Spending Plans“Take Charge of Your Finances”Advanced Level
1.15.2.G1Where’s My Dough?                                                                                                ...
1.15.2.G1What is aSpending Plan?  Document used to record  both planned and actualincome and expenses over a       period ...
1.15.2.G1Money Management Tools              Statement of                                       Income & Expense          ...
1.15.2.G1A forward-looking Income and ExpenseStatement                                                                    ...
1.15.2.G1Why is a                                                                                                Help mana...
1.15.2.G1             Congratulations!   You have been hired as a financial    advisor for John and Tia Brown• Developed a...
1.15.2.G1Spending Plan Development Process                                                            Step 5 - Evaluate   ...
1.15.2.G1Track Current Income and Expenses                                                                        Step 5 -...
1.15.2.G1          The Brown Family          Step One: Track          Current Income and          ExpensesKept all receipt...
1.15.2.G1Personalize Your Spending Plan        How will you                                                   Step 5 - Eva...
1.15.2.G1How will you develop aspending plan?                                Paper and pencil                             ...
1.15.2.G1What is the intended                                                                         What categories will...
1.15.2.G1            The Brown Family            Step Two: Personalize            Your Spending Plan• Requested a         ...
1.15.2.G1Allocate Money to Each Category                                                                       Step 5 - Ev...
1.15.2.G1When allocating money consider:Trade-offs and                                                                    ...
1.15.2.G1Spending Plan Guide          What variables may cause these           percentages to be different?               ...
1.15.2.G1Net Gain or Net Loss?  Net Gain?                               Net Loss?• Add more                        • Incre...
1.15.2.G1          The Brown Family          Step Three: Allocate          Money to Each          Category• Indicated a * ...
1.15.2.G1         The Brown Family         Step Three: Allocate         Money to Each         Category• Develop a spending...
1.15.2.G1Implement and Control                                                                       Step 5 - Evaluate    ...
1.15.2.G1                                    Which controlControl Systems                     system would                ...
1.15.2.G1The Brown FamilyStep Four: Implement and Control                                       © Family Economics & Finan...
1.15.2.G1Evaluate and Make Adjustments                                                                      Step 5 - Evalu...
1.15.2.G1The Brown FamilyStep Five: Evaluate and MakeAdjustments                                                          ...
1.15.2.G1Summary                                                                        Step 5 - Evaluate                 ...
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Personal finance 8.02 spending plans p_ptb(fefe)

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Personal finance 8.02 spending plans p_ptb(fefe)

