HDF 322 1st Edition Lecture 4 Outline of Last Lecture I The Financial Planning Process Outline of Current Lecture II Budgeting Spending Plans a Steps in Budgeting Process III Successful Budgeting Traits IV What is A Financial Plan V Selecting a Budgeting System VI When To Keep Track VII People Fight Defusing Money Issues VIII Personal Characteristics IX Developing Money Sense In Children Current Lecture I Budgeting Spending Plans a some people don t like budgeting so we call it spending plan so if youre a spender it will fit more into your personal style b Ex Sex in the City Carrie Bradshawc these plans help you live within your income helps you spend your money how you consider is wise it lets you determine how you are going to spend your money d you ve set goals so spending them moves you forward in accomplishing these goals long term or short e we always have financial emergencies by planning expenditures you can allocate some ER savings 3 6 or 8 months of liquid assets f You do develop management habits by doing something over and over that s why older generations saved so much bc during depression they had to so now it s a habitual habit ex she says a month should be habit forming you just start doing it g EX Money Pie how much should I spend on clothing housing entertainment etc this is a guideline breakdown of what people like to spend 20 on housing 16 on taxes 12 food 11 other stuff These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute 10 retirement 10 transportation 7 insurance 6 insurance 4 entertainment 4 short term savings h Steps in Budgeting Process II Successful Budgeting Traits a Spending plans don t just happen there is a PLAN THEY DON T JUST SPONTANEOUSLY HAPPEN b meet your needs be realistic c flexibility for the unplanned expenses d Especially when more than 1 involved in spending budgets you need to comm so you are both on same page and moving in same direction III What is A Financial Plan a a financial plan is how you allocate your income b and also consider and evaluate what you want to spend your money on your alternatives whats important to you c helps you save bc you save money first before you start paying fixed expenses rent insurance etc d helps you live within your income problem for lots of people e helps you know where money is going IV Selecting a Budgeting System a A BUDGET is sometimes a mental plan but don t work out well bc they are mental you forget them b you can have a PHYSICAL budget you have money in envelopes one for each expenditure aka ACCOUNTS SYSTEM if you have 400 for groceries you spend 50 you can subtract 50 from that category c WRITTEN SPREADSHEET SYSTEM expenses are always divided by 12 on project V When To Keep Track a you need a spending plan budget any of these events job married children something that will change your financial picture that s when you need to start tracking expenditures and make a plan b if youre in the red more debt and more liabilities than assets and income then you need to have a PLAN VI People Fight Defusing Money Issues a Money Attitudes and Budgeting couples with diff attitudes toward budgeting may experience conflict b How to Defuse the fights talk about it before you get married pay off debts go into marriage debt free talk about how your family of origin handled money bc we catch a lot of things bc we watch and see how people do things who and when was important past behavior have you been good with credit cards do you overdraw be honest VII Personal Characteristics don t know your value cant make decisions don t get a lot done we all procrastinate but try to do it less we do this we use money for ulterior purposes if you stop talking ill give you 1 to kids we pay for grades if you get A you get 100 bucks both members need to be involved in finances VIII Developing Money Sense In Children a children NEED to understand about money b they know its important they will take nickel vs dime bc its bigger c Ages 10 12 finally get concept of money d You need to give them experiences with money allowances