PHOENIX ACADEMY�FINANCIAL LITERACY�BUDGETING &�FINANCIAL PLANNING

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What questions do you still have about money?

• List and explain why.
• Answer in learning guide

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Benefits of gaining financial skills

Introduction

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• Control your financial future
• Achieve your life goals
• Provide for yourself and your family
• Be a smarter consumer
• Reduce stress and sleep better
• Be confident that you can manage your finances

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BUDGETS AND FINANCIAL PLANNING

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Budgeting

Introduction

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The percentage of Canadian households that use a budget to manage their finances is:

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• 32%
• 49%
• 68%

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Answer

2. 49%

• 49% of Canadians say that they use a budget of some sort.
• A written budget helps you manage your spending and prepare for the future, especially when the money you have is limited.
• It helps you decide what to spend on, avoid over-spending and set aside money for things you really need.

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Credit and debt management

Introduction

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In 2019, the proportion of Canadians who had outstanding debt or used a payday loan within the

previous 12 months was:

• 33%
• 53%
• 73%

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Answer

3. 73%

• The survey results indicate that nearly 73% of Canadians have some type of outstanding debt or used a payday loan at some point over the past 12 months.
• Almost 31% believe they have too much debt.

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Emergency savings

Introduction

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The best way to plan for unexpected expenses is:

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• Buy a lottery ticket every week
• Only have friends who will lend you money
• Set money aside in an emergency savings fund

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Answer

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• The survey results indicate that nearly 65% of Canadians are confident that they could come up with $2000 if needed in the next month.
• Setting money aside in an emergency fund is the best strategy for dealing with unexpected expenses, a sudden drop in your income or other changes in your personal finances.
• Experts recommend saving enough to cover your take-home income for 3-6 months if you were suddenly without income. That will give you time to rebuild your income or rearrange your finances in case of an emergency.

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BUDGETING�NEEDS AND WANTS

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Money Laughs

https://www.youtube.com/watch?v=0SZyr7OqByc

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Needs and Wants

• In this vignette the girl is influenced by her peers to make a poor choice.  Don’t let others decide what you need and what you want. Every day people are exposed to advertising trying to convince them to buy their product. If you think that what you want is something you need, you are more likely to buy it. Money must be spent on needs but wants are a choice you make. You should be in control of your spending.

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• Need – is something that you cannot live without (water, food or fuel for warmth).
• Want – something that is a luxury. Without it, you will still manage to survive (tennis racket, new purse, watch, etc.)
• Opportunity Cost – the cost of choosing one thing over another.
• Prioritize – learn to prioritize what are needs and wants, create goals and a plan.
• Tracking – start to keep track of your flow (money in and money out), realize what you typically spend money on and why.

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Psychology of Spending

Overview:

• Be aware of the different b/w a need and a want, identify what kind of spender you are, sleep on it – take time, don’t let friends pressure you, be aware of how advertising tries to lure you into making purchases you may not need!
• Realize that spending choices you make today affect your spending choices in the future.
• Don’t let others make spending decisions for you.

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Task:

• Read the attached article and answer the questions in the learning guide.
• https://www.stmarysbank.com/learn/tools---resources/blog/detail/the-psychology-of-spending-and-how-to-manage-it

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BUDGETING

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What is budgeting about?

• The first step in managing your money is knowing what’s coming in and where it’s going out – and making sure the “in” exceeds the “out” so you have enough for needs and can save and invest for your future. TRACKING YOUR MONEY!

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• There’s nothing difficult about a budget. Budgeting doesn’t mean doing without. It’s just an organized way to manage your money.

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Funny Money! James Cunningham

https://www.youtube.com/watch?v=mR7H-wQmSm8&t=140s

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Funny Money Overview – Christa’s take aways

Summary and Tips from Funny Money:

• Money is not the most important stuff in your life, don’t let it. If you don’t take control of it though it might control you.
• Budget money, first know where it is coming from.
• TRACK IT
• Debt – be aware, control it and don’t let it control you
• You don’t need lots of things
• 3 things: savings, chequing, and credit card (you can build your future)
• When money comes in:
• 75% chequing
• 25% savings
• Don’t use credit card more than what you have in chequing to pay off!
• What do wealthier people do? They buy assets! Things that can make them money. Go up in value.
• Typical people – buy money losers (however, we all need these things as well)
• What can we do? (terms, GIC, Mutual, Tax-Free Saving Account, RRSP, … - help you make your money make you money), it takes time, slowly but surely
• Manage the credit card!
• 3 Musts:
• Know your _____________ (Budget your money, in flow and out flow)
• Control what you _______________
• ___________ and __________ the dough (chequing, savings, and investments)

