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Budgeting Matters
Why Budget? <ul><li>See where your money comes from </li></ul><ul><li>See where your money is going </li></ul><ul><li>Plan...
Needs versus Wants <ul><li>How do you feel about money? </li></ul><ul><li>Are you spending more than you have? </li></ul><...
How much do Americans save?
How much do YOU save?
What’s an emergency fund? <ul><li>Money saved for unexpected emergencies </li></ul><ul><li>Ideally, the amount should be 6...
Budgeting Expenses <ul><li>What expenses are included in a monthly budget? </li></ul>“ I have enough money to last me the ...
TRUE  OR  FALSE? <ul><li>Only 14 out of 50 states in the U.S. require students to take a financial course to graduate. </l...
How much do you cost???   <ul><li>It costs $270,000 to raise a child in the United States to age 17. </li></ul>
TRUE  OR  FALSE? <ul><li>54% of American homes are paid for. </li></ul>FALSE-only 2%
What are your short term and long term goals? SHORT-TERM GOALS Buy a cell phone Save for vacation Buy new clothing iPod LO...
What Can You Do NOW? <ul><li>Be a smart spender </li></ul><ul><ul><li>Shop around for the best deals </li></ul></ul><ul><u...
Debit vs. Credit Cards <ul><li>What’s the difference? </li></ul><ul><ul><li>Debit cards deduct money from your bank accoun...
TRUE  OR  FALSE? <ul><li>It is always bad to use credit cards. </li></ul>FALSE
Credit Cards <ul><li>How do I choose a credit card? </li></ul><ul><ul><li>Low interest rate </li></ul></ul><ul><ul><li>No ...
Credit Cards <ul><li>How can you use credit cards wisely? </li></ul><ul><ul><li>Pay entire amount off each month </li></ul...
Let’s review <ul><li>WHAT to spend? </li></ul><ul><ul><li>Budgeting allows you to decide how much money can be spent on wh...
Helpful Web Sites <ul><li>www.fool.com/teens   discussion boards and detailed information </li></ul><ul><li>www.moneyopoli...
Thank You! Curriculum Development Committee: John Comer, Comer Consulting D.J. Enga, Auriton Solutions Shawn Jacobson, Leg...
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Budgeting Matters

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  • Introduce yourself and define budgeting Introduce yourself briefly ( max. 2 min ): •Company you work for •Career path Summarize your career: What is your education, background? What is an average day like? Define what budgeting mean to you and why it is important. Suggested questions and discussion prompts: How many if you are going to college? How are you saving for college? How do you save for something you want?
  • Discuss the pros of making a budget. Have the students brainstorm answers to the questions. Although budgets can seem time consuming and even confusing, they pay off bigtime in the long run! See where your money comes from: birthdays, baby sitting, Grandparents, parents, job See where your money is going: iPod, food, movies, car Plan for long term goals: college, home Save for unexpected emergencies: car repairs, stolen items Have more spending money!
  • Ask the students what emotions are evoked when they think about money. Write a list on the board and briefly discuss. What does the influence of friends and advertising have on how much money you spend? Do needs and wants vary by who you are? Have the students stand up and go to one side of the room or the other based on whether they think each item is a need or want. Choose a few items, you don’t need to do all. Cell phone Car ATM fee House/Apartment Clothes-brand name versus generic Electricity Food-fast food versus eating something from home iPod Magazines Heat Caller ID Gas Insulin
  • Ask the students how many have borrowed from their parents? How many have paid their parents back? Make sure the students understand how people spend more than they earn: Examples are credit cards, dipping into savings, etc. In 2005, the national savings rates dipped to negative 0.5 % for the first time since the Great Depression. A negative savings rate means that Americans spend all their disposable income and dip into savings or increase their borrowing. Chart: US Bureau of Economic Analysis.
  • Get students to share how much they save. Do they save for a car, prom, new shoes, etc? Do you earn enough to cover all your expenses? How do you get the money to pay for things? What are your sources of income, i.e. parents, job, birthday money, etc.
  • Ask students what they think an emergency fund is. Talk about what types of things constitute an emergency: car repairs, being laid off from a job, having goods being stolen, large medical bills, etc. Discuss what 6-12 months worth of expenses would cover. Explain this is ideal, and having a month’s worth of expenses saved is a good place to start for a college student or young professional.
