Spending Plan

EssentialsIntroductory Level
The Essentials to Take Charge of Your
Finances

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What is a spending plan?

A financial statement used to

assist with money management
Helps people manage money

Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 2
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Why is a spending plan

important to use?

Spending plans are used to help

people:

Track where their money is going

Identify income and expenses
Meet financial goals
Live within their income

Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 3
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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LONG-TERM POSITIVE
IMPACT OF A SPENDING
PLAN?
To know where your money is going!
To build long-term wealth!
To create long-term financial security!
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 4
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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A Spending Plan Tracks..

Income

Money earned

Expense

Money spent

Fixed expenses vs. flexible

expenses vs. pop up expenses

Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 5
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Income, Fixed Expense, Flexible

Expense, or Pop up Expense?

Rent/House
payment
Sink backing up
Paycheck
Groceries
Internet bill
Winning the
lottery
Utilities
Putting money

Hobbies
Car repairs
Clothes
Birthday
money
Pet injury
iPod
Using
savings
Phone

Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 6
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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The Costs Add up

Monthly haircut

$35.00 per month

$420 per year

Weekly date night

at the movies with
popcorn

$30 per week

$1,560

Daily Latt

Eating lunch out 5

days per week

$3.75 each time

$1,365 per year

$5-$10 each time

$1,300-$2,600 per
year

Daily sport drink

$2.00 each daily

$728 per year

Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 7
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Lees Spending Plan Example

Income
Item
Mowing a
lawn

Expenses

Amount
Item
Amount
$10.00 Movie
$15.00
ticket and
popcorn

Birthday
$15.00 Snack
$5.00
gift
and drink
$25.00
Total to pay for
$20.00
Total
Does Lee have
enough income
his

expenses?
If he would like to buy a new shirt for $15 does
he have enough money?
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 8
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Summary

A financial statement used to assist with money

management

What are the benefits of creating a

spending
Gives a plan?
Helps meet financial
person an

understanding of where
goals
there money is going
Helps people live
Tracks income and
within their income
What
are the two main components of a
expenses

spending
plan?

Income- money
earned

Expense- money spent

Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 9
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

7.15.1.
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Spending Plan Shake-Up!

Budget your beans to pay for the

things you need and want

Each square is worth one bean and

all the squares must be filled to have
that item
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 10
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Education Levels

High school drop out = 8 beans

High school graduate = 10 beans
Associates degree = 12 beans
College degree = 16 beans
Graduate degree = 20 beans

Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 11
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Change in Plans!

You have a job interview next week in a

nearby town. Suddenly your needs have
changed!
Adjust your beans accordingly!

You need a vehicle to drive to work

Purchasing a new interview outfit is necessary
and you have found a great suit at a
department store
You recently dyed your hair purple and need to
have it professionally fixed
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 12
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Spending Plan Shake-Up!

Could you afford everything that you

needed?
Could you afford everything that you
wanted?
How does Spending Plan Shake-Up
relate to real life?
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 13
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Recommended Spending plan

category pie chart (after taxes)

Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 14
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Housing

Housing

Housing is the largest

of the four major
expenditures
Recommended 30% of
an individuals net
income

Monthly payment A
fee charged each
month to live in a home
Utilities include
electricity, water, and
garbage fees
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 15
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Housing

Housing

Home or renters insurance

purchased to protect the home and
possessions inside from loss
Taxes paid by the owner of the home
Maintenance includes paying for the
upkeep of a home

Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 16
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Transportation

Transportation

The second largest

major expenditures
Recommended 20%
of an individuals
net income

Monthly payment
is made if a loan is
taken out to
purchase a vehicle

Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 17
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Transportation

Transportation

License and registration are required by

law to own a vehicle
Insurance required by law to protect the
vehicle and individuals if involved in an
accident
Maintenance costs keep automobiles
running smoothly
Fuel to operate the vehicle
Public transportation fees including bus,
metro pass, taxis or parking fees
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 18
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Food

Food

The third most

expensive
category within
an individuals
spending plan
Recommended
15% of an
individuals net
income
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 19
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Insurance

Insurance

Arrangement
between an
individual and an
insurance company
to protect the
individual against
risk

Risk is uncertainty
about a situations
outcome

Recommended 7%
of an individuals
income
Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 20
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Insurance

Includes the following:

Health pays a portion of health care

expenses if one is sick or injured
Disability provides financial support if an
individual is injured and cannot work
Life provides financial support to an
individuals beneficiaries upon death

Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 21
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Additional expenses

Savings and
investing

Save 3-6 months

of income that is
available in a
liquid account for
emergencies

Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 22
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Other

Fulfills additional
needs and accounts
for 18% of an
individuals net
income. Includes:

Gifts
TV/Internet
Cell Phone
Personal Care
Clothing
Entertainment

Family Economics & Financial Education December 2010 The Essentials to Take Charge of Your Finances Spending Plan Introduction Essential Slide 23
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona