14.1 Personal Budgets

Transcription

1 ? LESSON 14.1 Personal Budgets ESSENTIAL QUESTION Personal financial literacy 7.13.B Identify the components of a personal budget including income, planned savings for college, retirement, and emergencies, taxes, and fixed and variable expenses, and calculate what percentage each category comprises of the total budget. How do you identify the components of a personal budget? EXPLORE ACTIVITY B Identifying the Components of a Personal Budget It can be tough to reach a long-term goal without making a plan for how to get there. A budget is a plan to help you reach your financial goals. Some of the components of a budget are income, or the amount of money you earn, and expenses, or how much you spend. Expenses can include planned savings for college, retirement, emergencies, and taxes. The goal of a budget is to spend no more than you earn, and save some additional money if you can. Jenna is saving for a tablet for college. She is making a 4-week budget. The budget shows her total income and the various expenses she has, including saving for the tablet. STEP 1 Enter the total amount that Jenna will earn babysitting for 4 weekends in the table. Income is added to the total amount available. Description Earnings ($25 babysitting each weekend) College fund for tablet Snacks Income (+) Expenses ( ) Expenses are $100 subtracted from the total amount available. $80 STEP 2 Enter Jenna s expenses and planned savings in the Expenses column. Expenses: entertainment $15 snacks $10 Planned savings: college fund $20 tablet $25 Lesson

2 EXPLORE ACTIVITY 1 (cont d) STEP 3 Complete the column by adding each row of income and subtracting each row of expenses. How much money does Jenna have available at the end of 4 weeks? What could she do with it? Reflect 1. What If? What if Jenna misses a weekend babysitting? How would that affect the budget? Math On the Spot my.hrw.com Identifying Types of Expenses There are two different types of expenses: fixed expenses and variable expenses. Fixed expenses, such as car and house payments, occur regularly and do not change from month to month. A variable expense, such as purchases of food or gas, occurs regularly and is necessary for living, but you have some control over the amount. EXAMPLE B Math Talk Mathematical Processes Why do planned savings items go in the expense column instead of the income column? A The table shows Garrett s monthly budget. To earn money, he mows lawns. Identify Garrett s fixed and variable expenses. Garrett s Monthly Budget Description Income (+) Expenses ( ) Earnings ($30 per mowed lawn, 8 lawns) $240 $240 Clothes $40 $200 Monthly guitar rental fee $15 $185 for a car $30 $155 (movies, computer games) $50 $105 Emergency savings $10 $95 Fixed expenses: guitar rental fee, savings for a car, emergency savings Variable expenses: clothes, entertainment 430 Unit 7

3 B The table shows Mrs. Everdeen s monthly budget. Identify Mrs. Everdeen s fixed and variable expenses. Mrs. Everdeen s Monthly Budget Description Income (+) Expenses ( ) Wages $2,500 $2,500 Taxes $550 $1,950 Rent $850 $1,100 Utilities (water, electricity) $70 $1,030 Groceries & household supplies $425 $605 Auto insurance $50 $555 Retirement savings $150 $405 $100 $305 Fixed expenses: taxes, retirement savings, rent, auto insurance Variable expenses: utilities, groceries and household supplies, clothing Reflect 2. How are these budgets different? YOUR TURN 3. Malina is making a budget. The table shows the categories of expenses in her budget. In the second column of the table, use an F to mark fixed expenses and a V to mark variable expenses. Expenses Snacks Weekly flute lesson Saving for a new flute for college Monthly bus pass Personal Math Trainer Online Assessment and Intervention my.hrw.com Lesson

4 EXPLORE ACTIVITY 2 Analyzing a Family Budget One way to present a budget is in a circle graph. You can see at a glance which categories take the greatest part of the family s resources. You can also work backward from a circle graph to figure out exactly how much money is in each category. Use the circle graph to complete the table for the Baker family s monthly budget. Their net monthly income is $4,000. STEP 1 STEP 2 STEP 3 STEP 4 Enter the income in the table B Net monthly income means how much income the family has after taxes. Enter the percent or amount of money for each category from the circle graph in the table. Calculate the amount of money or the percent for each category in the table. Determine which expenses are fixed and which are variable. Place X s in the appropriate columns. Baker Family s Monthly Budget (car expense, bus passes) $400 (insurance and additional expenses) $600 $320 Emergency fund 5% Housing cost (house payment and Insurance) $1,400 15% STEP 5 Complete the column. Item Net monthly income ($) Percent (%) Fixed Expense Variable Expense ($) Housing cost Emergency fund 432 Unit 7