  • Have the students either individually or in small groups of 3-4 students brainstorm and write down all the expenses they can think of. Then, make a list as a whole class. If you are comfortable, allow the students to yell out the expenses they have thought of. Add any expenses they may have missed (i.e. insurance, medical bills, pets, hair cuts, personal care products, garbage collection, etc.) -Pass out sample adult budgets. What percentage is spent in each category? What are the guidelines? -Pass out sample teen budgets. Challenge teens to fill it out during the coming weeks.
  • Please note that “TRUE” is animated, will show on slide show when you click it forward. Get the students to speculate first! Ask students how many years of English and Math they have taken to prepare themselves to communicate and calculate in their future. Ask them how many years of money management they have taken. Stress the importance of personal money management and how it is dealt with on a daily basis. It is important for students to take advantage of learning opportunities such as this presentation and to also seek information on their own. Note: If the course you are speaking to is a business/financial literacy class, congratulate the students on making a wise decision to learn about money management. Source: USA Today, January 2007
  • According to a 2004 (most current) report from the U.S. Dept of Agriculture. (MSN Money, 2007). This cost is average, many parents are spending much more. Also, this stat does not include college as the child is only 17.
  • Please note that “FALSE” is animated, will show on slide show when you click it forward. Get the students to speculate first! The result of this statistic is that 98% of Americans who own a house are making mortgage payments every month. Remember that all renters make a monthly payment as well. Source: US Census Press Release 2006
  • Discuss how much each of these might cost and how much additional income a person would need to save in order to budget for it. Have the students define how long they think a short term and long term goal might be. Teens : Long term goal = over a year Short term goal = less than 3 months
  • Ask students: how many of you use one or more of these techniques? Shop around for the best deals- research on the internet, in newspaper ads, etc. Don’t buy on impulse- if you would like to buy a large item, leave the store and think about it for 24 hours. If you return, you know you really wanted the item. If not, you know if was an impulse buy. Online shopping encourages impulse buying – beware. If you don’t the money to pay for an item right now, don’t buy it! Use coupons or wait for sales- many websites have coupons for oil changes, grocery stores, restaraunts, etc. Also look in newspapers and mail. Use student discounts – movie theaters, sporting events, etc. have discounts on tickets for students with a school ID. Substitute – choose off brands – generic brand clothes, food, etc. are much cheaper than brand names and often offer the same quality. Negotiate on large items – if possible, negotiate with sales people. They want your business and are often willing to lower prices. Talk to others who have experience – get advice from people who have purchased the product/service recently.
  • Discuss credit cards.
  • Please note that “FALSE” is animated, will show on slide show when you click it forward. Get the students to speculate first! -Credit cards allow you to carry less cash and come in handy in emergencies, for travel, for reservations and can build your credit score when paid off monthly.
  • Define an interest rate: the percentage of the amount spent that one has to pay back in addition to the original amount. The amount accrues (adds on) each month. Incentive programs These cards often require high credit scores, when you are building credit they may be difficult to obtain. They offer incentive but usually at the trade off of a fee.
  • Unlike your parents, your credit and investment options are wide at an early age. Use resources wisely to help guide your money management.
  • Transcript of "Budgeting Matters"

    1. 1. Budgeting Matters
    2. 2. Why Budget? <ul><li>See where your money comes from </li></ul><ul><li>See where your money is going </li></ul><ul><li>Plan for long term goals </li></ul><ul><li>Save for unexpected emergencies </li></ul><ul><li>Have more spending money! </li></ul>
    3. 3. Needs versus Wants <ul><li>How do you feel about money? </li></ul><ul><li>Are you spending more than you have? </li></ul><ul><li>Is what you’re buying a need or a want? </li></ul>“ Money never made a man happy yet, nor will it.  The more a man has, the more he wants.  Instead of filling a vacuum, it makes one.”   -Benjamin Franklin
    4. 4. How much do Americans save?
    5. 5. How much do YOU save?
