Financial Literacy

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Financial Literacy

• Group 14

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Financial Literacy

• Is the ability of a person to
• make good decisions with
• their money financial futures
• What is a budget?
• a plan for using your income in a way that
  best meets your wants needs.

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What does your budget include?

• A record of your expected income
• Your planned expenses
• Your planned savings

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5 Steps on Planning a Budget

• Step 1 Set Goals
• Step 2 Estimate your income
• Step 3 Estimate your expenses
• Step 4 Plan for savings
• Step 5 Balance adjust your budget
• A good budget helps you set priorities for
  spending and saving and keeps track of how youre
  managing your money!

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Step 1 Set Goals

• Several questions you need to consider
• 1. What do I want to accomplish in the next
  month?
• 2. The next year?
• 3. The next five years?
• 4. What is important to me?
• 5. Are my goals practical?
• A budget should help you decide
• which goals you can meet with the
• amount of money you have.

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Step 2 Estimate Income

• What is income?
• the actual amount of money you
• earn or receive during a given time period.
• Examples allowance, tips, interest earned etc.

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Income cont.

• What is gross pay?
• total amount of money earned for a
  specific time.
• What is net pay?
• the total amount of money left over after
  deductions have been made.
• What are deductions?
• the amounts taken out of your pay before
  you receive your paycheck.
• What are taxes?
• money that is forwarded to the government

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Step 3 Estimate Expenses

• What are expenditures?
• food, clothing, rent etc.
• There are 2 basic types of expenses
• 1. Fixed expenses occur regularly
• (example rent, insurance, car payments)
• 2. Variable expenses expenses that fluctuate
• (example food, clothing, entertainment)

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Step 4 Plan for Savings

• Savings protect you against
• expenses that you didnt budget
• for and that are higher than you
• expected or did not expect.
• Savings are good to have to help you reach a
  long term goal

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Step 5 Balance and Adjust the Budget

• What is budget variance?
• the difference between how much you planned
  to spend and how much you actually spent.

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Using Credit Wisely
When using your credit card and decide to use
someone elses money, such as a bank, be sure to
pay on time to keep good credit.
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Protecting your Investments
Purchasing insurance is a wise way to protect
your belongings. Insurance can recover the things
that are lost in a fire or accident.
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Your Future Matters
Understanding what your earning potential is
compared to the cost factors can help you decide
on the right goals.
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Awareness Quiz

1. A budget is an outline that lists the amount of
   money that you have coming in each month as well
   as the amount of money that you have going to pay
   for expenses each month. __True or __False
2. Purchasing insurance is a wise way to protect
   your belongings that are lost in a fire or
   accident. __True or __False
3. Understanding what your earning potential is
   compared to the cost factors that surround the
   cost of education can help you to decide the best
   way to achieve your goals.__True or __False
4. The best way to keep good credit is to pay your
   bills on time. __True or __False
5. Income is the money your earn at work. __True or
   __False