5 Reflect 4. Analyze Relationships One month, the family must make an emergency car repair for $305. Are they able to pay for it out of the fixed emergency fund for that month? If not, how can they afford it? 5. The family wants to make a trip to Houston to visit the NASA Space Center. What are some ways they can save without using all of the allotted $160 for entertainment? YOUR TURN For 6 8, use the circle graph of the Torres family s monthly budget. Their net monthly income is $4, How much does the Torres family spend on housing each month? 7. What percent of the budget does the Torres family spend on food? clothing? (car expense, bus passes) $270 (insurance and additional expenses) 20% $360 Emergency fund 10% Housing cost (house payment and Insurance) 30% $ During a thunderstorm, lighting strikes a large tree in the Torres family s backyard. The tree needs to be removed. The cost to remove the tree is $500. Is there enough money budgeted in the allotted emergency fund? Explain. If not, how much more does the family need, and how could they find the money for it? Math Talk Mathematical Processes What if the cost of transportation for the Torres family rises by $90? How can they adjust the budget to cover this increased cost? Torres Family s Monthly Budget Personal Math Trainer Online Assessment and Intervention my.hrw.com Lesson

6 Guided Practice Sofia is creating a budget to save $250 for a week of soccer camp. She earns money by working as a mother s helper on Saturday mornings and Wednesday afternoons. She earns $20 each time she works. She wants to save $12.50 a week for the camp. Her mother wants her to save $5 a week for college. She is planning on spending $5 a week for snacks and $10 a week for entertainment. 1. Complete the table. (Explore Activity 1) Sofia s 4-Week Budget Description Income (+) Expenses ( ) Earnings for soccer camp for college Snacks 2. Circle the variable expenses in Sofia s budget. (Example 1) 3. If Sofia decides to take piano lessons at the community center for $5 a week, would that be a fixed expense or a variable expense? (Example 1) For 4 5, use the circle graph of the Talbot family s monthly budget. Their monthly income is $3,200. (Explore Activity 2)? 4. What percent of the Talbot family budget is spent on rent? 5. If the Talbots did not have to make a credit card payment, and instead put that money into savings, how much would they be able to save each month? ESSENTIAL QUESTION CHECK-IN Talbot Family s Monthly Budget (car expense, bus passes) 6% (insurance and additional expenses) $480 Credit card payment 6. How does a budget help an individual or a family manage their finances? Emergency fund 1 Rent $800 Taxes 16% 434 Unit 7

7 Name Class Date 14.1 Independent Practice 7.13.B my.hrw.com Personal Math Trainer Online Assessment and Intervention For 7 8, use the table. Kareem s 4-Week Budget Description Income (+) Expenses ( ) Earnings $300 for swim camp $40 for college $25 Computer (software, equipment) (movies, sporting events) $50 $40 7. Complete the column in the table. 8. The swim camp costs $280. How long will it take Kareem to save enough for the camp? Show your work. For 9 12, use the circle graph for the Moore family s monthly budget. Their monthly income is $5, What percent of the Moore s income goes to taxes? 10. How much does the Moore family spend each year on insurance? 11. Draw Conclusions Emily says that the Moore family spends $300 more on recreation than on transportation. Is she right? Explain. Moore Family s Monthly Budget 6% Recreation $500 Utilities 3% Insurance 12% $250 Miscellaneous Mortgage payment 22% 13% Taxes $ Communicate Mathematical Ideas The Moore s monthly income increases by $500, but the mortgage expense stays the same. Explain how to find what percent of the budget the mortgage payment would now be. Lesson

8 FOCUS ON HIGHER ORDER THINKING The circle graph shows the Rivera family s monthly budget. Their monthly income is $4,500. The table shows the budget for the Wagner family. Their monthly income is $4,200. Rivera Family s Monthly Budget (gas, car maintenance, bus passes) insurance 10% 7% Recreation 5% Car payment 10% Utilities 6% Housing (mortgage, insurance, property taxes) 36% 1 Wagner Family s Monthly Budget Description Expenses (-) Rent $1,134 insurance $504 expenses $210 $630 & household supplies $588 $252 Utilities $336 Miscellaneous $126 Retirement savings $168 Emergency savings $ Analyze Relationships Which family pays a greater part of their income for transportation (including car payments)? Explain your conclusion. Work Area 14. Multistep Over a year, which family pays more for medical insurance? How much more? 15. Multiple Representations Compare the two budgets. What are the advantages and disadvantages of each type of presentation? 436 Unit 7