Income and Expense Statement       “Take Charge of Your Finances”              Advanced Level
1.15.5.G1Meet Evan                Paid once per month            Puts enough money in            his checking account to  ...
1.15.5.G1    How does Evan think he is spending his    money?• Evan created a list of all of                              ...
1.15.5.G1Are you sure there isn’t anything elseyou spend your money on, Evan?                                             ...
1.15.5.G1The Costs Add UpHow much do you think each item would cost if    purchased every day for one month?              ...
1.15.5.G1                                                                             Wow, small expenses do add up       ...
1.15.5.G1The Income andExpense Statement  Income and Expense  Statement - lists andsummarizes income and  expense transact...
1.15.5.G1Money Management Tools           Statement of                                       Income & Expense             ...
1.15.5.G1How can an Income and ExpenseStatement help you manage money?                                                    ...
1.15.5.G1Three Components                        Income                     Expenses                 Net gain or          ...
1.15.5.G1Learning about income and expenses • Become aware                                                                ...
1.15.5.G1What is Income?                                 © Family Economics & Financial Education – May 2012 – Income and ...
1.15.5.G1  Income Categories  Earned income – any money  earned from working for pay   Unearned income – incomereceived fr...
1.15.5.G1Earned Income                                                   Wages or                                         ...
1.15.5.G1 Gross Income vs. Net IncomeEvan earns $1600.00                                                                  ...
1.15.5.G1Unearned Income                             Interest earned during                                  time period  ...
1.15.5.G1Unearned Income                                              Scholarships/                                       ...
1.15.5.G1Received Incomefrom GovernmentPrograms                                          Government                       ...
1.15.5.G1What areExpenses?                                 © Family Economics & Financial Education – May 2012 – Income an...
1.15.5.G1 Expense Categories• Taxes• Saving and Investing• Insurance• Housing• Transportation• Food• Other  Expenses will ...
1.15.5.G1  Taxes• Includes income and payroll tax• Numbers may be found on the  paycheck stubTaxes included in otherexpens...
1.15.5.G1 Saving and Investing                                                         Saving and                         ...
1.15.5.G1 Why can savings and investments be both an income and expense?Taking money from     savings orinvestments to pay...
1.15.5.G1Insurance                                                 Health                                      Property an...
1.15.5.G1  Four on the Floor• If   you receive a paper, add at                                                            ...
1.15.5.G1What expenses wererecorded in thehousing category?Housing payment    (rent or                                    ...
What expenses were                                                                                                        ...
1.15.5.G1What expenses wererecorded in the foodcategory? Groceries                                      Meals eaten at    ...
1.15.5.G1What expenses wererecorded in the othercategory?                                              Communication      ...
1.15.5.G1What expenses wererecorded in the othercategory?                                                    Clothing and ...
1.15.5.G1What expenses wererecorded in the othercategory?Educational                                                      ...
1.15.5.G1What expenses wererecorded in the othercategory?Entertainment                                       Credit costs ...
1.15.5.G1Make the Income and ExpenseStatement your own!    Customize thecategories to represent    all income and  expense...
1.15.5.G1                                                                         I now understand how an Income          ...
1.15.5.G1Find a tracking method that works foryouRecord in writing                                                   Smart...
1.15.5.G1Net Gain or Net Loss                                                           Net                               ...
1.15.5.G1                         Net Gain                                                                                ...
1.15.5.G1Help Evan Create an Income andExpense Statement      Create an Income and Expense   Statement for Evan for the mo...
1.15.5.G1 Evan’s ExpensesUsed an app on his smartphone to track his expenses 3/1 – Automatic transfer to savings account $...
1.15.5.G1Evan’s Expenses3/10 – Lunch $83/12 – Basketball game admission $153/15 – Cell phone payment $703/15 – Car insuran...
1.15.5.G1Evan’s Income and                                                                                 Income and Expe...
1.15.5.G1 Discussion• Accordingto Evan’s Income andExpense Statement, he has a net loss.What could he do to change his net...
