chapter 8 budgets and financial records budgeting and record keeping legal documents and filing...
TRANSCRIPT
Chapter 8
Budgets and Financial Records
Budgeting and Record KeepingLegal Documents and Filing
Systems
© South-Western Educational Publishing
GOALSGOALS
Lesson 8.1 Budgeting and Record Keeping
Describe and prepare personal budgets. Explain the purpose of record keeping. Prepare a personal net worth statement
and a personal property inventory.
Importance of Financial Planning
Disposable income—money you have left to spend or save after taxes haves been paid
Financial plan—a set of goals for spending, savings, and investing the money you earn
Financial Planning Helps You to:
Determine and evaluate options for your money
Prioritize your options so your money goes as far as possible
Avoid careless and wasteful spendingOrganize your income so you can achieve your
financial goalsAvoid money worries by planning your saving,
spending, and borrowing to live within your means
Achieving Your Financial Goals
First step is to prepare a budget Budget is a spending and saving plan
based on your expected income and expenses
Money coming in must equal money going out
Preparing a Budget
Estimate your income.Decide how much to save.Estimate your expenses.Balance your budget.
IncomeWork $320Allowance 20Lunch money 40
Total income $380Total expenses $280
Simple Budget
ExpensesLunches $ 80Supplies 20Snacks 40Entertainment 120
SavingsTo credit union $100
Total expenses plus savings $380
Monthly Budget
Fixed expenses Costs you are obligated to pay on a regular
basis (i.e., rent or mortgage, car payment) Should equal no more than 50-60% of net
pay
Variable expenses Costs that vary in amount and type,
depending on events and the choices you make (i.e., eating out, vacations)
Personal Records
4 types of personal records a person should keep:
1. Records of income and expenses (W-2 forms, bank statements, investment statements, receipts for charitable contributions, medical expenses, etc.)
2. Net worth statement3. Personal property inventory4. Tax records
Records of income and expenses Examples include W-2
forms, bank statements, investment statements, receipts for charitable contributions, medical expenses, etc.
Net Worth Statement
Assets
– Liabilities
Net worth
Net worth statement is a list of items of value (assets), amounts of money owed to others,or debts (liabilities), and the difference between the two, which is a person’s net worth.
Personal Property Inventory
A personal property inventory is a list of all valuable items a person owns, along with their purchase prices and approximate current values
ItemYear
PurchasedPurchase
PriceApproximate
Current Value
Tax Records
Keep copies of tax returns, W-2 forms and other tax receipts for at least three years
© South-Western Educational Publishing
GOALSGOALS
Lesson 8.2 Legal Documents and Filing Systems
Discuss the elements of legal contracts and your responsibilities regarding contracts.
Describe negotiable instruments and warranties.
Discuss ways to set up a filing system for personal records.
Types of Contracts
A contract is a legally enforceable agreement between two or more parties
Express contracts Oral Written
Implied contracts
Elements of an Enforceable Contract
AgreementConsiderationContractual capacityLegalityGenuine assentLegal form
Consumer Responsibilities in Agreements
Understand agreement. Keep a copy of the
agreement. Be sure the agreement
is dated correctly. Be sure all blank spaces
are filled in or marked out.
Be sure all terms agreed upon are written clearly.
Be sure all dates, amounts, and other numbers are correct and clearly written.
Be sure proper disclosure is made by the seller.
Be sure all cancellations and adjustments are made in accordance with the contract.
Negotiable Instruments
Must be in writing and signed by the makerMust contain an unconditional promise to
pay a definite amount of moneyMust be payable on demand or on a fixed or
determinable future dateMust be payable to the order of a particular
person or to the holder of the noteMust be delivered to the payee
Warranties
GuaranteeLimited warranty
Filing Systems for Personal Records
Paper filing systemElectronic record keeping
Spreadsheet Database
Home Filing System
WarrantiesWarranties
UtilitiesUtilities
MedicalMedical
TravelTravel
TaxesTaxes
SubscriptionsSubscriptions
InsuranceInsurance
HouseholdHousehold
EntertainmentEntertainment
AutomobileAutomobile