marketing mathematics “a basic skill needed in life and in any business”

Marketing Mathematics

““A Basic Skill Needed in Life and in A Basic Skill Needed in Life and in Any Business”Any Business”

What Kind of What Kind of Mathematics Mathematics Do We Use Do We Use

Business???Business???

AdditionAdditionSubtractionSubtractionMultiplicationMultiplicationDivisionDivisionFractionsFractionsPercentagesPercentages

AdditionAdditionSubtractionSubtractionMultiplicationMultiplicationDivisionDivisionFractionsFractionsPercentagesPercentagesIt’s Not Calculus!!It’s Not Calculus!!

AdditionAdditionSubtractionSubtractionMultiplicationMultiplicationDivisionDivisionFractionsFractionsPercentagesPercentages

How Do We How Do We Use Use

Mathematics Mathematics inin

Business???Business???

Identify situations in Identify situations in which the ability to add which the ability to add & subtract are required:& subtract are required:

DiscussionDiscussion

Identify situations in Identify situations in which the ability to add which the ability to add & subtract are required:& subtract are required: Cashier’s daily balanceCashier’s daily balance Daily sales summaryDaily sales summary Customer accountsCustomer accounts Sales checksSales checks Counting $$$Counting $$$ InventoryInventory

Identify situations in Identify situations in which the ability to which the ability to multiply & divide are multiply & divide are required:required:

Identify situations in Identify situations in which the ability to which the ability to multiply & divide are multiply & divide are required:required: Bulk pricingBulk pricing Average salesAverage sales ExtensionsExtensions Ad time purchasesAd time purchases Payment plansPayment plans

Identify situations in Identify situations in which the ability to which the ability to calculate percents & calculate percents & fractions are required:fractions are required:

Identify situations in Identify situations in which the ability to which the ability to calculate percents & calculate percents & fractions are required:fractions are required: Time cardsTime cards DiscountsDiscounts MarkupMarkup Sales tax calculationsSales tax calculations

Be Able to Be Able to Complete a Complete a

Standard Standard “Sales Check” “Sales Check” to 100% to 100%

AccuracyAccuracy

Marketing Mathematics Be able to Complete a Be able to Complete a

Standard Sales Check to 100% Standard Sales Check to 100% accuracyaccuracy Use of the sales receiptUse of the sales receipt

Customer receiptCustomer receiptTo determine commissionsTo determine commissionsPlanning future purchasesPlanning future purchasesMarket researchMarket researchBilling informationBilling informationCalculating of taxesCalculating of taxesDelivery informationDelivery information

Standard Sales Check to 100% Standard Sales Check to 100% accuracyaccuracy Types of sales transactionsTypes of sales transactions

Cash/CheckCash/CheckChargeChargeLayawayLayawayDiscountDiscountCash on Delivery “COD”Cash on Delivery “COD”Returns/ExchangesReturns/Exchanges

Standard Sales Check to 100% Standard Sales Check to 100% accuracyaccuracy Types of sales transactionsTypes of sales transactions

Cash/CheckCash/CheckChargeChargeLayawayLayawayDiscountedDiscountedCash on Delivery “COD”Cash on Delivery “COD”Returns/Exchanges Returns/Exchanges WHY???

Standard Sales Check to 100% Standard Sales Check to 100% accuracyaccuracy Rules to completing a sales Rules to completing a sales

checkcheckFill in all necessary Fill in all necessary

informationinformationBe legible & accurateBe legible & accurateUse in correct orderUse in correct order

Standard Sales Check to 100% Standard Sales Check to 100% accuracyaccuracy Making ChangeMaking Change

The “Count-Back Method”The “Count-Back Method”• Announce the $$$ amount Announce the $$$ amount

of the saleof the sale• Place bill on register platePlace bill on register plate• Repeat the amount Repeat the amount

tenderedtendered

Standard Sales Check to 100% Standard Sales Check to 100% accuracyaccuracy Making Change Making Change (Continued)(Continued)

The “Count-Back Method”The “Count-Back Method”• Count the amount out of Count the amount out of

the register to yourselfthe register to yourself• . . . then to the customer. . . then to the customer• Place money in the Place money in the

register register properlyproperly

Standard Sales Check to 100% Standard Sales Check to 100% accuracyaccuracy Making Change Making Change (Continued)(Continued)

The “Count-Back Method”The “Count-Back Method”• Place the receipt in the Place the receipt in the

customer’s handcustomer’s hand• Thank the customerThank the customer

Use the fewest bills & coins Use the fewest bills & coins possible!!!possible!!!

