The document provides guidance on creating a spending plan by outlining typical expenses like housing, transportation, food, and insurance, tracking current income and expenses, setting financial goals, and developing and maintaining a personalized plan through categorizing income and expenses and allocating money to meet goals. It emphasizes the importance of a spending plan for financial success and offers tips for planning based on individual needs and values.

1. 1.15.2.G1
Spending Plans
“Take Charge of Your Finances”
Advanced Level

2. 1.15.2.G1
Typical Spending Plan Pie Chart
Housing
10%
Transportation
18%
30%
Food Provides guidance
when creating a
7%
Insurance
spending plan
Other
20%
15%
Saving and
Investing
What variables may cause these
percentages to be different?
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 2
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

3. 1.15.2.G1
Having a plan
 Financial planning - a tool
used to achieve financial
success based upon the
development and
implementation of
financial goals Spending Plan
Development
 Spending plan - paper or
Process
electronic document used
to record both planned
and actual income through
expenditures over a period
of time
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 3
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

4. 1.15.2.G1
Everyone has a unique
spending plan
 Based upon
the following
elements:
What does the
Brown Family value?
How will these values affect
their spending?
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 4
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

5. 1.15.2.G1
SMART Financial Goals
Why is goal setting
important?
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 5
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

6. 1.15.2.G1
Example of SMART goals
 I plan to save $15.00 from my monthly
paycheck for ten months to purchase a new
MP3 player for $150.00
Write one SMART financial
goal for yourself.
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 6
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

7. 1.15.2.G1
SMART goals
 Evaluate your goal and identify if each
component of a SMART goal was included
 Re-write your goals to be SMART goals
 Share your goals with your group
Complete questions one and two by writing
SMART goals for the Brown family.
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 7
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

8. 1.15.2.G1
Components of a Spending Plan
 Gumball machine
represents components of
the financial planning
process
 Income - money earned
 Gumballs going into the
machine
 Wages from a job, allowance,
gifts
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 8
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

9. 1.15.2.G1
Components of a Spending Plan
 Expense - money spent
 Money going out of the gumball
machine
 Fixed expenses -may have a fixed
amount due each month and are
contractual
 Flexible expenses -can vary each
month in the amount owed and
are not contractual
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 9
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

10. 1.15.2.G1
Spending Plan Activity
 The following slides will tell you if each item
would be income, a fixed expense, or a
flexible expense .
 You may need to refer to those slides at a
later point in the module to assist in
answering questions.
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 10
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

11. 1.15.2.G1
Spending Plan Activity
Paying Rent
Fixed expense
Wages
Income
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 11
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

12. 1.15.2.G1
Spending Plan Activity
Groceries
Flexible expense
Internet bill
Fixed expense
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 12
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

13. 1.15.2.G1
Spending Plan Activity
Tips
Income or Flexible Expense
Utilities
Fixed expense
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 13
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

14. 1.15.2.G1
Spending Plan Activity
Gift from family
Income
Savings
Fixed expense or Income
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 14
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

15. 1.15.2.G1
Spending Plan Activity
Automobile registration
Fixed expense
Eating out/Snacks
Flexible expense
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 15
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

16. 1.15.2.G1
Spending Plan Activity
Scholarships
Income
Hobbies
Flexible expense
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 16
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

17. 1.15.2.G1
How to Develop and Maintain a
Spending Plan
 Steps 1-3 help develop
a spending plan
 Steps 4-5 help
maintain a spending Spending Plan
plan Development
 Evaluate and adjust to Process
meet personal needs
and adapt to life
changes
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 17
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

18. 1.15.2.G1
Step 1: Track Current Income
and Expenses
Necessary to creating a realistic spending plan
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 18
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

19. 1.15.2.G1
Tracking Methods
 Carrying a small notebook and writing down all
expenses
 Keep all receipts
 Use a debit card if your depository institution
creates spending reports for your account
 Input information into a cell phone
 Cell phone applications
Must work for the individual!
There is not one right method!
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 19
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

20. 1.15.2.G1
The Costs Add Up
 Weekly date night at  Eating lunch out 5 days
the movies with per week
popcorn  $5-$10 daily
 $30 per week  $1,300-$2,600 per year
 $1,560 per year  Daily sport drink
 Daily Latte  $2.00 daily
 $3.75 every day  $730 per year
 $1,369 per year
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 20
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

21. 1.15.2.G1
Gross vs. Net Income
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 21
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

22. 1.15.2.G1
Payroll Deductions
 Taxes
 Required by local, state, and federal governments
 Provide public goods and services
 Account for approximately 30% of an individual’s gross
income
What are two items or services you use
that are paid for by taxes?
 Payroll deductions:
 Federal Taxes (mandatory)
 State Taxes (If applicable)
 Federal Insurance Contribution Act (FICA tax) (mandatory)
 Retirement (depends upon the employer)
 Health care benefits (depends upon the employer)
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 22
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

23. 1.15.2.G1
Saving and Investing
 Savings- Current income not spent on
consumption
 Pay Yourself First!
 Save then spend
 Recommend saving 10-20 % of net income
 Save at least 6 months worth of expenses for
emergencies
 Continue to invest
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 23
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

24. 1.15.2.G1
Housing -
Typically 30% of net income
 Possible expenses associated with housing:
 Monthly payment – a fee charged each month to
live in a home
 Utilities – includes electricity, water, and garbage
fees
 Home or renters insurance – purchased to protect
the home and possessions inside from loss
 Property taxes – paid by the owner of the home
 Maintenance – Repairs, cleaning, and care
 Household furnishings - furniture, decorations, etc.
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 24
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