    6. 6. What’s an emergency fund? <ul><li>Money saved for unexpected emergencies </li></ul><ul><li>Ideally, the amount should be 6-12 months of expenses </li></ul>
    7. 7. Budgeting Expenses <ul><li>What expenses are included in a monthly budget? </li></ul>“ I have enough money to last me the rest of my life. . .unless I buy something.” – Jackie Mason, comedian
    8. 8. TRUE OR FALSE? <ul><li>Only 14 out of 50 states in the U.S. require students to take a financial course to graduate. </li></ul>TRUE Most high schools offer personal finance as an elective course.
    9. 9. How much do you cost??? <ul><li>It costs $270,000 to raise a child in the United States to age 17. </li></ul>
    10. 10. TRUE OR FALSE? <ul><li>54% of American homes are paid for. </li></ul>FALSE-only 2%
    11. 11. What are your short term and long term goals? SHORT-TERM GOALS Buy a cell phone Save for vacation Buy new clothing iPod LONG-TERM GOALS Purchase a car Save $10 each week Pay for college
    12. 12. What Can You Do NOW? <ul><li>Be a smart spender </li></ul><ul><ul><li>Shop around for the best deals </li></ul></ul><ul><ul><li>Don’t buy on impulse </li></ul></ul><ul><ul><li>Use coupons or wait for sales </li></ul></ul><ul><ul><li>Use the good student discount </li></ul></ul><ul><ul><li>Substitute – choose off brands </li></ul></ul><ul><ul><li>Negotiate on large items </li></ul></ul><ul><ul><li>Talk to others who have experience </li></ul></ul>
    13. 13. Debit vs. Credit Cards <ul><li>What’s the difference? </li></ul><ul><ul><li>Debit cards deduct money from your bank account </li></ul></ul><ul><ul><li>Credit cards loan you money which you have to pay back. After 30 days, interest accrues. </li></ul></ul>
    14. 14. TRUE OR FALSE? <ul><li>It is always bad to use credit cards. </li></ul>FALSE
    15. 15. Credit Cards <ul><li>How do I choose a credit card? </li></ul><ul><ul><li>Low interest rate </li></ul></ul><ul><ul><li>No annual fee </li></ul></ul><ul><ul><li>No start up fee </li></ul></ul><ul><ul><li>Incentive programs </li></ul></ul><ul><li>www.bankrate.org helps you choose a card that is right for you . </li></ul>
    16. 16. Credit Cards <ul><li>How can you use credit cards wisely? </li></ul><ul><ul><li>Pay entire amount off each month </li></ul></ul><ul><ul><ul><li>This builds your credit score </li></ul></ul></ul><ul><ul><li>Use for emergencies </li></ul></ul><ul><ul><ul><li>Car repairs </li></ul></ul></ul><ul><ul><ul><li>Ambulance ride or hospital stay </li></ul></ul></ul>
    17. 17. Let’s review <ul><li>WHAT to spend? </li></ul><ul><ul><li>Budgeting allows you to decide how much money can be spent on what items. </li></ul></ul><ul><li>WHY to spend? </li></ul><ul><ul><li>Determining needs versus wants helps decide why you are buying an item. </li></ul></ul><ul><li>HOW to spend? </li></ul><ul><ul><li>Deciding if you can pay for an item now or if you need to put it on credit. </li></ul></ul>
    18. 18. Helpful Web Sites <ul><li>www.fool.com/teens discussion boards and detailed information </li></ul><ul><li>www.moneyopolis.org interactive game simulations </li></ul><ul><li>www.creditunionsrock.org wide range of content </li></ul><ul><li>www.themint.org mock situations of budgeting, saving, investing, etc. </li></ul>
    19. 19. Thank You! Curriculum Development Committee: John Comer, Comer Consulting D.J. Enga, Auriton Solutions Shawn Jacobson, Legacy Financial Advisors Bob Kaitz, BestPrep Rachael Kelly, Asti Consulting Group Angela Laubmeier, BestPrep Jennifer Ruhland, Family Means Janet Stanzak, Financial Empowerment Bonnie Vagasky, BestPrep Suzy Wheeler, Family Means ©2007 BestPrep BestPrep gratefully acknowledges the Foundation for Financial Planning for providing financial support to fund this project. We also are indebted to the Financial Planning Association of Minnesota for their help in creating and piloting this presentation.
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