Marketing Mathematics Be able to Complete a Standard Be able to Complete a Standard

Sales Check to 100% accuracySales Check to 100% accuracy Making Change Making Change (Continued)(Continued)

Avoiding mistakesAvoiding mistakes• Remain calm/focusedRemain calm/focused• Be willing to start overBe willing to start over• Do one transaction at a timeDo one transaction at a time• Never put bill in register Never put bill in register

until finisheduntil finished• Enter information carefullyEnter information carefully

Standard Sales Check to 100% Standard Sales Check to 100% accuracyaccuracy The Cash Drawer:The Cash Drawer:

Bills are placed flat and Bills are placed flat and facing the same directionfacing the same direction

Fifties and above are placed Fifties and above are placed under the register drawerunder the register drawer

Maintain an adequate change Maintain an adequate change fundfund

Ask for change in advanceAsk for change in advance

Standard Sales Check to 100% Standard Sales Check to 100% accuracyaccuracy Be able to complete a charge Be able to complete a charge

sales transactionsales transaction Very similar to a regular Very similar to a regular

sales checksales checkAdd customer account Add customer account

number and authorization number and authorization codecode

Sales Check to 100% accuracySales Check to 100% accuracy Be able to complete a charge Be able to complete a charge

sales transactionsales transaction (Continued)(Continued)First check the expiration dateFirst check the expiration dateAuthorize accountAuthorize accountCompare signature on receipt Compare signature on receipt

w/ signature on card’s backw/ signature on card’s backIs everything legible?Is everything legible?Return the card to customerReturn the card to customer

Standard Sales Check to 100% Standard Sales Check to 100% accuracyaccuracy Be able to complete a check Be able to complete a check

transactiontransaction More difficultMore difficultJust like cash, but fraudulent Just like cash, but fraudulent

checks are more plentifulchecks are more plentiful““I can’t be overdrawn, I’ve I can’t be overdrawn, I’ve

still got checks in my still got checks in my checkbook.”checkbook.”

Standard Sales Check to 100% Standard Sales Check to 100% accuracyaccuracy Be able to complete a check Be able to complete a check

transactiontransaction (Continued)(Continued)Your job is to preventYour job is to preventChecks are called “sales Checks are called “sales

drafts.” Drafts are orders to drafts.” Drafts are orders to pay. In this case, you’re pay. In this case, you’re ordering your bank to pay.ordering your bank to pay.

Sales Check to 100% accuracySales Check to 100% accuracy Be able to complete a check Be able to complete a check

transactiontransaction (Continued)(Continued)Checks are “negotiable Checks are “negotiable

instruments” meaning that they instruments” meaning that they are transferable. are transferable.

To transfer a check, it must be To transfer a check, it must be endorsedendorsed

There are special endorsementsThere are special endorsements• ““For Deposit Only”For Deposit Only”

• ““Pay to the Order”Pay to the Order”

transactiontransaction (Continued)(Continued)Do not accept “Two-Party” Do not accept “Two-Party”

checkschecksCheck for the correct Check for the correct

information on the checkinformation on the checkCompare signature on check Compare signature on check

w/ what is on their picture ID.w/ what is on their picture ID.

transactiontransaction (Continued)(Continued)Remember, if they can check Remember, if they can check

your merchandise, you can your merchandise, you can check their checks. check their checks.

Sales Check to 100% accuracySales Check to 100% accuracy Be able to conduct a customer Be able to conduct a customer

return transactionreturn transactionWhy do stores hate to do Why do stores hate to do

return transactions?return transactions?

return transactionreturn transactionWhy do stores hate to do Why do stores hate to do

return transactions?return transactions?

