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Lesson 2: Budgeting

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An Introduction to Financial Literacy

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Step 1:

Find and job that interests you and find its annual average salary

Before Lesson: Reality Check

Step 2:

Take the reality check quiz

https://texasrealitycheck.com/Location?flow=lifestyle

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Presentation Main Points

  • Functions of Money
  • The Importance of Money
  • What is Budgeting?
  • Budgeting Basics
  • Good vs. Bad Budgets
  • Sources of Income
  • Spending and Expenses
  • Savings

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Medium of Exchange

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Money is used as a medium of exchange because it is an efficient way to allocate resources.

The Functions of Money

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Unit of Account

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As a unit of account, money serves as the common base of comparison that people use to present prices and record debts.

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Store of Value

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Money is used as an item that people can use to transfer purchasing power from the present to the future

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  • Money determines wealth; economics is the field that studies wealth.

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  • Money is accepted world wide in trade of goods and services,

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  • it is used to measure wealth, and it is regulated by governments.

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The Importance of Money

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Different Types of Income

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Examples of the Different Types of Income

  • Salaries
  • Wages
  • Commissions
  • Bonuses
  • Side Hustles
  • Businesses
  • Royalties
  • Property Rentals
  • Affiliate Marketing
  • Capital Gains
  • Shares
  • Stocks
  • Currency Exchanges

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Periodic Expenses

  • Periodic expenses are costs that occur on an irregular basis rather than monthly basis.

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  • Some examples are tuition/fees, or quarterly insurance payments

Fixed Expenses

  • Payments we have very little control over as they are legal issues or needed for our daily lives, such as your rent or mortgage.

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  • These expenses occur at predictable intervals, typically monthly.

Variable Expenses

  • Also known as discretionary expenses. Variable expenses are the money you spend on food, clothing, and entertainment.

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  • These are the expenses that we can influence with our behaviors.

Different Types of Expenses

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  • Having savings will benefit you in the future, whether you're avoiding hardship or going after the things you want.

The Importance of Saving Money

Savings can go towards :

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  • Retirement
  • Rainy Fund Expenses
  • Emergency Funds
  • Investments
  • Future Financial Goals

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10%

90%

College Students Stats on Savings

Don’t track their spending

43%

Can lead to overspending

Said they aren't saving money each month

58%

Can lead to insufficient funds

Students are stressed about their finances

7 out of 10

Can lead to being harder to reach financial stability

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What is Budgeting?

Why is it Important?

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Budgeting Basics

Step 1

Track your expenses & income for one month

Step 2

Create the categories that fit your life

Step 3

Set some short-term & long-term financial goals

Step 5

Adjust your budget accordingly over time

Step 4

Cut certain areas to make those goals possible

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Ritika- Age 20, College Student

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Dhwani- Age 20, College Student

Healthy vs. Unhealthy Budgets

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https://www.moneyprodigy.com/wp-content/uploads/2019/11/Money-Prodigy-Day-5-merged.pdf

Lesson Activity: Real Life Budgeting

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This Presentation is Prepared by:

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  • Rakib Momin
  • Aditya Rao
  • Dhwani Mulani
  • Ritika Bhattacharya

“PROMOTING EDUCATION ACROSS THE COUNTRY”

“AHS PEAC”