Budget Basics

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leWhy Do Budgets Get a Bad Rap?

Does the mere mention of the word “budget” conjure up images of drudgery and deprivation? You’re not alone. Most people think budgets are

Rigid and inflexible Painful – who wants to eat Top Ramen

every night? No fun!

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leWhy Budgets Really Do Make SenseA good budget should help you set priorities

and achieve what’s important to you. Not

what’s important to your banker, your best

friend, or your relatives. A good budget

should be Flexible: It should change as your needs change. Ongoing: It’s not a one-time event. A budget

should be part of your everyday life. Clear and easy to use: 12 page spreadsheets are

out!

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leBudgets: Where to Start

Be clear on

what you make

and how much

you spend. Anticipate all of

your potential

expenses.

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leBudget Categories Income

GrossNet

SavingsEmergenciesLong-TermRetirementShort-Term

ExpensesFixedVariableDiscretionary

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leIncome: The Amount of Money Earned Gross income: An

individual’s income

before taxes. Net income:

Income after taxes

are paid. Fasten your seat

belts: Taxes can

range from 15% to

31%. Yikes!

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leThe Amazing Disappearing Paycheck Your first real job pays $30,000/year. You’re

rolling in the bucks, right? Not necessarily. Your salary is your gross income. Take off at

least 25% for taxes and other deductions.

That’s what’s left for you to spend. Example:

Gross salary = $30,000

Minus 25% taxes and deductions - 7,500

Net income $22,500

Quite a hit, huh?

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leSavings: Pay Yourself First Savings is unspent income. Types

Emergencies: Plan to set aside three months’

living expensesLong-term: Large ticket items (house, car,

college)Retirement: It’s never to early to startShort-term: Vacation, clothes, new skis

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leExpenses Expense: A cost

to meet a need

or pay a debt Types of

expensesFixedVariableDiscretionary

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leFixed ExpensesA cost that occurs

regularly and

doesn’t vary in

amountRentMortgageCar paymentInsurance

premiumSchool loansOthers?

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leVariable ExpensesA cost that occurs

regularly but may

vary in amountElectricityWater and

GarbageTelephoneGasolineGroceriesOthers?

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leDiscretionary ExpensesA cost determined

by personal wants

that may be

controlled Movies, videos, CDs Sports Eating out Grooming and clothes Concerts and plays Vacations Others?

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leBudget Basics Summary Set your

priorities. What

do you want to

accomplish with

your money?

Establish a budget with the following:IncomeSavingsExpenses

• Fixed• Variable• Discretionary

End up with a budget surplus and you’re a success!

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leopening a checking account

Teens – Lesson 6 - Slide 6-C

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lereading a bank statement

Teens – Lesson 6 - Slide 6-H

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lemaking a deposit

1. Write the date you are making the

deposit in this field.

2. If you are depositing currency

(paper bills), write the total amount

here.

3. If you are depositing coins, write the

total amount here.

4. If you are depositing a check, write

the bank transit number here, which is

the top portion of the two-part number

printed in the upper corner of the

check.

5. Write the amount of the check here.

Teens – Lesson 6 - Slide 6-D

6. If you are depositing more checks than can be

listed on the front, continue to list them on the

back, and write the total amount of the checks

on back here.

7. Write the total amount you are depositing

here.

8. If you are making a deposit inside a bank with

a teller and you want to receive cash back from

your deposit, write the amount you want in this

field.

9. Write the total amount (less cash back) of your

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lewriting a check

Teens – Lesson 6 - Slide 6-Fa

1. Date Enter the date you are writing the check.

2. Payee Enter the name of the person or the company you are going to give

the check to.

3. Amount of check in numerals Enter the amount of the check, in numbers.

Don’t leave any space between the pre-printed dollar symbol ($) and the

numbers indicating the amount of the check; there should be no room for

someone to add in extra numbers.

4. Amount of check in words Enter the amount of the check in words. Start

writing at the far left side of the line. Follow the dollar amount by the

word “and,” then write the amount of cents over the number 100. Draw a

line from the end of the 100 to the end of the line.

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lewriting a check (continued)

5. Name Your personal information is printed here. Never list your Social

Security number on your printed check.

6. Signature Sign your check exactly the way you signed your name on the

signature card you filled out when you opened your account.

7. Memo Use this space to note why you wrote the check. If you are paying a

bill, this is a good place to put information requested by the company.

8. Identification numbers These numbers are used to identify the bank, your

account number, and the check number. They are printed in a special

magnetic ink that machines can read.Teens – Lesson 6 - Slide 6-Fb

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leendorsing a check

Teens – Lesson 6 - Slide 6-E

blank endorsementAnyone can cash check

restrictive endorsementMore secure than blank endorsement

special (or full) endorsementTransfer check to another party

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lekeeping a running balance

Teens – Lesson 6 - Slide 6-Ga

(a) Keeping a Running Balance: Check Transaction

(b) Keeping a Running Balance: ATM Cards

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lekeeping a running balance (continued)

(c) Keeping a Running Balance: Check Cards

Teens – Lesson 6 - Slide 6-Gb