Money Matters
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Transcript of Money Matters
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PERSONAL FINANCE UNIT(DON’T BE A DOPE WITH YOUR MONEY)
Money Matters
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Purpose
Money Matters will help you:
Get a handle on how you spend your money.
Prepare and follow a personal spending plan or budget.
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Objective
By the end of this course, you will be able to:
Track daily spending habits.Prepare a personal
spending plan or budget to estimate monthly income and expenses.
Identify ways to decrease spending and increase income.
Identify budgeting tools that will help you manage your money.
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How to Prepare a Budget
1. Track daily spending.2. Determine income and expenses.3. Find ways to decrease spending.4. Find ways to increase income.
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Budget
Definition:A step-by-step plan for meeting expenses in
given period of time. Also called a “personal spending plan.”
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Benefits of Budgeting
Reduces money-related anxiety.
Gives you control of your financial situation.
Helps you build assets to improve your quality of life.
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Daily Spending Diary
Example
Day What did I spend my money on today?
Sunday
Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
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Income
• Wages• Public assistance• Child support• Alimony
• Interest• Dividends• Social security• Other sources
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Gross vs. Net Income
Gross income = Total income without deductions
Net income = Gross income minus SS, taxes, other deductions
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Social Security Benefits
Social Security covers:RetirementDisabilityFamilySurvivorsMedicare benefits
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Social Security Statement
A record of:Your earnings.Social Security taxes
you have paid during your working years.
Estimate of monthly retirement, disability, and survivor benefits.
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Fixed vs. Flexible Expenses
Fixed expenses = Expenses with amounts that don’t change from month to month.
Flexible expenses = Expenses with amounts that may change from month to month
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Tax Credits
Earned Income Tax Credit (EITC).
Child tax credit.Credit for Child and
Dependent Care Expenses.
Education credits.Tax credits for
retirement savings contributions.
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Recordkeeping Tips
Keep records in a safe place.
Keep files organized.Keep tax records for
at least 3 years.Send your bill
payments before they are due.
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Budgeting Tools
Monthly payment schedule
Monthly payment calendar
Expense envelope system
Budget box systemComputer system
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Monthly Payment Calendar
Month - _______
Sunday Monday Tuesday Wednesday Thursday Friday Saturday 1
2
$2,000 pay check $100-savings $40-food $150-personal
$25-savings
3
$160 transportation
4 5
$800 child support
6
$1,000 rent
7
8
9
10 11 12 13 14
15
16
$40 phone bill
17 18 19 0
$200 credit card
21
22
23
24 25 26 27
28
$550 child care
29
30
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What To Pay First
Rent or mortgage
Utilities
Food
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Loan Payment Decisions
Pay off loans with the highest interest rate first.
Talk to your creditors.
Get credit counseling.
Enroll in a debt management plan.
Consider bankruptcy only as a last resort.
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Practice Exercise: Budget Considerations
Instructions:Read the scenario.Answer the questions.Be prepared to explain your answers.