Because money is Because money is leaving the store leaving the store

instead of coming in!!!instead of coming in!!!

return transaction return transaction (Continued)(Continued)Do store have to do returns?Do store have to do returns?

Why do stores do returns?Why do stores do returns?

return transaction return transaction (Continued)(Continued)Do store have to do returns?Do store have to do returns?

NoNoWhy do stores do returns?Why do stores do returns?

Trust & loyaltyTrust & loyalty

return transaction return transaction (Continued)(Continued)What other options are What other options are

available to a salesperson?available to a salesperson?

return transaction return transaction (Continued)(Continued)What other options are What other options are

available to a salesperson?available to a salesperson?• ExchangeExchange• Credit to their accountCredit to their account• Gift certificateGift certificate

return transaction return transaction (Continued)(Continued)Types of exchanges:Types of exchanges:

• Even ExchangeEven Exchange• Uneven ExchangeUneven Exchange

return transaction return transaction (Continued)(Continued)Return Polices:Return Polices:

• Wrapping?Wrapping?• Length of time?Length of time?• Damage?Damage?• Receipt?Receipt?• Sale item?Sale item?

See examples next

return transaction return transaction (Continued)(Continued)Return Polices:Return Polices:

• Dress shirt is unwrapped?Dress shirt is unwrapped?• Kept for one month?Kept for one month?• Bottom of shoes scuffed?Bottom of shoes scuffed?• It was a gift, no receipt?It was a gift, no receipt?• 50% off sale, but . . . ?50% off sale, but . . . ?

Role Play

return transaction return transaction (Continued)(Continued)What business forms must be What business forms must be

changed:changed:• InventoryInventory• Cash register balanceCash register balance• CommissionsCommissions• Income statementsIncome statements

Marketing Mathematics Be able to operate a Be able to operate a

computerized cash registercomputerized cash register Cash register purposes:Cash register purposes:

• Calculate accuratelyCalculate accurately• Provide customer receiptProvide customer receipt• Provide records for storeProvide records for store• Display work to customerDisplay work to customer• Speed purchaseSpeed purchase• Cash securityCash security• Inventory recordsInventory records• Merchandise orderingMerchandise ordering

computerized cash registercomputerized cash register Common cash register keys:Common cash register keys:

• Operator’s Operator’s keykey– LocksLocks– Initiate readsInitiate reads

““X” X” readread

““Z” Z” readread

– Indicates functionIndicates function

• Keyboard:Keyboard:– ReceiptReceipt– Receipt feedReceipt feed– Journal feedJournal feed– Date/No.Date/No.– Numeric keysNumeric keys– Dept. keysDept. keys

• Keyboard:Keyboard:– #/NS#/NS– TX/MTX/M– ““X”X”– Item Corr.Item Corr.– ““C”C”– ““Retn MDSE”Retn MDSE”– ““R/A”R/A”

Continued

Marketing Mathematics Be able to operate a computerized Be able to operate a computerized

cash registercash register Common cash register keys:Common cash register keys:

• Keyboard:Keyboard:– #/NS#/NS No SaleNo Sale– TX/MTX/M Tax Mod.Tax Mod.– ““X”X”

ExtensionExtension– Item Corr.Item Corr. CorrectionsCorrections– ““C”C” ClearClear– ““Retn MDSE”Retn MDSE” ReturnsReturns– ““R/A”R/A” Account Account

ReturnsReturns

Continued

computerized cash registercomputerized cash register Types of Cash Registers:Types of Cash Registers:

• Keyboard:Keyboard:– ““PO”PO”– ““Vali Date”Vali Date”– ““Chg.”Chg.”– ““ST”ST”– ““Doll Disc”Doll Disc”– ““AT/TL”AT/TL”

Continued

Marketing Mathematics Be able to operate a computerized Be able to operate a computerized

cash registercash register Types of Cash Registers:Types of Cash Registers:

• Keyboard:Keyboard:

