unit 1: introduction to personal finance. examine the charts, graphics, and reading excerpts in...
TRANSCRIPT
Explore Examine the charts, graphics, and reading
excerpts in Chapter 3: Budgeting.o Make a list of questions you would like to have
answered as we go through the chapter.
Introduction WB: Before You Begin, pgs. 50-51
o Review the Learning Outcome objectives and Key Terms
o Complete the “Before” column on the “Measure Your Progress” chart
Journal: 1. On average, how much money do you spend
per week?2. What are your top three expenses?
Cash Flow Planning Video 1.1 (10 minutes): Cash Flow Planning
Journal: 1. Describe in your own words what it means to
have a budget.
Read: 1. 10 Things Millionaires Do NOT Do (p. 52)
Discussion Questions In what way is money active?
o Money can easily be spent without accurate accounting of where it all went.
Why is it important to have a cash flow plan?o It allows you to be intentional with your spending
and saving.
Four Reasons People Avoid Budgets
Video 1.2 (6 minutes): Four reasons people avoid budgets
Journal: 1. What do you think is most challenging when it comes
to keeping a monthly budget?
Read: 1. What’s the difference between a cash flow statement
and a budget? (p. 53)2. Real Wealth Building Begins with Your Behavior (p.
54)
Discussion Questions
Why do some people avoid writing or following budgets?o If budgeting is not done correctly, people view
budgets as restrictive or ineffective.
Types of Check Endorsements (packet) All checks are eventually taken to a financial
institution. o This is why you must add your signature to the
back of the check, telling the institution what to do with your money.
An endorsement is your signed approval for a check to be:o Cashedo Depositedo Assigned to someone else
Types of Check Endorsements (packet) Blank
Endorsement: o Just your signature
o Anyone can cash your check if it is lost or stolen.
Types of Check Endorsements (packet)
Restrictive Endorsement: o For deposit only, our
signature, and your account number.
o This type of endorsement can only be deposited into your account.
Types of Check Endorsements (packet)
Special Endorsement: o Write “Pay to the order of,”
the person’s name, followed by your signature.
o This type of endorsement is used if you are signing your check over to another person.
Responsible Banking Video 2.1 (8 minutes): Responsible Banking
Journal: 1. Explain why Dave describes overdrafts as a sign
of “crisis living.”
Read: 1. Balancing Your Checking Account (p. 56)2. Are multiple accounts a good idea? (p. 58)3. Banking tools (p. 59-60)
Four Types of Expenses, pg. 60
• Expenses for things we don’t NEED.
• Restaurants• Gifts• Candy • Etc.
• Occur at various times throughout the year and tend to be large lump sums.
• Tuition payments• Athletic/Club dues• Car repairs
• Expenses that remain relatively the same from month to month
• Rent/Mortgage• Insurance
premiums• Cable Bill
• Vary from month to month
• Electricity• Gas• Groceries• Clothing Variable Fixed
Discretionary
(Non-Essential)
Intermittent
Discussion Questions
1. What is the First Foundation?
2. Why is it important to maintain an accurate balance of your checking account?
3. Should a checking account be used as a saving or spending account?
4. What are three things you’ll need to balance your checking account each month?
5. Which record is the most accurate reflection of your current balance?
Discussion Questions
6. What transactions will you need to include on your account register?
7. Why is it important to keep your own financial records?
8. What does it mean to reconcile your account? How often should you do this?
9. Why is it a good idea to select “credit” instead of “debit” when using your debit card for purchases?
Discussion Questions
10. Have you ever written a budget?
11. You have heard Dave say that personal finance is 20% head knowledge and 80% behavior. How does this relate to budgeting?
12. Some Americans believe that a credit card is safer for purchases than a debit card. Explain why that is a money myth.
Responsible Banking Activity:
1. Balance Your Checking Account
2. BB&T Activity
3. Calculating Your Net Worth
Cash Flow Plans Do Not Work When…
Video 3.1 (8 minutes): Cash Flow Plans Don’t Work When…
Journal: 1. Why do you think it is so common in America to
spend more than you make?
Discussion Questions Explain how budgeting helps you save money.
o Managed money goes farther because you intentionally cut out unnecessary spending.
Describe the ways in which having an agreed upon budget can improve a relationship.o A written plan, if lived and agreed on, removes
guilt, shame, fear and fights regarding how money is spent and saved.
Have you ever witnessed money affecting a relationship close to you?
Cash Flow Plans Do Not Work When…
Activity: o M&M Budget Activity
Quizo Write checkso Check registero Deposit slipso Check endorsemento Bank reconciliation
Cash Flow Plans Do Not Work When…
Video 3.2 (13 minutes): The Zero-Based Budget
Journal: 1. Explain in your own words what a zero-based
budget is. 2. Why is it important to write a zero-based
budget every month?
Discussion Questions What is a zero-based budget?
o A budget where every dollar has a name on paper, on purpose.
What is the envelope system and how does it work?o A system for managing spending on things that
don’t normally have a fixed monthly expense.
Your budget will only work if you follow it. What are some things you can do to make sure you stick to your budget?o Use the envelope system, direct transfer from checking to
savings each week, etc.
Discussion Questions In a zero-based budget, income minus
expenses/ purchases should equal _________.o Zero
Look at the student budget form. In what categories might it be a god idea to use the envelope system?o Where you see the envelope icon.
You have a friend who has not taken a personal finance course. How would you describe the benefits of budgeting to him/her?
Income Fixed Income: Receiving the same amount
of money each paycheck.o Salary
Irregular income: Receiving a different amount of money each paycheck.o Hourly paychecks
Discretionary income: Money left over after all of your expenses have been paid that you can use however you would like.
Budget Terminology Fixed expense: stays
relatively the same each month.o Mortgage or rent
Variable expense: changes each montho Groceries, electric bill, etc.
Discretionary expense: You have a choice on whether or not to spend money on these items.o Dining out
Intermittent expense: Expenses that happen periodicallyo Vehicle or house
repairs
Impulse purchase: an item that is bought without previous planning or consideration of the long-term effects.