Key Terms
1. _______: A plan for managing income and expenses over a specific period.
2. ______: The money you earn or receive regularly.
3. ______: The money you spend on goods and services.
4. ________: Costs that remain the same each month, such as rent or mortgage payments.
1. Budget:
2. Income
3. Expenses
4. Fixed Expenses
What is the purpose of budgeting? 3 things
You work as a cashier and earn $12 per hour. Last week, you worked 20 hours. Calculate your gross income for last week.
Gross income for last week: $12/hour * 20 hours = $240
So, your gross income for last week was $240.
James wants to buy a new computer that costs $1,200. He currently has $400 saved and can save $100 per month. How long will it take him to save enough money to buy the computer?
A family's monthly income is $8,000. They want to save 20% of their income, spend 50% on necessities, and use the rest for discretionary spending. How much will they spend on each category each month?
5. _________: Costs that can change from month to month, such as groceriesor utility bills.
6. ________: Money set aside for future needs or goals.
7. ________: Essential items required for survival, such as food, shelter, and clothing.
8. _______: Non-essential items that add comfort or enjoyment to life, such as entertainment or luxury items.
5. Variable Expenses
6. Savings
7. Needs
8. Wants
5 steps to a budget plan
Calculate Your Income: Add up all sources of income, including your salary, freelance work, and any other earnings.
List Your Expenses: Make a list of all your expenses, including fixed expenses (like rent and utilities) and variable expenses (like groceries and entertainment).
Differentiate Between Needs and Wants: Identify which expenses are essential (needs) and which are non-essential (wants). This will help you prioritize your spending.
Set Spending Limits: Determine how much you can afford to spend in each category based on your income and goals. Allocate a portion of your income to savings and debt repayment.
Track Your Spending: Keep track of your actual spending to see if it aligns with your budget. This will help you identify areas where you may need to adjust your spending.
Suppose you work as a consultant and earn $80 per hour. Last week, you worked 35 hours. After deductions for taxes and other expenses, you take home 85% of your gross income. Calculate your net income for last week, excluding taxes and other expenses.
Gross income for last week: 35 hours * $80/hour = $2800
Next, we'll calculate your net income after deductions:
Net income after deductions: 85% of $2800 = $2800 * 0.85 = $2380
So, your net income for last week, excluding taxes and other expenses, is $2380.
A company has a budget of $50,000 for a project. They have already spent 25% of the budget on research and development, 20% on marketing, and 15% on equipment. How much money do they have left in their budget?
Sarah earns $2,000 per month and wants to save 20% of her income. She also has expenses of $1,200 per month. How much will she save each month?
9. _________: When income exceeds expenses.
10. __________: When expenses exceed income.
11. _______: The amount of money left after subtracting expenses from income.
12. _______: The movement of money in and out of your accounts.
9. Budget Surplus
10. Budget Deficit
11. Net Income
12. Cash Flow
What is the 50/30/20 rule?
The 50/30/20 rule is a simple guideline for budgeting that suggests dividing your after-tax income into three categories:
50% for Needs: Allocate 50% of your income to cover essential expenses or needs. This includes things like rent or mortgage payments, utilities, groceries, transportation, and insurance.
30% for Wants: Use 30% of your income for discretionary spending or wants. This category includes things like dining out, entertainment, shopping for non-essential items, and hobbies.
20% for Savings and Debt Repayment: Dedicate 20% of your income to savings, investments, or paying off debt. This portion can help you build an emergency fund, save for retirement, or pay down high-interest debt.
You are a software engineer and earn $60 per hour. You work 40 hours per week. After deductions for taxes and retirement savings, you take home 75% of your gross income. Calculate your net income for a week, excluding taxes and retirement savings.
Gross income for the week: 40 hours * $60/hour = $2400
Next, we'll calculate your net income after deductions:
Net income after deductions: 75% of $2400 = $2400 * 0.75 = $1800
So, your net income for the week, excluding taxes and retirement savings, is $1800.