– ““PO”PO” Paid OutPaid Out

– ““Vali Date”Vali Date” ValidateValidate

– ““Chg.”Chg.” Charge saleCharge sale

– ““ST”ST” SubtotalSubtotal

– ““Doll Disc”Doll Disc” DiscountDiscount

– ““AT/TL”AT/TL” Amt Amt TenderedTendered

Continued

Marketing Mathematics Be able to operate a computerized cash Be able to operate a computerized cash

registerregister Common cash register types:Common cash register types:

• Manual Key EntryManual Key Entry– Numeric keysNumeric keys– Function keysFunction keys

• Optical ScanningOptical Scanning– Uses wand to “read”Uses wand to “read”– UPC (Universal Product Codes)UPC (Universal Product Codes)

computerized cash registercomputerized cash register Be able to verify a “Change Fund”:Be able to verify a “Change Fund”:

• A change fund is the amount of A change fund is the amount of $$$ an operator starts the day $$$ an operator starts the day withwith

• Amounts vary between $100 Amounts vary between $100 and $150 depending on and $150 depending on customer habits & sales volumecustomer habits & sales volume

• The make-up depends on the The make-up depends on the prices charged by the storeprices charged by the store

computerized cash registercomputerized cash register Be able to verify a “Change Fund”:Be able to verify a “Change Fund”:

• Verify your change fund at the Verify your change fund at the start of each daystart of each day

• ““Buy ChangeBuy Change” during the day ” during the day in advance of running out.in advance of running out.

– Pennies = 50 = $ .50Pennies = 50 = $ .50

– Nickels = 40 = $ 2.00Nickels = 40 = $ 2.00

– Dimes = 50 = $ 5.00Dimes = 50 = $ 5.00

– Quarters= 40 = $10.00Quarters= 40 = $10.00

– Dollars = 25 = $25.00Dollars = 25 = $25.00

Continued

computerized cash registercomputerized cash register Be able to “Tally” the day’s sales & Be able to “Tally” the day’s sales &

“balance” the register at day’s end“balance” the register at day’s end• End the day by totaling the End the day by totaling the

coin, currency, charge slips, & coin, currency, charge slips, & checks in the registerchecks in the register

• Subtract the change fundSubtract the change fund• Make allowances for returns, Make allowances for returns,

corrections, & paid out corrections, & paid out transactionstransactions

computerized cash registercomputerized cash register Be able to “Tally” the day’s sales & Be able to “Tally” the day’s sales &

“balance” the register at day’s end“balance” the register at day’s end• Compare the “tape” of the day’s Compare the “tape” of the day’s

transactions with your totalstransactions with your totals• Record “overage” Record “overage”

or “underages”or “underages”• Turn in “Tally”Turn in “Tally”• Make change fund for tomorrowMake change fund for tomorrow

Continued

Be able to Be able to describe the role describe the role of banks in our of banks in our business’s business’s operationsoperations

Marketing Mathematics Be able to describe the role of Be able to describe the role of

banks in our business’s operationsbanks in our business’s operations Homework:Homework:

1.1. Read Chapter 12, Read Chapter 12, Pages 194 – 205Pages 194 – 205

2.2. Read Chapters 29 & 30, Read Chapters 29 & 30, Pages 512 – 539 Pages 512 – 539

Marketing Mathematics Be able to describe the role of banks Be able to describe the role of banks

in our business’s operationsin our business’s operations Role of banks:Role of banks:

SecuritySecurityMoney Management.Money Management.

in our business’s operationsin our business’s operations Money substitutes:Money substitutes:

Bank checksBank checksTraveler’s checksTraveler’s checksDrafts (bank to bank checks)Drafts (bank to bank checks)Money ordersMoney ordersCashier’s checksCashier’s checksDebit cardsDebit cardsCredit cards Credit cards (Store cards vs. Bank cards)(Store cards vs. Bank cards)

LoansLoans

in our business’s operationsin our business’s operations Other services:Other services:

Deposit boxesDeposit boxesCounselingCounseling

• BusinessBusiness

• PersonalPersonal

• Real estate/Stocks Real estate/Stocks & Bonds& Bonds

Community serviceCommunity service

in our business’s operationsin our business’s operations Accounts:Accounts:

SavingsSavingsCheckingChecking

Terms:Terms:InterestInterestPayeePayeeDrawerDrawerDraweeDrawee

SavingsSavingsCheckingChecking

Terms:Terms:InterestInterest IncomeIncomePayeePayee To WhomTo WhomDrawerDrawer Writer of the checkWriter of the checkDraweeDrawee The bankThe bank

Marketing Mathematics Be able to describe the Be able to describe the

role of banks in our role of banks in our business’s operationsbusiness’s operations Specialty terms:Specialty terms:

Signature Authorization Signature Authorization CardCard

Taxpayer IDTaxpayer ID

banks in our business’s operationsbanks in our business’s operations Accounts:Accounts:

SavingsSavings Saving Account Basics:Saving Account Basics:

Why do people save money?Why do people save money? (& others don’t)(& others don’t)

• ________________ ________________ • ________________ ________________ • ________________ ________________ • ________________________________

Why do people save money? Why do people save money? • For major purchasesFor major purchases• EmergenciesEmergencies• RetirementRetirement• ??????

Earning Interest on SavingsEarning Interest on Savings• Why do we get interest Why do we get interest

income from a bank?income from a bank?– Because they let others use your Because they let others use your

money to make them and themselves money to make them and themselves make money.make money.

Earning Interest on SavingsEarning Interest on Savings• Start earlyStart early• Save at least 10% of gross Save at least 10% of gross

incomeincome

Saving ConceptsSaving Concepts• Rate of Return – Rate of Return – the percentage the percentage

of increase in the value of your of increase in the value of your savings.savings.

• Simple vs. Compounding – Simple vs. Compounding – ““Interest earning income on Interest earning income on interest incomeinterest income.”.”

Types of Savings AccountsTypes of Savings Accounts• Regular Savings AccountsRegular Savings Accounts• Certificates of Deposit (CDs)Certificates of Deposit (CDs)

– Maturity DatesMaturity Dates

• Money Market FundsMoney Market Funds– Also called Mutual FundsAlso called Mutual Funds

Pros of Saving AccountsPros of Saving Accounts• Insurance through the FDICInsurance through the FDIC

– Federal Deposit Insurance CorporationFederal Deposit Insurance Corporation

– Up to ??? KUp to ??? K

• LiquidityLiquidity

Cons of Saving AccountsCons of Saving Accounts• Low Rates of ReturnLow Rates of Return

– Very little riskVery little risk

• Inflation RiskInflation Risk– 2% return; 4% inflation? Ouch!!!2% return; 4% inflation? Ouch!!!

• FeesFees– Min. balance, Account Fees, TaxesMin. balance, Account Fees, Taxes

banks in our business’ operationsbanks in our business’ operations Accounts:Accounts:

CheckingChecking Homework:Homework:

1.1. Read Chap 29, pages 512 – 518Read Chap 29, pages 512 – 518

CheckingChecking Checking Account Basics:Checking Account Basics:

A check is a written order directing a A check is a written order directing a bank to pay money on demand to the bank to pay money on demand to the person/company namedperson/company named

Once the bank pays the money, the Once the bank pays the money, the check is “check is “canceledcanceled” meaning the ” meaning the debt has been paid.debt has been paid.

A check can be “A check can be “endorsedendorsed” meaning ” meaning sign over to another party. sign over to another party.

Society is moving more in the Society is moving more in the direction of “direction of “debitdebit cardscards” allowing ” allowing funds to be removed from another funds to be removed from another person’s account immediately.person’s account immediately.

Types of Accounts:Types of Accounts:• Regular Checking – for Regular Checking – for

customers who write only a few customers who write only a few checks a month & do not keep checks a month & do not keep high balances. Allows for high balances. Allows for ““ATMS”ATMS” and “ and “Direct DepositDirect Deposit.”.”

