Budgeting: 101 Financial Literacy Program

Transcription

1 Program Schedule Budgeting: 101 Financial Literacy Program Introduction: 5 minutes Introduce yourself - Name, company, mention that you are a CPA. Ask the students - What does CPA stand for? Briefly explain what a CPA does and what YOU do. Set the rules Be respectful when others are speaking Don t be afraid to ask questions! First activity Agree or Disagree: 5 minutes Tell the students Today, we will cover: identifying financial goals, writing financial goals, fixing an overspent budget, and building a 6-week budget of your own. (For this activity, you will be reading three statements to your group of students. The students will raise their hand if they agree with the statement.) Explain the activity I will read three statements. After each one is read, raise your hand only if you agree with the statement. Statements: I am currently saving money for a goal. I have a budget and use it to keep track of my spending. I know what it means to pay yourself first. **Explain the concept of compound interest and how saving money can grow over time. This is a great resource to explain: ~~ Second activity Financial Goals: 10 minutes For this activity, you can either write down what the students say yourself or appoint a student to do so. What is an example of a financial goal? Write their answers on the flip chart/chalkboard

2 Some other answers a car, college, an apartment, a vacation, new clothes Why is it important to have goals when it comes to your finances? One easy way to map out your goals is to write them down. You can separate your goals into three categories Long-term accomplish in 5 years Intermediate-term accomplish in 1 to 5 years Short-term accomplish in under one year Go back to the list of financial goals the students gave you earlier have the students go down that list and tell you how to label the goals using long-term, intermediate or short-term. Do yourself a favor get specific with your goals. Go back to the examples and choose one of the goals the students gave you and use it in an example: Let s say you re saving for (student goal example). Make it more solid by giving it detail and a deadline. Have the group give you a price for this goal how much will this cost? Use the price/cost in the example: I will have saved $ toward (example) in six weeks. I can reach this goal by setting $ aside from my paycheck every week. Now, you have a plan. Refer to the WHITE Budgeting Basics sheet. Tell the students Pull out the WHITE My Budget sheet. Put your name on the sheet wherever you d like and write down three financial goals for the next 6 weeks in the numbered spaces on the left-hand side. By the time the 6 weeks are over, what would you like to have saved for? After the students write down their goals, ask if anyone would like to share them.

3 Third activity - Budgeting Basics: 10 minutes Discuss with your group: Do you ever wonder where your money goes every month? Does it seem like you ll never have any money left over? Explain- Establishing a budget can help you keep track of how you spend your money. Remember, it s not how much you make, it s how much you spend that matters. What is gross income? Possible answer: Gross income is all of the income you earn BEFORE anything is taken out. What gets taken out? You will get questions about this a lot of students have no idea how much gets taken out and what it goes to. They are a bit shocked! Possible answers: Federal income tax Social Security tax Medicare tax State tax Federal and State Unemployment taxes Philadelphia wage tax if you live in AND work in Philly, the tax is higher than if you lived outside of Philly but work there. What is take home pay? Possible answer: Take home pay is the amount of income you have AFTER all the taxes are taken out. This is the number you can work with when you make your budget. Discuss with your group: You will also need to look at what your money is being spent on. These would be your expenses. Your expenses can be categorized as either fixed or variable. Ask What is a fixed expense? Possible answer: A fixed expense is something that has a fixed cost, it doesn t change each month.

4 Examples rent, cell phone bill, car payment, if you get your hair and nails done every two weeks that could also be a fixed expense. Ask What is a variable expense? Possible answer: A variable expense is an unknown expense, or something you re not able to put a fixed amount on. The costs may go up and down each month. Examples Going to the movies - How many times will you go in one month? How much popcorn will you eat? Eating out - Will you get fast food or go to a more expensive restaurant? How many times a week or month will you eat out? Concerts - What kind of seats will you have? Transportation - Where and how will you be traveling? Groceries - Will you be having a party? Will you be on vacation for a week and not need as much food? Will you pack your lunch to work/school or buy it? Fourth activity Fixing a Broken Budget: 15 minutes Refer to the GREEN sheet Tell your group Take a look at the GREEN Correcting a Budget sheet This is an example of an overspent budget. Your task is to 1) Identify the items in the budget as either fixed or variable 2) Determine where this person has overspent and make recommendations where they can trim their costs. Let them know that the 6-Week Total column is the result of money spent after 6 weeks. Give the students 5 minutes. After 5 minutes, review the budget with your students identify the fixed and variable expenses. Could there be any items that are both? Ask each group Where did you cut costs? Why did you cut costs there? Did you cut costs on fixed or variable expenses? Why?

5 Fifth activity - A Budget of Your Own: 10 minutes Go back to the WHITE Budgeting Basics sheet This is going to serve as the student s personal budget. Pull out the WHITE My Budget sheet again. This is an example of what your budget could look like. Ask the group If you are the one who has the job, who should get paid? YOU! This is why you need to understand what it means to pay yourself first. Ask the group What does it mean to pay yourself first? Paying yourself first means that you will set aside a certain amount of your money every time you get paid to either save or invest. This money gets paid to you BEFORE you start paying any bills or going out to eat or buying a new phone. Explain to your students some of the ways they can pay themselves first savings accounts, other savings vehicles. Are there any questions? ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~