25. 1.15.2.G1
Transportation-
Typically 20% of net income
 Possible expenses associated with transportation:
 Monthly payment – if a loan is taken out to purchase an
automobile
 License and registration – required by law to own an
automobile
 Insurance – required by law to protect the vehicle and
individuals if involved in an accident
 Repairs and maintenance
 Fuel
 Public transportation fees – including bus, metro pass,
taxis, or parking fees
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 25
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

26. 1.15.2.G1
Food-
Typically 15% of net income
 Possible expenses associated with food:
 Food at the grocery store
 Meals at restaurants
 Snacks eaten out (coffees, treats)
 Party and entertainment foods
 Non-food kitchen supplies (plastic wrap, dish
soap)
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 26
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

27. 1.15.2.G1
Insurance-
Typically 7% of net income
 Arrangement between an individual and an
insurance company to protect the individual
against risk
Health – pays a
portion of health care
Home/renters Automobile expenses if one is sick
or injured
Life – provides
Disability – provides
financial support to an
financial support if an
individual’s
individual is injured
beneficiaries upon
and cannot work
death
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 27
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

28. 1.15.2.G1
Other Expenses-
Typically 18% of net income
Communication and Medical costs
computers (Internet,
cell phone, cable
not covered by Clothing
television) insurance
Educational
Personal care Pet care Entertainment
expenses
Gifts and
Credit costs
charitable
(loan payments)
contributions
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 28
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

29. 1.15.2.G1
Step 2: Create Personalized Income and
Expenses Categories
 Categories are based
upon the
individuals/families
income and expenses
 Reference tracking from
Step One
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 29
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

30. 1.15.2.G1
Step 3: Allocate Money to Each
Category
Use categories created in Step Two
Reference tracking from Step One
Refer to goals and determine if any changes
in spending needs to be made
A spending plan is now developed!
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 30
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

31. 1.15.2.G1
Spending Plan Template
 Everyone uses a different program to create a
spending plan
 Paper and pencil
 Online software
 Electronic programs such as Microsoft Excel and
Word
 Must be something that an individual can
manage effectively
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 31
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

32. 1.15.2.G1
Spending Plan Template
Income Amount
Wages $
Total Income $
Expenses Amount Percentage of income used for
each expenditure
Housing $
Rent or mortgage
Utilities
Maintenance
Insurance
Food $
Eating out
Groceries
Total Expenses $
Total Income – Total Expenses $
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 32
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

33. 1.15.2.G1
Net Gain or Net Loss?
 Net gain - there is remaining money to either save, spend or
invest
 Net loss - an individual is spending more money that he/she
is earning and has to use credit (borrowed money) to meet
their financial obligations
 A spending plan should have income and expense matching
one another (reach zero)
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 33
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

34. 1.15.2.G1
Step 4: Implement and
Control
 Implement:
 Put plan into action!
 Control:
 Determine what was actually spent
 Continued monitoring of spending allows an
individual to know if they are spending too much
in a category
 Helps avoid credit and savings use
 Utilize control systems
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 34
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

35. 1.15.2.G1
Control Systems
 Envelope systems – place the actual budget amount
of cash from a paycheck into a specific envelope
system for the expense
 Check register system –track all expenditures in a
checkbook register which has been divided into
spending plan categories
 Electronic spending plan systems – Multiple types
of software are available
 Cell Phone Applications
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 35
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

36. 1.15.2.G1
Step 5: Evaluate and Make
Adjustments
 Assess if spending plan is working
 Are goals being met?
 Are the dollar amount allocations in each
category accurate?
 Is money being saved or invested?
 Is credit being used? If so, then the spending
plan needs to be adjusted (by increasing
income or decreasing expenses)
 Make changes to spending plan if necessary
 Begin the process again!
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 36
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

37. 1.15.2.G1
WHAT IS THE LONG-TERM POSITIVE
IMPACT OF A SPENDING PLAN?
To know where your money is going!
To build long-term wealth!
To create long-term financial security!
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 37
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

38. 1.15.2.G1
Net Worth Statement
 Net worth statement - describes an individual or family’s
overall financial condition on a specified date
 The components include:
 Assets – Everything a person owns with monetary value
 Liabilities – Debts or what is owed to others
 Net Worth – the amount of money left when liabilities are
subtracted from assets (indicates wealth)
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 38
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

39. 1.15.2.G1
Who is Wealthier?
Juanita – earns $35,000 per year Alexis – earns $100,000 per year
Assets Assets
Home $75,000
Home $60,000
Retirement $35,000
Retirement $24,000
Automobile $8,000
Automobile $8,000 Total Assets $118,000
Total Assets $92,000 Liabilities
Liabilities College loan $10,000
College loan $6,000 Automobile loan $4,000
Credit card debt $20,000
Mortgage $35,000
Mortgage $65,000
Total Liabilities $41,000
Total Liabilities $99,000
Net Worth $51,000 Net Worth $19,000
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 39
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

40. 1.15.2.G1
Gumball Analogy
Always have more money coming in than out!
Work towards building wealth!
 Income (money in)
 Net Worth (wealth)
 Flexible Expenses
(money out)
 Fixed Expenses
(money out)
© Family Economics & Financial Education – Updated May 2011 – Spending Plan Unit – Spending Plans – Slide 40
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona