UNIT 4-BUDGETING

Section 6.2 Track Income and Expenses

Section 6.2 Track Income and Expenses

Goals:Describe how to set up an effective filing

system for your records.

Explain the difference between fixed and flexible spending.

Section 6.2 Track Income and Expenses

Key TermsFixed expenseFlexible expense

Keep Financial Records

You need to list your income and expenses.

By keeping records and establishing a filing system, you can track where your money goes. This allows you to estimate your income & expenses for your future budget.

Step 1-Track Your Income

A paycheck is a source of regular income.

Some income comes without a written record but still needs to be tracked.

○ Allowance○ Babysitting○ Birthday gifts

To track all of your income effectively simply note the amount and source on your list of income.

Step 2-Track Your Spending Spending records include

Sales receiptsCredit card statementsChecking account statements

In order to track your spending, you need to make a note of all purchases

Step 3-Establish a Filing System

An easy way to keep your records in order is to establish a filing system.

Good record keeping habits are the key to taking control of your financial life.

Computer programs or spreadsheets are very effective ways to track your finances.

The Importance of Effective Record Keeping Your filing system needs to be:

OrganizedCompleteEasy to use

All of your records must be available when you prepare your budget.

**The most important thing is to keep all your records in files and all your files in one place!**

How to use Financial Records You will use your financial records to

help you plan your budget. By studying your records of income &

spending you will get a true picture of your “financial self.”

Fixed Expenses

Fixed Expenses- amounts you are committed to spend. (right now you don’t have many of these, you will when you get older)Examples include- mortgage/rent, car

payment, property taxes, car insurance.

Flexible Expenses

Flexible Expenses: amounts that you can choose to spend or not spend. (right now most of your spending falls in this category.)Examples include- new clothes, cell phones,

laptops, music, out to dinner with friends.

How do fixed & flexible expenses impact budgets!

Fixed expenses must be paid. They are easy to plan for and need to be set aside each month for payment.

Flexible expenses may or may not be purchased depending upon careful analysis and your financial goals.