1.15.5.G1 Discussion• WereEvan’s mental                                                                                   ...
1.15.5.G1Summary   Tells you where your money is coming from and     where it is going    Three components:  income, expen...
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Personal finance 8.03 p pt (use)

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Personal finance 8.03 p pt (use)

  1. 1. Income and Expense Statement “Take Charge of Your Finances” Advanced Level
  2. 2. 1.15.5.G1Meet Evan Paid once per month Puts enough money in his checking account to cover his expenses for the month He runs out of money each month before all of his expenses are paid © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 2 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  3. 3. 1.15.5.G1 How does Evan think he is spending his money?• Evan created a list of all of Expense Amount his expenses Rent and Utilities $500• First allocates money to Health insurance $100 his savings account Renter’s Insurance $10• Estimates that his Car insurance $40 remaining expenses will Gas $100 be no more than Groceries $100 $1000/month: Cell phone $70• But he runs out of money Personal care $30 before the end of each month Entertainment $50 Total $1000 © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 3 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  4. 4. 1.15.5.G1Are you sure there isn’t anything elseyou spend your money on, Evan? Well… I do purchase a cup of drip coffee almost every morning but that is only $1.00! And I usually eat lunch at a restaurant about once per week… but I didn’t think that added up to much money. $1.00/ $30/ $365/ day month year Lunch at $32/ $416/ $8.00/ month year week Evan wasn’t accounting for $62.00 per month! © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 4 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  5. 5. 1.15.5.G1The Costs Add UpHow much do you think each item would cost if purchased every day for one month? Approximate Approximate Average Cost Cost Per Month Cost Per Year if Item of Item if purchased purchased every day every day $365.00 - 16 oz. soda $1.00 - $2.00 $30.00 - $60.00 $730.0016 oz. energy or $730.00 - $2.00 - $3.00 $60.00 - $90.00 sports drink $1095.00 $273.75 - Candy bar $0.75 - $1.25 $22.50 – $37.50 $456.25 16 oz. Latte’ or $912.50 – $2.50 -$3.50 $75.00 - $105.00 flavored coffee $1277.50 © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 5 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  6. 6. 1.15.5.G1 Wow, small expenses do add up fast. So, how do I better determine what I have spent my money on? How would you answer Evan’s question? © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 6Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  7. 7. 1.15.5.G1The Income andExpense Statement Income and Expense Statement - lists andsummarizes income and expense transactions that have taken placeover a specific period oftime, usually a month or year © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 7 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  8. 8. 1.15.5.G1Money Management Tools Statement of Income & Expense Spending Plan Financial Position Statement What is my How have I What is my future financial position managed my money today? money in the past? management plan? Tells you where your money came from and where it went © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 8 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  9. 9. 1.15.5.G1How can an Income and ExpenseStatement help you manage money? Make changes to increase net worth Make changes to reach goals Improve financial well-being © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 9 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  10. 10. 1.15.5.G1Three Components Income Expenses Net gain or net loss © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 10 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  11. 11. 1.15.5.G1Learning about income and expenses • Become aware • Create an all- of all inclusive categories statement available for • Customize income and the expenses statement for yourself © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 11 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  12. 12. 1.15.5.G1What is Income? © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 12 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  13. 13. 1.15.5.G1 Income Categories Earned income – any money earned from working for pay Unearned income – incomereceived from sources other than employment Received Income from Government Programs – offer aform of income, usually temporary What income category is represented on your card? © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 13 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  14. 14. 1.15.5.G1Earned Income Wages or salary before deductions Commissions/ tips/bonuses Tax refunds © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 14 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  15. 15. 1.15.5.G1 Gross Income vs. Net IncomeEvan earns $1600.00 Evan’s paycheck is before taxes worth $1277.60 This is his net This is his gross income income Net Income Employer Address City, State Zip Code $1277.60 Recorded in the Evan Jones income section of One-thousand seventy seven dollars and 60/100 Employer the statement © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 15 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  16. 