Types of Accounts:Types of Accounts:• Interest Bearing – Allows the Interest Bearing – Allows the

customer to earn interest income customer to earn interest income from the funds left in the from the funds left in the checking accountchecking account

Types of Accounts:Types of Accounts:• Joint Account – Allows two or Joint Account – Allows two or

more people to write checks on more people to write checks on the account. the account.

Account SecurityAccount Security• Signature CardSignature Card

Account ServicesAccount Services• Overdraft Protection is for when Overdraft Protection is for when

the client is “the client is “overdrawnoverdrawn.”.”• ““Stop PaymentStop Payment””• ““Online BankingOnline Banking””• ““Debit CardsDebit Cards””

CheckingChecking Keeping Track of Financial Keeping Track of Financial

Transactions:Transactions:Writing a CheckWriting a Check

• Parts of a CheckParts of a Check– See diagram next pageSee diagram next page

• Check Register – a log of Check Register – a log of customer transactionscustomer transactions

Parts of a CheckParts of a Check

CheckingChecking Making DepositsMaking Deposits

Deposit SlipsDeposit SlipsKeep Your ReceiptsKeep Your ReceiptsUse the ATMUse the ATMWatch for EndorsementsWatch for Endorsements

• For Deposit OnlyFor Deposit Only

CheckingChecking Reconciling Your Bank StatementReconciling Your Bank Statement

Confirming that your records agree Confirming that your records agree with the bank’s records. with the bank’s records.

Balancing Your CheckbookBalancing Your CheckbookOutstanding Checks & DepositsOutstanding Checks & DepositsFees Fees (Bank and ATM)(Bank and ATM)InterestInterest

Marketing Mathematics Be Able to Manage Your Be Able to Manage Your

Personal FinancesPersonal Finances Making Financial DecisionsMaking Financial Decisions Homework:Homework:

1.1. Read Chap 28, pages 496 - 507Read Chap 28, pages 496 - 507

2.2. Complete the Crossword Puzzle ProvidedComplete the Crossword Puzzle Provided

3.3. On the Puzzle sheet, answer any one On the Puzzle sheet, answer any one “Critical Thinking” question from the text. “Critical Thinking” question from the text. Use complete sentences. Summarize the Use complete sentences. Summarize the question in the first sentence.question in the first sentence.

Personal FinancesPersonal Finances Making Financial DecisionsMaking Financial Decisions

Personal Financial Planning means Personal Financial Planning means spending, saving, & investing your spending, saving, & investing your money so you can enjoy the kind of money so you can enjoy the kind of lifestyle you want. lifestyle you want.

Financial Goals are Critical – buy a Financial Goals are Critical – buy a car, save for college, socialize, pay car, save for college, socialize, pay your bills, A plan to retire, etc. your bills, A plan to retire, etc.

Steps to Financial Planning:Steps to Financial Planning:

1.1. Determine your financial Determine your financial situationsituation

– List your savingsList your savings

– Monthly incomeMonthly income

– Monthly expensesMonthly expenses

– DebtsDebts

2.2. Determine your financial goalsDetermine your financial goals– Spend or save?Spend or save?

– Wants & needs?Wants & needs?

– Work now or later?Work now or later?

– Education?Education?

3.3. Identify possible courses Identify possible courses of actionof action

– ““There’s more than one way to skin There’s more than one way to skin a cat.” a cat.”

4.4. Evaluate your alternativesEvaluate your alternatives– Gather needed informationGather needed information

– Consider pros, cons, & riskConsider pros, cons, & risk

5.5. Implement your financialImplement your financial action planaction plan

– Identify your objectivesIdentify your objectives

– Determine needed tacticsDetermine needed tactics

6.6. Review & revise your planReview & revise your plan– Needs & situations changeNeeds & situations change

– Update your plan as neededUpdate your plan as needed

Sources of Financial Information:Sources of Financial Information:• Internet research of company Internet research of company

information (Annual Reports).information (Annual Reports).• PublicationsPublications::

– Business WeekBusiness Week– Wall Street JournalWall Street Journal– The New York TimesThe New York Times– Financial TimesFinancial Times

Understanding Risk:Understanding Risk:• Every financial decision has a certain Every financial decision has a certain

amount or risk. You must be able to amount or risk. You must be able to accept possible losses.accept possible losses.

