourexpenses, ifit posit e, t a a mor t yourPY l
’s iv hink bout dding e o F ine

16. Vocabulary
 S pending Plan or B udget
 Apl n forma gingyourmoneydur agiv per ort
a na ing en iod ime
 Income
 A moneyyou r e
ny eceiv
 Payroll Deductions
 M subt a ed byyourempl s, foranumberofit befor wit you t check
oney r ct oyer ems, e r ing he
 Taxes
 F t tsuppor gov nmentpr a a ae r ed byl wt be a ied t income, pr t orgoods
ees ha t er ogr ms nd r equir a o ppl o opery,
 Federal Income Tax
 F colect byt feder lgov nmentt suppor it pr a a sentt t Int na R enue Ser ice (IR
ee l ed he a er o t s ogr ms nd o he er l ev v S)
 S tate Income Tax
 F colect t hel pa forst t ser ices a sentt t st t r enue depat
ee l ed o p y ae v nd o he ae ev rment
 S ocial S ecurity Tax
 Pr ides asmalincome a ot ser ices t t el l disa ed A ica a or ned minor a sentt t Socia
ov l nd her v o he dery, bl mer ns, nd pha s nd o he l
Secur yA
it dminist aion aongw h amaching a
r t l it t mountpa byt empl
id he oyer
 Medicare Tax
 Pr ides medica insur nce, aso t t el l a t some disa ed A ica a sentt t Socia Secur y
ov l a l o he dery, nd o bl mer ns nd o he l it
A dminist aion aongw h amachinga
r t l it t mountpa byt empl
id he oyer

17. Vocabulary
 Gros s Income
 T aa
ot l mountofincome fr yourw ges, befor a pa ol deduct
om a e ny yr l ions
 Net Income
 “T ke-
a home pa – a
y” mountyou’’ be a e t deposit once yourempl ha deduct t xes fr yourgr
bl o , oyer s ed a om oss
income
 E xpens es
 W tyou spend moneyon – yourneeds a w nt
ha nd a s
 Fixed E xpens es
 Costt sa a
he me mountev yter ime
 Variable E xpens es
 Fl uae in a
uct t mount
 Periodic/Occ as ional E xpens es
 Y don’tpa ev ymont ca eit be fixed orv r bl
ou y er h, n her aia e
 PYF – “ Pay Yours elf Firs t”
 W henev you r e money, you shoul immediael putacera a
er eceiv d ty t in mountint a a
o n ccountt tyou w lset
ha il
a t use l t t meetal t m fina lgoa.
side o aer o ong-er ncia l