16. 1.15.5.G1Unearned Income Interest earned during time period Money earned from investment during time period Sales of assets Money from savings and investments to help pay expenses during time period © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 16 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  17. 17. 1.15.5.G1Unearned Income Scholarships/ grants from non- government sources Money from others Child support © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 17 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  18. 18. 1.15.5.G1Received Incomefrom GovernmentPrograms Government programs such as workers compensation Scholarships/grants from government sources Place a checkmark next to income that you have © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 18 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  19. 19. 1.15.5.G1What areExpenses? © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 19 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  20. 20. 1.15.5.G1 Expense Categories• Taxes• Saving and Investing• Insurance• Housing• Transportation• Food• Other Expenses will vary for every person © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 20 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  21. 21. 1.15.5.G1 Taxes• Includes income and payroll tax• Numbers may be found on the paycheck stubTaxes included in otherexpense categories• Property taxes such as housing and transportation• Sales and excise taxes are included within the cost of other expenses © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 21 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  22. 22. 1.15.5.G1 Saving and Investing Saving and Investing• Savings - the portion of current income not spent on consumption• Retirement investments may be deducted directly from a paycheck © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 22 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  23. 23. 1.15.5.G1 Why can savings and investments be both an income and expense?Taking money from savings orinvestments to pay for expenses Adding money to savings or investments for future use © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 23 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  24. 24. 1.15.5.G1Insurance Health Property and liability (home, automobile) Life Disability © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 24 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  25. 25. 1.15.5.G1 Four on the Floor• If you receive a paper, add at What expenses What expenses least one expense may be included may be included to any of the in the “housing” in the categories that category? “transportation” wasn’t already category? recorded What expenses What expenses may be included may be included in the “food” in the “other” category? category? © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 25 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  26. 26. 1.15.5.G1What expenses wererecorded in thehousing category?Housing payment (rent or Utilities mortgage) Property taxes Maintenance Home/renter’s Household insurance furnishings (included in insurance) © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 26 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  27. 27. What expenses were 1.15.5.G1 recorded in the transportation category?• Loan payment• Fuel• License and registration• Repairs and maintenance• Insurance (included in insurance category) © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 27 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  28. 28. 1.15.5.G1What expenses wererecorded in the foodcategory? Groceries Meals eaten at restaurantsSnacks away Kitchen from home supplies © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 28 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  29. 29. 1.15.5.G1What expenses wererecorded in the othercategory? Communication and computers Child care Cell phone Allowances Internet service Care for Cable/satellite other television dependents © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 29 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  30. 30. 1.15.5.G1What expenses wererecorded in the othercategory? Clothing and personal care Medical Shampoo care Dental Toothpaste care Medications Haircuts © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 30 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  31. 31. 1.15.5.G1What expenses wererecorded in the othercategory?Educational Pet care expenses Tuition Food Private Veterinary lessons/ costs tutoring Supplies Boarding © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 31 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  32. 32. 1.15.5.G1What expenses wererecorded in the othercategory?Entertainment Credit costs Credit Movies cards Student Music loans Gifts and charitable contributions © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 32 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  33. 33. 1.15.5.G1Make the Income and ExpenseStatement your own! Customize thecategories to represent all income and expenses you have Place a checkmark next to expenses that you have Specific categories may be more effective © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 33 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  34. 34. 