Planning 10 - Mr. Berra: Day 18

Want to handle money like a pro? Want to avoid the big money drain? Perhaps you're confused about how you'll be able to afford living away from home. Or maybe you're trying to decide whether or not to buy that new sound system.

This unit will help you learn how to budget and guide you in finding out what things really cost. You'll become financially literate by learning the facts about financial services. You'll also find out how a poor credit rating can affect your future, and discover the real cost of debt.

All this will help you develop a personal financial plan that will put your future journey on the road.

This unit is worth 25% of your Planning grade.

Needs, Wants and Priorities

When you are deciding to spend the money that your grandparents and other relatives gave you for your birthday, or you saved up by spending the past six Saturday nights babysitting for the adorable family down the street, one of the first things you should do is understand the difference between needs and wants.

• Need - a necessity, something required, something essential for life

• Want - a desire, something wished for, something non-essential

Maybe you are saving up your money for something that costs a lot of money, like a car, or a season's snowboard pass. When your friend texts you to meet her at the mall, knowing what your priorities with your money are can help you decide if it is worth it to spend on that lunch out.

Discovering Your Money Personality

How do you feel or think about money? Do you want to spend it as soon as you get it or would you rather save it for something special later on? This exercise will help you identify your money personality. It will also give suggestions on how to have balance in managing your money, which is important to have. However, if you find that your spending habits bother you or someone close to you, you may want to change your ways.

To find out your money personality, click HERE and answer the questions. You may have more than one personality.

My Savings Quest

You will be dealing with budgeting, balancing savings and spending, paying taxes, and using credit throughout your life. This is a good time to start learning how these concepts function. Being knowledgeable will help ensure that you make good financial decisions in the future. In this section you will explore each of these topics in detail and learn how and why they are important.

How many times have you received money and couldn't decide whether to buy that new CD or save it for that school trip you wanted to take? Or maybe you used your debit card to buy a CD and found yourself short of money later.

In this lesson, you will play the game My Savings Quest the game that tests your ability to save for the things you want, and pay for the things you need. Please click "Play the Game" to learn about Savings Quest and follow all directions.

Play the game twice (change your goals, jobs and budget) so you can compare the results.

Budgeting

Budgeting is a process of making a plan for managing your money and then reviewing your plan to see if your original budget was realistic.

Income is all money that is coming in from any source such as a job, your parents, or birthday and Christmas presents. Expenses are all the ways you spend money from your cell phone bill and your morning latte, to your sports and that shirt that you just had to have.

Expenses are divided into two categories: Fixed expenses and Variable expenses. Fixed expenses are those that are the same every month. (eg. rent or mortgage). Variable expenses are those that change all the time. (eg. food or entertainment costs). While both fixed and variable expenses are important, variable are often the hardest to track, and tend to be the ones that get people into trouble with their finances.

A budget is a plan that keeps track of all your income and expenses.

Assignment

This budgeting assignment will take one week and is designed to show you how much your life would cost you if you had to pay for it yourself. It is difficult to do a budget with teenagers, because most of you don't have incomes of your own.

1. Brainstorm a list of all the things you spend money on. Include money that you spend as well as money that is spent on you.

2. Go to My One-Week Budget and check out the items listed. You may notice some expenses that you haven't thought about. Add these to your list if they are relevant to you. All of these things are expenses that you will have when your parents are no longer paying for you and need to be planned for.

3. Now, using the template, input all of your cost amounts in the Projected Amount column. If you don't have much of a list, predict how much you think your parents spend on all of the items. If you don't use that item, exclude it. If you use the item most of the time, but not that week, figure out what it would cost you for the month and divide by 4. Add up the columns. Will you have money left over at the end of the month? Or will you be a little short?

4. For the next week, record all your income. Save your receipts and write down at the end of each day all of your expenses. After one week, you will record these totals in your One-Week Budget form in the Actual Amount column. Again, if you don't have much of an income, sit down with your parents and ask them what they actually spend on the items you predicted. What are the differences?

5. Paragraph: Answer the following questions in a paragraph of approximately 200 words:

• Will your budget work for you?
• Have you included saving some money for a big purchase or your future education?
• What surprised you?
• What did you learn about your spending habits?
• What do you need to change and why?
• How would you go about making these changes?

Marks:

• 5 for your brainstorming list
• 5 for your budget
• 10 for your paragraph
• TOTAL: 20