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Income and Expense Statement Presentation
- 1. Income and ExpenseStatement “Take Charge of Your Finances”
- 2. 1.15.5.G1 Meet 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. 1.15.5.G1 How does Evan think he is spending his money? Expense Amount • Evan created a list of all of Rent and Utilities $500 his expenses Health insurance $100 • First allocates money to Renter’s Insurance $10 his savings account Car insurance $40 • Estimates that his Gas $100 remaining expenses will Groceries $100 Cell phone $70 be no more than Personal care $30 $1000/month: Entertainment $50 • But he runs out of money Total $1000 before the end of each month © 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. 1.15.5.G1 Are you surethere isn’t anything else you 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. 1.15.5.G1 The Costs AddUp How 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 $730.00 16 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. 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 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. 1.15.5.G1 The Income and ExpenseStatement Income and Expense Statement - lists and summarizes income and expense transactions that have taken place over a specific period of time, 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. 1.15.5.G1 Money 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. 1.15.5.G1 How can anIncome and Expense Statement 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. 1.15.5.G1 Three 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. 1.15.5.G1 Learning about incomeand 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. 1.15.5.G1 What 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. 1.15.5.G1 IncomeCategories Earned income – any money earned from working for pay Unearned income – income received from sources other than employment Received Income from Government Programs – offer a form 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. 1.15.5.G1 Earned 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. 1.15.5.G1 Gross Incomevs. Net Income Evan 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. 1.15.5.G1 Unearned 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. 1.15.5.G1 Unearned 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. 1.15.5.G1 Received Income from Government Programs 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. 1.15.5.G1 What are Expenses? © 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. 1.15.5.G1 Expense Categories •Taxes • Saving and Investing • Insurance • Housing • Transportation • Food Expenses will vary for every • Other 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. 1.15.5.G1 Taxes •Includes income and payroll tax • Numbers may be found on the paycheck stub Taxes included in other expense 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. 1.15.5.G1 Saving andInvesting 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. 1.15.5.G1 Why cansavings and investments be both an income and expense? Taking money from savings or investments 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. 1.15.5.G1 Insurance 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. 1.15.5.G1 Fouron the Floor • If you receive a What expenses What expenses paper, add at may be included may be included in the “housing” in the least one expense category? “transportation” to any of the category? categories that wasn’t already What expenses What expenses may be included may be included recorded 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. 1.15.5.G1 What expenses were recordedin the housing 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. 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. 1.15.5.G1 What expenses were recordedin the food category? Groceries Meals eaten at restaurants Snacks 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. 1.15.5.G1 What expenses were recordedin the other category? 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. 1.15.5.G1 What expenses were recordedin the other category? 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. 1.15.5.G1 What expenses were recordedin the other category? 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. 1.15.5.G1 What expenses were recordedin the other category? 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. 1.15.5.G1 Make the Incomeand Expense Statement your own! Customize the categories 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. 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 34 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
- 35. 1.15.5.G1 Find a trackingmethod that works for you Record 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. 1.15.5.G1 Net Gain orNet 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. 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 Plan Financial Position Statement A spending plan will help you plan your spending What is my How have I What is my future financial 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. 1.15.5.G1 Help Evan Createan Income and Expense Statement Create an Income and Expense Statement for Evan for the month of March Evan has Gross Income $1600.00 summarized the Federal $200.00 information from his Income Tax March paycheck Social Security $99.20 Medicare $23.20 Net Income $1277.60 This is Evan’s only source of income © 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. 1.15.5.G1 Evan’s Expenses Usedan 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. 1.15.5.G1 Evan’s Expenses 3/10 –Lunch $8 3/12 – Basketball game admission $15 3/15 – Cell phone payment $70 3/15 – Car insurance payment $40 3/15 – Renter’s insurance payment $10 3/16 – Haircut $15 3/17 – Purchased gas for $40 3/20 – Lunch $7.50 3/25 – Bowling with friends $15 3/27 – Groceries $38 3/27 – Concert ticket - $45 3/28 – Purchased gas for $40 3/31 – Electricity payment $50 3/31 – 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. 1.15.5.G1 Evan’s Income and Income and Expense Statement for: Time Period: Evan March Amount Expense Statement Earned Income Income Wages or salary before deductions 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 Food Costs Food at the grocery store 90.00 Net Loss Meals at restaurants 22.00 Snacks away from home (coffees, treats) 20.00 Communication and Computers Cell phone 70.00 Clothing and Personal Care -$57.42 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. 1.15.5.G1 Discussion • AccordingtoEvan’s Income and Expense Statement, he has a net loss. What could he do to change his net loss 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. 1.15.5.G1 Discussion • WereEvan’smental Expense Amount Rent and Utilities $500 calculations accurate? Health insurance $100 • What does this say Renter’s Insurance $10 regarding only thinking Car insurance $40 about your finances Gas $100 versus writing the Groceries $100 information down? Cell phone $70 Personal care $30 • Howhas creating an Entertainment $50 Income and Expense Total $1000 Statement helped Evan manage his money? © 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. 1.15.5.G1 Summary 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