TOPIC NO.

2
UNDERSTANDING THE CONCEPT OF BUDGETING
At the end of this lesson, you will be able to:
 Define budgeting;
 Identify the importance of budgeting;
 Learn some tips in useful budgeting for incoming college
students;
 Define and identify the pros and cons of needs and wants;
 Discuss the similarities of needs and wants, and;
 Learn saving and investing differences and its pros and
cons
WHAT IS BUDGETING?
WHAT IS BUDGETING?
 Budgeting is the process of creating a plan to
spend your money.
 Through budgeting keeps your spending in check
and makes sure that your savings are on track for
the future.
 Budgeting can help you set long-term financial
goals, keep you from overspending, help shut
down risky spending habits, and more.
WHAT IS THE IMPORTANCE OF BUDGETING?
What is the importance of
budgeting?
 It ensures that you will always have enough money for the
things you need and the things that are important to you.
 By tracking expenses and following a plan through budgeting
makes it easier to pay bills on time, build an emergency
fund, and save for major expenses.
 Overall, budgeting puts a person on stronger financial footing
for both the day-to-day and the long term.
SOME USEFUL BUDGETING TIPS FOR
INCOMING COLLEGE STUDENTS:
 Track Your Spending
 Set Short-Term Financial Goals
 Create an Income Source
 Spend Below Your Means
 Keep Searching for Scholarships
 Set Aside Savings
WHAT IS MORE IMPORTANT?
NEEDS
are the fundamental
necessities required for
survival, physical health, and
mental well-being.
PROS CONS
 Survival  Dependency

 Health  Limitations
 Monotony
 Focus
 Lack of motivation
 Efficiency
 Ignoring wants
 Satisfaction  Overconsumption
 Peace of mind  Emotional impact
 Productivity  Inflexibility
 Resilience
WANTS
represent desires and
preferences beyond the basic
necessities required for
survival.
PROS CONS
 Personalization  Financial strain
 Pleasure and  Impulsive decision-making
enjoyment  Materialistic focus
 Self-expression
 Comparison and envy
 Motivation and
aspiration  Environmental impact
 Cultural enrichment  Distraction
 Social connection  Unrealistic expectations
 Personal development  Temporary satisfaction
 Quality of life
WHAT ARE THE SIMILARITIES OF
NEEDS AND WANTS?
 Both needs and wants influence decision-making and prioritize certain goals
or actions.
 Both needs and wants can contribute to personal satisfaction and well-being.
 Both needs and wants can be influenced by societal, cultural, and
environmental factors.
 Both needs and wants play a role in shaping individual identity and self-
expression.
 Both needs and wants require consideration and balancing in decision-making
processes.
WHAT IS MORE RISKY?
SAVING
is an essential part of
personal finance that
involves setting aside money
for future use.
PROS CONS

 Builds up an  Much lower

emergency fund
 Funds short-term goals yields
like buying groceries,
 May lose out
a new phone, or going
on a vacation. to inflation
 Minimal risk of loss.
INVESTING
is a way to grow your
money over time by
putting it to work in
financial instruments.
PROS CONS
 Potential for higher  Risk of loss,
returns than savings
especially in the
 Can help achieve long-
short-run
term financial goals
 Requiresdiscipline
 Diversification can
reduce risk and commitment
 May require longer
time horizons
WRAP UP
 Budgeting
 Importance of Budgeting
 Some Tips for Budgeting in College life
 Needs and Wants
 Saving and Investing
References:
 https://www.nerdwallet.com/article/finance/what-is-a-budget#~:text=A%20
budget%20is%20a%20spending,as%20a%20month%20or%20yea
 https://www.mymoneycoach.ca/budgeting/what-is-a-budget-planning-foreca
sting#:~:text=What%20is%20a%20Budget%3F,or%20would%20like%20to%20do

 https://study.com/learn/lesson/needs-and-wants-in-economics.html#:~:text=
A%20need%20is%20something%20that,is%20necessary%20to%20sustain%20life
 https://testbook.com/key-differences/difference-between-needs-and-wants#
:~:text=Similarities%20between%20Needs%20and%20Wants,evolve%20and%20c
hange%20over%20time

 https://www.investopedia.com/articles/investing/022516/saving-vs-investing
-understanding-key differences.asp#:~:text=Saving%20and%20investing%20are
%20both,the%20risk%20of%20losing%20money

 https://www.bestcolleges.com/blog/budgeting-tips-first-year-students/
THANK YOU!