BUD - Budgeting Module Overview
Budgeting Module Overview
Introduction
Maserati, mansion in the Hollywood Hills, celebrity spouse, 2.5 kids, a booming business bringing in 6 figures, and a personal trainer and chef...or maybe something a little less extravagant.
No matter what plans you have for your future and the lifestyle you want to live, the most efficient way to determine whether you can afford it is to PLAN! It is important that you learn how to spend only what you have earned or less, and be intentional about what you spend your money on. In this module, you will learn how to determine a want from a need, how to make financial decisions, how to be responsible with your money, and how to create a spending plan. You are going to need your brain working at full capacity for this one, so power up and let's get started!
Essential Questions
- What process can be used to make personal financial decisions?
- How does limited financial resources affect the choices you make?
- How does designing a plan for earning, spending, saving and investing affect your finances?
- What effect does inflation have on spending and investing?
- How is net worth calculated?
Key Terms
- Needs: The essentials, the basics of life you must have to survive - food, housing, clothing, transportation, health care, etc.
- Wants: Desired, but nonessential - buying a new shirt, eating out, going to movies, getting the latest smartphone, etc.
- Financial goals: The things you want to accomplish in life that cost money.
- Saving: The process of setting money aside for a future date instead of spending it today.
- Investing: The process of setting money aside to increase wealth over time and accumulate funds for long-term financial goals such as retirement.
- Budget: An estimation of the income and expenses over a specified future period of time, usually a month.
- Net worth: The amount by which assets exceed liabilities.
- Opportunity cost: The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.
- Pay-yourself-first: When you collect your paycheck, set aside a certain amount for savings before paying any bills.
- Inflation rate: The annual percentage increase in the prices of goods and service.
- Income: Money that an individual earns in exchange for work performed for a company.
- Variable Expenses: Money spent or costs incurred that usually changes monthly based on consumption.
- Fixed expenses: Money spent or costs incurred that usually remains constant monthly.
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