A nonprofit organization has a budget of $100,000 for the year. They have already spent 40% of the budget on programs, 20% on administrative costs, and 10% on fundraising. How much money do they have left in their budget?
Rachel is planning a wedding and has budgeted $15,000 for the event. So far, she has spent 40% of the budget on the venue, 20% on catering, and 10% on decorations. How much money has she spent in total, and how much does she have left in her budget?
13. _________: Savings set aside for unexpected expenses or emergencies.
14. ________: Money owed to lenders or creditors.
15. ________: A numerical representation of your creditworthiness based on your credit history.
16. ________: A purchase made without planning or consideration, often based on immediate desires
13. Emergency Fund
14. Debt
15. Credit Score
16. Impulse Purchase
For our road trip activity, where did we drive to and from? AND where did we visit? *Think carefully*
Anderson, SC to Los Angeles, CA.
Disney Land
You are a freelance graphic designer and earn $50 per hour. You typically work 20 hours per week, but this week you have a rush project and work an additional 10 hours. You also have monthly expenses as follows:
You are required to save 25% of your income for taxes. Calculate your net income for the week, excluding taxes and expenses.
Regular hours worked: 20 hours/week Extra hours worked: 10 hours Hourly wage: $50
Total hours worked: 20 hours/week + 10 hours = 30 hours Total earnings for the week: 30 hours * $50/hour = $1,500
Next, we'll calculate your savings for taxes:
Savings for taxes: 25% of $1,500 = $375
Subtracting the savings for taxes from your total earnings gives your net income for the week, excluding taxes and expenses:
Net income for the week: $1,500 - $375 = $1,125
So, your net income for the week, excluding taxes and expenses, is $1,125.
A company's annual budget is $1,000,000. They have already spent 40% of the budget on salaries, 25% on equipment, and 15% on marketing. How much money do they have left in their budget?
Mark is starting a new business and needs to create a budget. He estimates his monthly income to be $10,000. He plans to spend 30% on rent, 20% on employee salaries, 15% on utilities, 10% on marketing, and the rest on miscellaneous expenses. How much will he spend on each category, and how much will he have left?
17. _________: A specific, measurable target for saving or spending that helps you achieve your financial objectives.
18. _________: Monitoring and recording all your spending to gain insight into your financial habits.
19. ________: The amount of money needed to sustain a certain standard of living, including expenses like housing, food, and transportation.
20. __________: The knowledge and skills needed to make informed and effective financial decisions.
17. Financial Goal
18. Tracking Expenses
19. Cost of living
20. Financial Literacy
What "holiday" did we celebrate during our budgeting unit AND who was one of the people who shared a birthday?
PI Day - 3.14
Albert Einstein and/or Stephen Curry
You are a part-time sales associate at Target, earning $14 per hour. You work 25 hours per week and get paid every other Friday. You have $700 in credit card debt from previous car repairs and are required to save a minimum of 20% of each paycheck.
Additionally, you must pay the following taxes:
Hourly wage: $14 Hours worked per week: 25 Earnings per week: $14 * 25 = $350 Earnings for two weeks: $350 * 2 = $700
Next, we'll calculate the total taxes for two weeks:
Federal tax: 15% of $700 = $105 State tax: 5% of $700 = $35 Social Security: 6.2% of $700 = $43.40 Medicare: 1.45% of $700 = $10.15 Total taxes: $105 + $35 + $43.40 + $10.15 = $193.55
Subtracting the total taxes from your earnings gives your net income after taxes:
Net income: $700 - $193.55 = $506.45
A company's total revenue for the year is $2,000,000. They want to allocate 30% of their revenue to research and development, 25% to marketing, 20% to salaries, and the rest to profits. What is the company's annual profit?
The total amount allocated to these categories is $600,000 + $500,000 + $400,000 = $1,500,000. Therefore, the amount allocated to profits is $2,000,000 - $1,500,000 = $500,000.
A couple's total monthly income is $7,000. They want to save 25% of their income, spend 40% on necessities, and use the rest for entertainment. How much money will they spend on each category each month?