• Types of RiskTypes of Risk::– InflationInflation: a general increase in the cost of : a general increase in the cost of

goods & servicesgoods & services

– Interest RateInterest Rate: Interest rates rise & fall which : Interest rates rise & fall which

will effect your cost & returnwill effect your cost & return..

• Types of RiskTypes of Risk (Cont.)(Cont.)

– Income RiskIncome Risk: Your income may rise & fall : Your income may rise & fall over time. You could lose a job. Your or a over time. You could lose a job. Your or a family member’s health may fail for a time, family member’s health may fail for a time, or you could get a raise!or you could get a raise!

– Personal RiskPersonal Risk: Don’t put yourself in a risky : Don’t put yourself in a risky situation unnecessarily for minimal benefit. situation unnecessarily for minimal benefit. For example, driving for 24 hours straight to For example, driving for 24 hours straight to save plane faresave plane fare

– Liquidity RiskLiquidity Risk: The ability to withdraw : The ability to withdraw savings or investments in a timely manner savings or investments in a timely manner without lose of valuewithout lose of value. .

Personal FinancesPersonal Finances The Importance of BudgetingThe Importance of Budgeting

Money Management is a method of planning Money Management is a method of planning to get the most from one’s money to get the most from one’s money (“(“Getting the Getting the

biggest bang for the buckbiggest bang for the buck””):):• A budget is a plan for using your income A budget is a plan for using your income

in a way that best meets your wants & in a way that best meets your wants & needs. needs.

– A good budget will help you A good budget will help you set priorities for spending & set priorities for spending & saving and keep track of saving and keep track of your money?your money?

Personal FinancesPersonal Finances The Importance of BudgetingThe Importance of Budgeting

Preparing a BudgetPreparing a Budget

1.1. Set your financial goalsSet your financial goals- What do I want to accomplish monthly, What do I want to accomplish monthly,

yearly, for the next five years?yearly, for the next five years?

- What’s important to me? What’s important to me?

- Are my goals practical?Are my goals practical?

2.2. Estimate your incomeEstimate your income- Actual money you earnActual money you earn

- Gross pay, net pay,& deductionsGross pay, net pay,& deductions

Marketing Mathematics Be Able to Manage Your Personal FinancesBe Able to Manage Your Personal Finances

The Importance of BudgetingThe Importance of Budgeting Preparing a BudgetPreparing a Budget

3.3. Budget for unexpected expenses & savingsBudget for unexpected expenses & savings- Unexpected expenses: medical, damagesUnexpected expenses: medical, damages

- Save for major purchases & Save for major purchases & future needs (college?)future needs (college?)

4.4. Budget for fixed expensesBudget for fixed expenses- Fixed expenses (necessary) Fixed expenses (necessary)

such as rent, insurance, such as rent, insurance, car loans, food, etc. car loans, food, etc.

- Often stay the same over timeOften stay the same over time

- Allow for depreciation expenseAllow for depreciation expense

5.5. Budget for variable expensesBudget for variable expenses- Variable expenses change and can be controlled Variable expenses change and can be controlled

more readily. They include dining out, phone more readily. They include dining out, phone charges, entertainment, gifts, etc. Often called charges, entertainment, gifts, etc. Often called discretionary.discretionary.

6.6. Record what you spendRecord what you spend- Determine the difference Determine the difference

between actual expenses between actual expenses vs. budgeted expensesvs. budgeted expenses

- Surpluses & deficitsSurpluses & deficits

7.7. Review Spending & Saving PatternsReview Spending & Saving Patterns- Budgeting is a continual process. Review each Budgeting is a continual process. Review each

month & consider changesmonth & consider changes. .

marketing mathematics “a basic skill needed in life and in any business”

standard sales check

sales checkfill

accuracymaking changethe

mathematics inbusiness

register platerepeat

percents fractions

saleplace bill

accuracythe cash drawer

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