Planning for Expenses

Glossary
TERM DEFINITION
discretionary

emergency fund
A credit report is a statement that shows all the accounts associated with your name.
credit report
This report also includes your social security number and previous addresses.

Objective
explain the consequences of unexpected expenses and describe how consumers can protect themselves.
In this lesson, you will ______________________________________________________________________________.

Types of Expenses
An expense is anything we spend money on. Expenses can be one of two types:

Fixed Expenses Variable Expenses

Here are two examples of fixed expenses: Variable expenses are expenses that _____________ a lot

car loan payments

1. ____________________________ from month to month.

2. ____________________________ Here are some examples of variable expenses:

The amount for each payment remains the eating out

1. __________________________________
_____________ each month.
2. __________________________________
playing a round of mini golf with friends
3. __________________________________
clothing
4. __________________________________

5. __________________________________

To create a detailed personal budget, it’s helpful to categorize expenses into groups:

major or minor
1. _________________________ 2. _________________________ 3. _______________________

Having a clear understanding of expenses can help in achieving _________________________________________.

Nondiscretionary expenses are _______________. Here are some examples:

rent ___
1. ____ or m___
ort___
gage payment
__________ 2. _________________________ 3. _u_t_ilitie
___s__________________

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Discretionary expenses are things that you ____________ necessarily need. Here are some examples:

1. __________________________________

enter___
2. ____ tainm
___ent
___(___
mov__
ies, m_us
___ ic)________
____

3. latest technology (smartphones, tablets)

__________________________________

If you want to save money, _____________________ discretionary expenses is usually a good place to start.

Estimating College Expenses

Categorize different college expenses.

Variable,
Variable, Discretionary Fixed, Discretionary Fixed, Nondiscretionary Nondiscretionary

• __________________ • __________________ • room and board_____ • ________________

• __________________ • living at home____ • __________________

• transportation______

Unexpected Expenses
An expense doesn’t become unexpected just because it’s infrequent.
Infrequent expenses can be _______________ and _____________________.
Here are some examples:
1. ________________________________
2. semiannual car insurance premiums
________________________________
3. ________________________________

Truly unexpected expenses come from _____________________ and _________________________ events.

Here are some examples:
natur_al
1. ____ __d___
isas ter_s________________
___ 2. ______________________________

Setting up an ______________________________ is one way to prepare for unexpected expenses. Another way is to
have insurance policies that cover medical expenses, damage to property, and other risks specific to your situation.
Lack of _______________________________________ can keep you from achieving your financial ________________.

The type of unexpected expense and the amount affects the way you deal with the expense. Here are some alternate
ways to prepare:
insur___
1. ____ anc__
e ______________ 2. _______________________ 3. _d_o -it-___
___ you___
rse___
lf (DIY)__
___ sk_il_ls__
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Identity Theft
Unexpected expenses can also result from _________________ activity. A thief can get your personal details to steal
your identity. Here are some ways to find out whether someone is using your identity:

credit card charges

1. _________________________ Is someone else using your card to make purchases?
2. _________________________ Is anyone apart from you withdrawing money from your bank account?
3. _________________________ Is someone using a service and making you pay for it?
redi___
4. _c___ t repor_t ______________ Do you see any unfamiliar accounts or inquiries?
___

If the answer to any of these questions is ____________, you may be a victim of identity theft.

In the video Why Care About Identity Theft?, what does Lynn look at every year to check for signs of identity
theft?___________________

An identity thief could potentially do the following using your personal information:
1. ______________________________________________________________
Apply for and use new credit cards in your name.
2. ______________________________________________________________

File for a tax refund in your name.

3. ______________________________________________________________

4. ______________________________________________________________

Use your identity to mislead authorities in the case of an arrest.

5. ______________________________________________________________

Video: Recovering from Identity Theft

recovery plan
Thomas went to ______________________________________ online and received a ____________________________
to help him fix the problems caused by his identity theft. His plan told him to put a ______________________ on his
credit report and get a free copy of his credit report from _______A nnua
____ lC__
___ redi
___tR____
epor___
t.com
____________.

Here are a few things you can do to protect your personal information and identity:

so___
1. Store your financial, health, and legal records safely at home. Examples include your ____ cial___
secu
___rit_y__
ca___
rd ___

and ________________________.

2. Shred old documents that contain your personal details.

3. Check your _________________ regularly.

4. In business transactions, provide your social security number _______ if no other identification proof is allowed.

5. Avoid giving out personal details on _____________________ phone calls or emails.

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 6. Avoid using ________________ computers if you plan to send personal information via email.

7. Ensure your account __________________ are difficult to guess.

The Expense Equation and Models

E=F+V
sum of fixed expenses

Rearrange the total expense equation to calculate the amount of variable expenses.

E=F+V Begin with the expense equation.

E– F =F+V– F
____________ the fixed expenses from both sides of the equation.

V =E–F Simplify the equation.

William wants to determine his total monthly expenses. He knows he needs to add his fixed expenses to his variable
expenses.

Fixed Expenses Variable Expenses

rent utility bill $114

renter’s insurance $20 $292

$80 credit card payment

car loan payment clothing $17

car insurance $152 ---------- ----------

Sum of Fixed Expenses Sum of Variable Expenses

______________ (fixed) + _____________ (variable) = ______________

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Complete the bar chart to summarize the expenses listed in the table.

Summary
What are different types of expenses? Why is it important to keep track of them?
Expenses can be divided into different types, including fixed expenses
(such as rent and insurance), variable expenses (like groceries and
entertainment), discretionary expenses (such as dining out and
vacations), and unexpected expenses (like car repairs or medical bills).
It's important to keep track of expenses to maintain financial control and
make informed decisions. Tracking expenses helps in budgeting,
identifying spending patterns, and planning for future financial goals. It
also helps to prevent overspending and ensures that you have enough
money set aside for savings and emergency funds.

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