Section 1: What is a Budget. Distinguish a budget vs. a financial plan Define: Scarcity, Budget...

UNIT 3: BUDGETINGSection 1: What is a Budget

I CAN:

Distinguish a budget vs. a financial plan Define: Scarcity, Budget (balanced,

deficit, surplus), assets, net worth statement, and liabilities

Explain HOW to set a budget (the pie chart!)

Know your net worth

Your Net Worth (total value) is all of your assets ($ and stuff: house, car, boat, etc) MINUS all of your liabilities (what you owe)

Sally has $45,000 in her retirement account, she has $9,000 in her savings. She owns a $180,000 home. She drives a car, which is valued at $3,000. She owes $171,000 on her mortgage (house loan). She owes $500 on her car. What is her net worth?

What is a Budget?

We have a scarcity (limited supply) of money, so we have to know HOW to spread it out to get what we want for our standard of living

A budget is a day, week, month, year guide of where your income is going

A financial plan is a life long plan that considers education, tax flow, retirement management and individual’s life goals

Balance your Budget

People want to balance their budget. This means that they account for all of their

money in their budget A Budget Deficit means that you are

spending more money that you have What would YOU do if this happened to you?

A Budget Surplus means that you have more money than you have accounted for in your budget What would YOU do if this happened to you?

What should a budget look like?

Let’s do this together:

Bob’s take home salary is $28,000Suzie’s take home salary is $240,000

CAN I?

Distinguish a budget vs. a financial plan Define: Scarcity, Budget (balanced,

deficit, surplus), assets, net worth statement, and liabilities

Explain HOW to set a budget (the pie chart!)

I can prove this by completing :Net worth calculation worksheetthe Oprah Applied activity