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ANSWER THE QUESTION IN LEARNING GUIDE

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3.2 Tracking Your Income Assignment

• Attached to your learning guide.
• Must complete

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Budgeting

Stats:

• 47% of Canadians describe themselves as financially knowledgeable,
• 56% of Canadian households report having trouble with their financial commitments (up from 38% in 2019)
• 37% of households borrow money for daily expenses (up from 27% in 2019).
• The question is with so much information available to people, why is this a problem?

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How?

1. List all your income (inflow of money) for the month.
2. List all your expenses (outflow of money) for the month.
3. Subtract your expense from income (should equal zero).
4. Track what you spend (expense) over the month.

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Parts of a budget

Budgeting

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• Income
• Money coming in from employment or self-employment
• Expenses
• Cost of living (fixed, variable, periodic, etc.)
• Difference between the two:
• surplus or deficit

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• Fixed Expenses
• Have a consistent cost each month
• Variable Expenses
• Change from month to month
• Occasional/Periodic Expenses
• Should be planned for in your budget (gifts, holiday shopping, car repairs, school supplies)
• Pay Yourself First
• save and plan it into the budget
• Emergency Fund
• start small but just start (next slide)

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Other

Which cost is easier to reduce and why?

• Variable costs are easier to reduce since the amount spent can change.

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https://www.youtube.com/watch?v=Niv9tE4bOac

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Emergency Fund

• A savings set aside for unexpected expenses to avoid breaking your budget, usually including 3-6 months worth of expenses (loss of job, etc.)

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• Tips:
• Open a savings account
• Set a realistic amount
• Habit
• Automate
• Eliminate an expense and

save more

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https://www.canada.ca/en/financial-consumer-agency/services/savings-investments/setting-up-emergency-funds.html

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Pay Yourself First

Get a savings account, automatic and frequent deposits, inaccessible, save!

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"Pay yourself first" means when you get paid, you should try to put money away in your own savings before you spend money on anything else, whether it's your regular monthly living expenses or discretionary purchases.

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TRACKING - Know what you spend

Budgeting

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• Keep every receipt
• Record every expense in a notebook or electronic device
• Review bank and credit card statements
• Make a list of irregular expenses (gifts, donations, car or home repairs, vacations)
• Total your expenses at the end of the month
• Do this for at least three months

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• Apps/Tools to help with spending plan and tracking:
• YNAB, Goodbudget, EveryDollar, PocketGuard, Mint App, Nerd Wallet
• Your bank’s app!
• MUST REVIEW – find the one that fits for you
• https://www.nerdwallet.com/article/finance/best-budget-apps

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Review: How do I prepare a budget? (your choice to watch or not watch)

https://www.youtube.com/watch?v=sVKQn2I4HDM

Government of Canada Module 1: How do I prepare a budget?

• https://www.youtube.com/watch?v=sVKQn2I4HDM

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It is a review – your choice to watch the video or not.

• Good tips, gives reasons why you should budget,
• Financial control and piece of mind in budgets can help you.
• Money in and money out
• Needs and wants; income and expenses

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Biggest thing:

• Have your goals in mind!
• Create a spending plan by doing a budget.
• Budgets do need to be realistic so they can be achievable.
• Track first, plan, create a budget, re-evaluation and re-adjust, do the budget
• Be positive and stick to it!

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SMART GOALS

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Budgets – Goal Setting

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Types of Goals

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• The first step in building a personal budget is to identify your short-term and long-term goals.

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• SMART goal strategy is a useful way to hold yourself accountable and to plan for goals that are achievable and can help you work towards your future success.

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• Examples of financial goals:
• Purchase bike, car, new gaming console, trip, musical instrument, school, pay back friends, etc.

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SAMPLE BUDGETS

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Assignment

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• BUT FIRST LOOK AT THE NEXT 4 SLIDES
• Gabrielle’s Budget Assignment (attached and on here)

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Samples:

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Gov’t of Canada Online Budget Tool

�(really good, different types of expenses, it will do the math for you!)