  1. 1. Spending Plans“Take Charge of Your Finances”Advanced Level
  2. 2. 1.15.2.G1Where’s My Dough? Divide your How much do play dough to What you spend on Play dough = show howexpenses do each income much is spent you have? expense? on each expense Based upon You have your current Adjust your Write a begun to spending, is it play dough to personal develop a realistic to reach yourfinancial goal spending achieve your goal plan! goal? © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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. 1.15.2.G1What is aSpending Plan? Document used to record both planned and actualincome and expenses over a period of time A budget © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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. 1.15.2.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? Determine what changes Make to make changes © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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. 1.15.2.G1A forward-looking Income and ExpenseStatement May use the same template for both the Income and Expense Statement and the Spending Plan © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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. 1.15.2.G1Why is a Help manage your money in aSpending Plan positive manneran important Analyze thepart of financial opportunity costs of your trade-offs Increase netplanning? to maximize worth financial well- being Helps set and reach goals © Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 6 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
  7. 7. 1.15.2.G1 Congratulations! You have been hired as a financial advisor for John and Tia Brown• Developed a Statement of • Develop a Financial Position and Income and spending plan for Expense Statement the Brown family• Identified the following goals: Increase the Pay more on their Spend less Spend less moneyamount of their monthly car loan money on dining out at emergency payment to pay clothing every restaurants savings fund the loan off faster month © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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. 1.15.2.G1Spending Plan Development Process Step 5 - Evaluate Step 1 - Track and Make Current Income and Develop the Adjustments Expense spending plan Step 4 - Step 2 - Implement and Personalize Your Control Spending Plan Maintain the Step 3 - spending plan Allocate Money to Each Category © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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. 1.15.2.G1Track Current Income and Expenses Step 5 - Evaluate Step 1 - Track and Make Current Income and Adjustments Expense Step 4 - Step 2 - Implement and Personalize Your Control Spending Plan Ensures spending Step 3 - plan is realistic Allocate Money to Each Category © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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. 1.15.2.G1 The Brown Family Step One: Track Current Income and ExpensesKept all receipts Review John andfor the month of Tia’s JanuaryJanuary to Income andcreate an ExpenseIncome and Statement for aExpense realistic view ofStatement their income and expenses © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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. 1.15.2.G1Personalize Your Spending Plan How will you Step 5 - Evaluate Step 1 - Track and Make Current Income and develop a Adjustments Expense spending plan? What is the intended time period for your Step 4 - Step 2 - spending plan? Implement and Personalize Your Control Spending Plan Step 3 - What categories Allocate will your spending Money to plan include? Each Category © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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. 1.15.2.G1How will you develop aspending plan? Paper and pencil Spreadsheet How would Money management you develop a computer software spending plan? Applications © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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. 1.15.2.G1What is the intended What categories will yourtime period for your spending plan include?spending plan? • Usually concurrent with • Reference tracking from pay period the Income and Expense Statement What time period • Do any categories need would you choose added, changed, or for your spending removed? plan? © Family Economics & Financial Education –May 2011– Insurance Unit – Types of Insurance– 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. 1.15.2.G1 The Brown Family Step Two: Personalize Your Spending Plan• Requested a • Find the column spending plan for on the Income the month of and Expense February Statement• Requested the where the same document Spending plan and categories as will be created the Income and Expense Statement © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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. 1.15.2.G1Allocate Money to Each Category Step 5 - Evaluate Step 1 - Track and Make Current Income andReference tracking Expense Adjustments from Step One Step 4 - Step 2 - Implement and Personalize Your Control Spending Plan Determine what Step 3 - changes to make Allocate Money to Each Category © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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. 1.15.2.G1When allocating money consider:Trade-offs and Contractual opportunity Goals expenses costs Contractual Non-contractualRequired to pay expense for aspecific amount of time - not Easy to reduce or eliminate easy to reduce or eliminate Rent, Internet, Cell phone Food, entertainment © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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. 1.15.2.G1Spending Plan Guide What variables may cause these percentages to be different? © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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. 1.15.2.G1Net Gain or Net Loss? Net Gain? Net Loss?• Add more • Increase money to income savings or • Decrease another expenses expense • Both © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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. 1.15.2.G1 The Brown Family Step Three: Allocate Money to Each Category• Indicated a * next to expenses that are either contractual or they are unwilling to decrease• Remember goals• Consider trade-offs• Must have a net gain or a zero balance © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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. 1.15.2.G1 The Brown Family Step Three: Allocate Money to Each Category• Develop a spending plan for the family• Explain each change made• Re-write goals into SMART goals using their new spending plan © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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. 1.15.2.G1Implement and Control Step 5 - Evaluate Step 1 - Track and Make Current Income and Adjustments Expense Step 4 - Step 2 - Implement and Personalize Your Control Spending PlanUse a control system Step 3 - to stay on track Allocate Money to Each Category © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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. 1.15.2.G1 Which controlControl Systems system would help you stick to your spending plan? Internet-based spending plan program Depository institution programs Check register system Envelope system © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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. 1.15.2.G1The Brown FamilyStep Four: Implement and Control © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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. 1.15.2.G1Evaluate and Make Adjustments Step 5 - Evaluate Step 1 - Track and Make Current Income and Adjustments Expense Is your spending plan helping you Step 4 - Step 2 - reach goals? Implement and Personalize Your Control Spending Plan Do you need to Step 3 - make any Allocate Money to adjustments? Each Category © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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. 1.15.2.G1The Brown FamilyStep Five: Evaluate and MakeAdjustments How could• John and Tia • Increase their creating a realized that if grocery budget spending plan they dine out at by $20.00 • How has help you now restaurants less often they will developing a and in the need to increase spending plan future? their monthly helped the grocery expense Brown family? © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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. 1.15.2.G1Summary Step 5 - Evaluate Step 1 - Track• A spending plan is an Current Income and and Make important financial Adjustments Expense planning tool ▫ Helps achieve goals• Make your spending Step 4 - Step 2 - plan work for you Implement and Personalize Your• Make sure to control, Control Spending Plan evaluate, and adjust Step 3 - your spending plan Allocate Money to Each Category © Family Economics & Financial Education – Updated May 2012 – Spending Plans – 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

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