© 2010 South-Western, Cengage Learning SLIDE 1 Chapter 8 Lesson 8.1 Budgeting and Planning GOALS Explain the purpose of financial planning and prepare a personal budget. Explain the need for and create a net worth statement and a personal property inventory.
© 2010 South-Western, Cengage Learning SLIDE 1 Chapter 8 Lesson 8.1 Budgeting and Planning GOALS Explain the purpose of financial planning and prepare.
Dec 26, 2015
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
© 2010 South-Western, Cengage Learning SLIDE 1
Chapter 8
Lesson 8.1 Budgeting and Planning
GOALSExplain the purpose of financial planning
and prepare a personal budget.Explain the need for and create a net
worth statement and a personal property inventory.
© 2010 South-Western, Cengage Learning SLIDE 2
Chapter 8
Financial Planning Basics
Planning, budgeting, and keeping good records provide the road map that leads to financial security.
© 2010 South-Western, Cengage Learning SLIDE 3
Chapter 8
Getting Started
Income and expensesGross incomeDisposable income
Financial planA financial plan is a set of goals for
spending, saving, and investing the money your receive
Resources and obligations
© 2010 South-Western, Cengage Learning SLIDE 4
Chapter 8
Visualizing Your Future
What comes in and how it goes outChanges you could make
© 2010 South-Western, Cengage Learning SLIDE 5
Chapter 8
Preparing a Budget
A budget is a spending and saving plan based on your expected income and expenses. Money coming in (earnings plus borrowing) must
equal money going out (spending plus saving). The budget must balance.
A budget helps you plan your spending and saving so that you won’t have to borrow money or use credit to meet your daily needs.
© 2010 South-Western, Cengage Learning SLIDE 6
Chapter 8
Steps in Preparing a Budget
Estimate your income.Estimate your expenses.Decide how much to save.Balance your budget.
© 2010 South-Western, Cengage Learning SLIDE 7
Chapter 8
Evan Anderson—Budget for September
Income Expenses
Part-time job $320 Daily lunches $ 80
Allowance 20 Supplies 20
Birthday gift 40 Clothes 40
Total Income $380 Entertainment 140
Total expenses $280
Savings
Credit union account $100
Total expenses plus savings
$380
Simple Budget
The budget balances.
© 2010 South-Western, Cengage Learning SLIDE 8
Chapter 8
Monthly Budget
Fixed expenses are costs that do not change from month to month.
Variable expenses are costs that vary in amount and type, depending on the choices you make.
© 2010 South-Western, Cengage Learning SLIDE 9
Chapter 8
Personal Records
Good personal records makes budgeting and long-range planning easier.
Your records also make it easier to prepare income tax returns, credit applications, and other financial forms.
You should keep five types of personal records: Income and expenses records Net worth statement Personal property inventory Tax records Other miscellaneous documents
© 2010 South-Western, Cengage Learning SLIDE 10
Chapter 8
Income and Expenses Records
Examples of income recordsW-2 forms Statements from banksStatements from investment companies
Examples of expence records Receipts listing charitable contributionsMedical billsReceipts for work-related expenses
© 2010 South-Western, Cengage Learning SLIDE 11
Chapter 8
Net Worth Statement
A net worth statement shows a person’s net worth based on his or her assets and liabilities.
Assets are items of value that a person owns. Money or debts you owe to others are called
liabilities. When you subtract your liabilities from your
assets, the difference is known as net worth.
Assets – Liabilities = Net worth
© 2010 South-Western, Cengage Learning SLIDE 12
Chapter 8
Anisa Newkirk
January 1, 20—
Assets Liabilities
Checking account $500 Loan on car $1,800
Savings account 800 Loan from parents 100
Car value 3,000 Total liabilities $1,900
Personal property 5,000 Net Worth
Total assets $9,300 Assets minus liabilities $7,400
Total liabilities and net worth $9,300
Net Worth Statement
These two numbers must be the same.
© 2010 South-Western, Cengage Learning SLIDE 13
Chapter 8
Personal Property Inventory
A personal property inventory is a list of the valuable items you own, along with their purchase prices and approximate current values.
Personal property includes anything of value inside your home—clothing, furniture, appliances, and so forth.
© 2010 South-Western, Cengage Learning SLIDE 14
Chapter 8
Personal Property InventoryAnisa Newkirk: January 2, 20—
ItemYear
PurchasedPurchase
PriceApproximate Current Value
Sphinx XTL DVD Player with big-screen TV 2008 $ 3,200 $1,300
Bedroom furniture (bed, dresser, lamp, clock) 2006 2,000 1,200
Clothing, jewelry ------ 3,000 500
MBD motor bike 2005 1,800 1,000
CD collection, CD burner, digital camera, scanner 2006 2,000 1,000
$12,000 $5,000
(continued)
© 2010 South-Western, Cengage Learning SLIDE 15
Chapter 8
Tax Records
All taxpayers should keep copies of their tax records for at least three years after they file their tax return.
Tax records include the tax return itself (a copy of the signed form), W-2 forms, and other receipts verifying income and expenses listed on each return.
Keep your tax records in a safe place in case of an audit.
© 2010 South-Western, Cengage Learning SLIDE 16
Chapter 8
Other Miscellaneous Documents
Lists of credit card numbersCar titlesInsurance policiesBirth certificatesMarriage certificatesPassports
© 2010 South-Western, Cengage Learning SLIDE 17
Chapter 8
Lesson 8.2
Legal Agreements andRecord Keeping
GOALSList the elements of a legally binding
agreement.Design an effective filing system for your
personal records.
© 2010 South-Western, Cengage Learning SLIDE 18
Chapter 8
Personal Record Keeping
As you begin to accumulate financial records and legal documents, you should have a good filing system.
A filing system allows you to:OrganizeStoreRetrieve
© 2010 South-Western, Cengage Learning SLIDE 19
Chapter 8
Paper Filing System
FoldersLabelsFile cabinet
© 2010 South-Western, Cengage Learning SLIDE 20
Chapter 8
Electronic Record Keeping
The advantages of computerized systems include the following:Ease of updating informationEase of record storage and retrievalSpeed of making new computations and
comparisons
© 2010 South-Western, Cengage Learning SLIDE 21
Chapter 8
Software Programs
Many software programs can help you keep better records.A spreadsheet is a computer program that
organizes data in columns and rows and can perform calculations using the data.
A database is a computer program that organizes data for easy search and retrieval.
Related Documents