1.15.5.G1 I now understand how an Income and Expense Statement can help me determine where I spend my money, but how do I track my income and expenses to make the statement? How would you answer Evan’s question? © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 34Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  35. 35. 1.15.5.G1Find a tracking method that works foryouRecord in writing Smartphone Keep receipts Depository Money institution management account computer statements software program A written system is more effective than a mental system – like Evan you can trick yourself into thinking you spend less than you do! © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 35 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  36. 36. 1.15.5.G1Net Gain or Net Loss Net loss © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 36 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  37. 37. 1.15.5.G1 Net Gain Net Loss Use that money for Increase income and/or savings or other decrease expenses expenses Statement of Income & Expense Spending PlanFinancial Position Statement A spending plan will help you plan your spending What is my How have I What is my futurefinancial position managed my money today? money in the past? management plan? © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 37 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  38. 38. 1.15.5.G1Help Evan Create an Income andExpense Statement Create an Income and Expense Statement for Evan for the month of March Evan has Gross Income $1600.00 summarized the Federal $200.00information from his Income Tax March paycheck Social Security $99.20 This is Evan’s only Medicare $23.20 source of income Net Income $1277.60 © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 38 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  39. 39. 1.15.5.G1 Evan’s ExpensesUsed an app on his smartphone to track his expenses 3/1 – Automatic transfer to savings account $255.52 3/1 – $400 check for rent payment 3/1 – Health insurance $100 3/2 – Withdrew $20 in cash to purchase daily coffee 3/3 – Lunch $6.50 3/3 - Hockey game admission - $10 3/5 – Purchased gas for $40 3/6 – Movie theater ticket $7.50 3/7 – Groceries $52 © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 39 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  40. 40. 1.15.5.G1Evan’s Expenses3/10 – Lunch $83/12 – Basketball game admission $153/15 – Cell phone payment $703/15 – Car insurance payment $403/15 – Renter’s insurance payment $103/16 – Haircut $153/17 – Purchased gas for $403/20 – Lunch $7.503/25 – Bowling with friends $153/27 – Groceries $383/27 – Concert ticket - $453/28 – Purchased gas for $403/31 – Electricity payment $503/31 – Water payment $50 © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 40 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  41. 41. 1.15.5.G1Evan’s Income and Income and Expense Statement for: Time Period: Evan March AmountExpense Statement Earned Income Wages or salary before deductions Income 1600.00 Total Income $1,600.00 Expenses Deductions Often Taken from Paychecks Customize Evan’s Federal Income Tax Social Security (FICA) 200.00 99.20 statement by removing Medicare 23.20 Saving and Investing (Pay Yourself First) Contribution to savings and investments 255.52 the categories and Insurance Premiums Health insurance, Medicaid and Medicare 100.00 sub-categories that you Renters or homeowners insurance Auto insurance 10.00 40.00 believe he doesn’t need Housing Costs Housing payment (rent or mortgage) 400.00 Utilities (gas, electricity, water, garbage) 100.00 Transportation Costs Fuel (gasoline/diesel) 120.00 Net Loss Food Costs Food at the grocery store 90.00 Meals at restaurants 22.00 -$57.42 Snacks away from home (coffees, treats) 20.00 Communication and Computers Cell phone 70.00 Clothing and Personal Care Personal care (shampoo, haircuts, cosmetics) 15.00 Entertainment Movies, books, and other entertainment 92.50 Total Expenses $1,657.42 Net Gain or Net Loss (Income less Expenses) -$57.42 © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 41 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  42. 42. 1.15.5.G1 Discussion• Accordingto Evan’s Income andExpense Statement, he has a net loss.What could he do to change his netloss to a net gain? • Increase income and/or decrease expenses • Use a spending plan to determine what changes to income and expenses to make © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 42 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  43. 43. 1.15.5.G1 Discussion• WereEvan’s mental Expense Amountcalculations accurate? Rent and Utilities $500 • What does this say Health insurance $100 regarding only thinking Renter’s Insurance $10 about your finances versus writing the Car insurance $40 information down? Gas $100• Howhas creating an Groceries $100Income and Expense Cell phone $70Statement helped Evan Personal care $30manage his money? Entertainment $50 Total $1000 © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 43 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
  44. 44. 1.15.5.G1Summary Tells you where your money is coming from and where it is going Three components: income, expenses, and net gain/loss Use a tracking method that works best for you Customize income and expense categories © Family Economics & Financial Education – May 2012 – Income and Expense Statement – Slide 44 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
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