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https://itools-ioutils.fcac-acfc.gc.ca/yft-vof/eng/ieb-4-3.aspx

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ASSIGNMENT LINK: https://docs.google.com/spreadsheets/d/1jhfRZvl37RM99KpMS-usXtibTH2VymT8/edit?usp=sharing&ouid=108380426669268166546&rtpof=true&sd=true

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https://docs.google.com/document/d/1ZLciHgxmBqGO2IsxAAwggpHRS06kd7JG/edit?usp=sharing&ouid=108380426669268166546&rtpof=true&sd=true

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CREATE A BUDGET FOR GABRIELLE FOR NEXT MONTH, based on her “actual” spending from last month.

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ANSWER IN THE LEARNING GUIDE

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MANAGING YOUR COST OF LIVING – BEING A SMART CONSUMER

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Remember Opportunity Costs means Tradeoffs��When you spend money on one thing that is something else you can’t use it for. Is it worth it?��No such thing as a free lunch!

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What can you do to help with the budget?

• Increase sources of income (online, offline, another job, etc.)
• Thrift, garage sales,
• Sleep on it
• Consider the psychology of spending
• Built in Pay Yourself First
• Coupons
• Library and Community Resources
• Not the latest updated tech
• Buy on sale

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Areas for saving

Managing your cost of living – Being a smart consumer

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• Check your bills
• Negotiate better plans (banking fees and services, telephone, cell phone)
• Review your food costs (groceries, take out, buying lunch)
• Consider whether you need to own a car, a home or the latest high-tech gadget

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Negotiate better plans – when you are older

Managing your cost of living – Being a smart consumer

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Call each service provider and ask:

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• How can I cut back my monthly bills?
• Am I currently on any plans?
• Do you have a better plan or deal for me?
• If so, what is the timeframe?
• Will I be put on contract for any new deals?
• Can I bundle services to save money?
• Can I avoid interest or late payment penalties?

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Reduce banking costs

Managing your cost of living – Being a smart consumer

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• What am I paying in monthly service charges?
• How much am I paying for ATM fees?
• Can I save by doing more banking online?
• Am I eligible for a low-fee deal if I’m a student?
• Can I get a reduced fee if I keep a minimum balance?
• Can you suggest a better plan for me?
• Am I eligible for a low-cost account or a no-cost account?

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Compare Accounts

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How to save on food

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• Eat breakfast at home
• Bring your lunch, drinks, snacks, and coffee
• “Veg out” on low-cost meatless meals at least once a week
• Cook one big dish on weekends and freeze
• Shop with a buddy at discount supermarkets and split quantities
• Set a budget and stick to it

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Do you really need a car?

Managing your cost of living – Being a smart consumer

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• Add up the real costs of ownership (gas, insurance, depreciation, interest and maintenance)
• Compare the full costs of car ownership and leasing against alternatives
• Be wary of long-term financing

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EX: How to cut $162/month of spending

Managing your cost of living – Being a smart consumer

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Your latte factor

Managing your cost of living – Being a smart consumer

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“We’ve all got a latte factor, regardless of our income level.”

—David Bach

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• Designer coffees
• Lunches in restaurants
• Impulse buys
• The latest, greatest [fill in the blank]

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Questions to ask yourself

Managing your cost of living – Being a smart consumer

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• When does a want become a need?
• What motivates you to buy—advertising, friends, trendy styles, rough day?
• Does the urge to buy die the next day?
• Do your purchases make you happier?
• What “needs” are now collecting dust?
• What can you learn to live without?

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Reduce impulse buying

Managing your cost of living – Being a smart consumer

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• Avoid unnecessary trips to stores and shopping malls and online buying sites
• Leave credit cards at home and use your debit card or cash instead – don’t use or get a credit card – unless you have the money to pay for each purchase!
• Use cash to pay for your purchases and/or carry only the cash you are willing to spend
• Sleep on it and see if you still want it the next day

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Assignment Review:

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1. Learning Guide (Goals and Budget included)
2. Tracking Assignment (3.2)
3. Needs and Wants Assignment (3.1)
4. Personal Decision
• https://www.kalsee.com/articles/spending-money

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THE END

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