Lifestyle Costs Money management is the process of planning how to get the most from your money

Lifestyle CostsLifestyle Costs Money management is the process of planning how to get the most from your money.

Lifestyle CostsLifestyle Costs A budget is a plan for using your money in a way that best meets your wants and needs.

Lifestyle CostsLifestyle Costs A budget includes a record of your expected income, your planned expenses, and your planned savings over a certain period of time.

Lifestyle CostsLifestyle Costs

The five steps in planning a budget are:

• Setting your goals • Estimating your income • Estimating your expenses• Planning for savings• Balancing and adjusting your budget

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Set GoalsSet Goals A budget should help you decide which goals you can meet with the amount of money you have.

Estimate IncomeEstimate Income Your income is the actual amount of money you earn or receive during a given time period.

Gross PayGross Pay Your gross pay is the total amount of money you earned for a specific time.

Net PayNet Pay Your gross pay is reduced by various deductions, or amounts that are taken out of your pay before you receive your paycheck.

Your net pay, or take-home pay, is your gross pay minus deductions.

TaxesTaxes Withholding, or subtracting taxes from a paycheck to be forwarded to the government

Federal, State & City, Social Security, Medicare, Option (health, pension)

TaxesTaxes Employers responsibility -- forward taxes withheld to government

If not all taxes withheld from checks then must budget for payment of those taxes later

TaxesTaxes When accept job, complete W-4 which states withholding

In January receive W-2 which shows your earnings and what taxes paid in. This is submitted with your tax return.

Other IncomeOther Income If your net pay is the only income you have to consider, it’s easy to figure your total income.

If part of your income is from tips, don’t overestimate how much you expect to receive in tips.

Estimate ExpensesEstimate Expenses Items you have to spend money on such as food, rent, and clothing are called expenditures.

Estimate ExpensesEstimate Expenses The two basic types of expenses are:

• Fixed expenses• Variable expenses

Fixed ExpensesFixed Expenses Fixed expenses are expenses that occur regularly and that are regularly paid.

For example, rent and insurance.

Variable ExpensesVariable Expenses Variable expenses are expenses that fluctuate from month to month.

For example, food and entertainment.

Plan for SavingsPlan for Savings Savings protect you against expenses that you didn’t budget, that are higher than you expected, or that are completely unexpected.

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Balance and Adjust the BudgetBalance and Adjust the Budget The total estimated income for a period should equal the total estimated expenses.

If you spend more than you planned, you will have a deficitIf spent less, your will have a surplus

Graphic OrganizerPlanning a BudgetPlanning a Budget

Graphic OrganizerGraphic Organizer

Set Goals

Estimate Income

Plan for Savings

Balance and Adjust the Budget

Estimate Expenses