ECONOMÍA UNIT 5

1-Budgeting:
An accurate monthly budget can help you reach your financial goals, whether
you’re saving for a car, buying a home or paying off student loans. By sticking to
a budget, you can save thousands of dollars each year and avoid overspending.
Budgeting may sound complicated, but it can actually be a very basic personal
finance skill. Whether you decide to make your budget bare bones or detailed
to the last dollar, the most important part of budgeting is to put it into practice.
Tracking your spending is essential to managing your budget.
2-Budgeting Basics:
A budget is a financial plan that takes income and expenses into account and
provides estimates for how much you make and spend over a given period of
time. Addressing your financial situation and distinguishing between needs and
wants is an important first step.
 Fixed expenses are expenses that stay the same from month to month,
such as rent payments.
 Flexible expenses are expenses that change from month to month, such
as how much you spend on utilities.
 Total expenses are the combined amount of your fixed and flexible
expenses.
 Total monthly income is the income from your job or other resources
including investment dividends, pensions, Social Security benefits,
rental income and more.
 Disposable income is the money you have left over after you subtract
your income taxes from your income.
The next step is to create your monthly budget using this basic Budget
Worksheet. If you find you are not able to stick to your budget, it may mean you are
spending beyond your means or that your budget is not flexible enough.

3- Evaluating Your Finances

Create a Monthly Budget

1- Add up your income. To create a monthly budget, you should first

determine how much income you have by listing your monthly
income.
2- Estimate your expenses. The best way to do this is to keep track of
how much you spend in a month.
 3- Figure out the difference. Once you’ve totaled up your yearly
income and expenses, subtract the expense total from the income
total to get the difference.
4- Track it. Creating a budget is just the first step. Keep track of your
monthly income and expenses to make sure you’re sticking to
your budget.
 Build an Emergency Fund

After creating your budget, it’s important to protect the money you
are saving for the future. Building a substantial emergency fund that
covers between three and six months’ worth of living expenses is key
to a secure financial foundation.

4- Creating a Budget
1. Question Your Needs and Wants

What do you want? What do you really need? Evaluate your current financial situation and
make two lists — one for needs and one for wants. As you make the list, ask yourself the
following:

Why do I want it?

How would things be different if I had it?

Which things are important and essential to me?

2. Set Guidelines
Keep your budget balanced with wants and needs by setting clear guidelines.
3. Track, Trim and Target
Once you start tracking, you may be surprised to find that you spend hundreds of
dollars a month on eating out, entertainment or other discretionary expenses.

5- Budgeting Benchmarks
Creating and sticking to a budget is key to building a strong financial
foundation.
 Tips for Students
Establishing strong budgeting habits is essential for students and recent
graduates. s a student, it’s important to understand your unique set of
financial priorities. For example, your parents may cover your housing costs
or you might have to pay monthly rent. Similarly, your arrangement may
offer a meal plan, or perhaps it’s your first time having to cook for yourself.
 Either way, budgeting can help prepare you to take on these new
responsibilities.
 Planning as a New Employee
Just landed your dream job but aren’t sure how to budget with a new
salary? Entering the workforce or starting a new job presents a great
opportunity to set goals and ensure the money you’re working hard for
is being used wisely. Reevaluate your budget, taking into account any
changes in income or monthly expenses.
 Challenges for Parents
Parenthood adds a lot of joy to life and a lot of new expenses. Becoming
a parent increases financial responsibility and can present personal
finance challenges that did not exist before the addition of a new child.
Create specific and realistic goals for a balanced and manageable
budget for your family.
 Budgeting as a Retiree
Retirement is likely to change your financial situation. Many retirees opt
to keep working in some part-time capacity to help offset expenses.
Retirement is different for everyone, but planning for it years in advance
is your best tactic for creating a financially stable environment.
Credit and debit card
The credit card charge you the money you spend per month but in the credit
card you are automatically charged
Credit card: Standard cards simply extend a line of credit to their users.
Standard debit cards draw on your bank account.
Saving account and Term deposit
Interest rates
Savings account:
The interest rate offered in a savings account is a standard variable rate, which
means that it can change at any time. Online savings accounts have high
competitive interest rates, while many banks offer higher introductory interest
rates for new clients that only last a few months. Search the Mozo database for
high interest savings accounts.

Time deposit:
A term deposit always comes with a fixed interest rate, it is blocked and it is
guaranteed that it will not change during the term of your investment. The
interest rate offered in a 12-month term deposit is generally higher than a
short-term deposit of three or six months. Also, the more money you invest,
the better the rate. For short-term deposits, interest is usually paid at the end
of the term. When it comes to long-term deposits, interest is likely to be paid
annually.
Finished
Savings account:
The time you can save your money in a savings account is indefinite. Have your
hard earned savings on the account as long as you want!

Time deposit:
When you establish a term deposit, you will have to decide the period of time
you want to invest your funds. This can be from one month to five years. There
are two main types of term deposits, short and long term. A short-term deposit
is considered 12 months or less, while a long-term deposit is more than a year.

Enrollment
Savings account:
Many savings accounts do not have commissions, especially online accounts.
The idea is to save not to share your money to pay rates! However, some banks
charge installation fees, continuous and / or annual. If you compare our
database of hundreds of savings accounts, you will surely find many that are
free.

Time deposit:
There are no fees attached to term deposits. However, if you withdraw your
funds before the term has expired, you will be penalized. Check out our article
for more information on the characteristics and rates of term deposits.

Retreats
Savings account:
With a savings account you have the option to withdraw money at any time.
However, you may not receive the high interest rate bonus for that month if
you make more withdrawals than the allowed number.

Time deposit:
Your money is kept in a time deposit, you can not touch the funds until the
term has expired. If you had to make a withdrawal before the set date,
penalties will apply.

Minimum opening deposit

Savings account:
You do not need to make a minimum deposit to open a savings account, you
can start from scratch.

Time deposit:
Banks like to work in round numbers, so to open a term deposit, you must
invest a minimum of $ 1000. The balance limits are detailed in our comparison
table for term deposits.
Payments
Savings account:
You can continue to add money to your savings account, after the more money
you have there, the more interest you will earn. However, often, to absorb the
high interest rate that is offered, you must deposit a certain amount each
month. If you do not make these payments, the bank will reduce your interest
rate or you will not pay any interest during that month.

Time deposit:
You can not make additional payments to a time deposit. See the Mozo guide
for more information on the types of term deposits you can choose.

Bank account
A checking account is a bank account that allows you to easily access your
money. Also called transactional account, it is the account that you will use to
pay your bills and perform most of your financial transactions. If you have a
checking account, you can access your money by issuing a check, setting up an
automatic transfer or using your debit card.

A checking account is a deposit account maintained at a financial institution

that allows withdrawals and deposits. Also called demand accounts or
transactions, checking accounts are very liquid and can be accessed through
checks, ATMs and electronic debits, among other methods. A checking account
differs from other bank accounts in that it often allows for numerous
withdrawals and unlimited deposits, while savings accounts sometimes limit
both.