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

2. 1.15.2.G1
Where’s My Dough?
Divide your
How much do play dough to
What
you spend on Play dough = show how
expenses do
each income much is spent
you have?
expense? on each
expense
Based upon
You have
your current Adjust your
Write a begun to
spending, is it play dough to
personal develop a
realistic to reach your
financial goal spending
achieve your goal
plan!
goal?
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 2
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

3. 1.15.2.G1
What is a
Spending Plan?
Document used to record
both planned and actual
income and expenses over a
period of time
A budget
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 3
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

4. 1.15.2.G1
Money Management Tools
Statement of Income & Expense Spending Plan
Financial Position Statement
What is my How have I What is my future
financial position managed my money
today? money in the past? management plan?
Determine what changes Make
to make changes
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 4
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

5. 1.15.2.G1
A forward-looking Income and Expense
Statement
May use the same template
for both the Income and
Expense Statement and the
Spending Plan
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 5
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

6. 1.15.2.G1
Why is a Help manage
your money in a
Spending Plan positive manner
an important Analyze the
part of financial opportunity costs
of your trade-offs Increase net
planning? to maximize worth
financial well-
being
Helps set and
reach goals
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 6
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7. 1.15.2.G1
Congratulations!
You have been hired as a financial
advisor for John and Tia Brown
• Developed a Statement of • Develop a
Financial Position and Income and spending plan for
Expense Statement the Brown family
• Identified the following goals:
Increase the Pay more on their Spend less
Spend less money
amount of their monthly car loan money on
dining out at
emergency payment to pay clothing every
restaurants
savings fund the loan off faster month
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 7
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

8. 1.15.2.G1
Spending Plan Development Process
Step 5 - Evaluate Step 1 - Track
and Make Current Income and
Develop the Adjustments Expense
spending plan
Step 4 - Step 2 -
Implement and Personalize Your
Control Spending Plan
Maintain the
Step 3 -
spending plan Allocate
Money to
Each Category
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 8
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

9. 1.15.2.G1
Track Current Income and Expenses
Step 5 - Evaluate Step 1 - Track
and Make Current Income and
Adjustments Expense
Step 4 - Step 2 -
Implement and Personalize Your
Control Spending Plan
Ensures spending Step 3 -
plan is realistic Allocate
Money to
Each Category
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 9
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

10. 1.15.2.G1
The Brown Family
Step One: Track
Current Income and
Expenses
Kept all receipts Review John and
for the month of Tia’s January
January to Income and
create an Expense
Income and Statement for a
Expense realistic view of
Statement their income
and expenses
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 10
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

11. 1.15.2.G1
Personalize Your Spending Plan
How will you Step 5 - Evaluate Step 1 - Track
and Make Current Income and
develop a
Adjustments Expense
spending plan?
What is the intended
time period for your Step 4 - Step 2 -
spending plan? Implement and Personalize Your
Control Spending Plan
Step 3 -
What categories
Allocate
will your spending Money to
plan include? Each Category
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 11
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

12. 1.15.2.G1
How will you develop a
spending plan?
Paper and pencil
Spreadsheet
How would
Money management you develop a
computer software
spending
plan?
Applications
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 12
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

13. 1.15.2.G1
What is the intended What categories will your
time period for your spending plan include?
spending plan?
• Usually concurrent with • Reference tracking from
pay period the Income and
Expense Statement
What time period • Do any categories need
would you choose added, changed, or
for your spending removed?
plan?
© Family Economics & Financial Education –May 2011– Insurance Unit – Types of Insurance– Slide 13
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

14. 1.15.2.G1
The Brown Family
Step Two: Personalize
Your Spending Plan
• Requested a • Find the column
spending plan for on the Income
the month of and Expense
February Statement
• Requested the where the
same document Spending plan
and categories as will be created
the Income and
Expense
Statement
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 14
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

15. 1.15.2.G1
Allocate Money to Each Category
Step 5 - Evaluate Step 1 - Track
and Make Current Income and
Reference tracking Expense
Adjustments
from Step One
Step 4 - Step 2 -
Implement and Personalize Your
Control Spending Plan
Determine what Step 3 -
changes to make Allocate
Money to
Each Category
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 15
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

16. 1.15.2.G1
When allocating money consider:
Trade-offs and
Contractual
opportunity Goals
expenses
costs
Contractual Non-contractual
Required to pay expense for a
specific amount of time - not Easy to reduce or eliminate
easy to reduce or eliminate
Rent, Internet, Cell phone Food, entertainment
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 16
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

17. 1.15.2.G1
Spending Plan Guide
What variables may cause these
percentages to be different?
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 17
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

18. 1.15.2.G1
Net Gain or Net Loss?
Net Gain? Net Loss?
• Add more • Increase
money to income
savings or • Decrease
another expenses
expense • Both
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 18
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

19. 1.15.2.G1
The Brown Family
Step Three: Allocate
Money to Each
Category
• Indicated a * next to expenses
that are either contractual or
they are unwilling to decrease
• Remember goals
• Consider trade-offs
• Must have a net gain or a zero
balance
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 19
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

20. 1.15.2.G1
The Brown Family
Step Three: Allocate
Money to Each
Category
• Develop a spending plan for
the family
• Explain each change made
• Re-write goals into SMART
goals using their new
spending plan
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 20
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

21. 1.15.2.G1
Implement and Control
Step 5 - Evaluate Step 1 - Track
and Make Current Income and
Adjustments Expense
Step 4 - Step 2 -
Implement and Personalize Your
Control Spending Plan
Use a control system
Step 3 -
to stay on track Allocate
Money to
Each Category
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 21
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

22. 1.15.2.G1
Which control
Control Systems system would
help you stick to
your spending
plan?
Internet-based spending plan program
Depository institution programs
Check register system
Envelope system
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 22
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

23. 1.15.2.G1
The Brown Family
Step Four: Implement and Control
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 23
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

24. 1.15.2.G1
Evaluate and Make Adjustments
Step 5 - Evaluate Step 1 - Track
and Make Current Income and
Adjustments Expense
Is your spending
plan helping you Step 4 - Step 2 -
reach goals? Implement and Personalize Your
Control Spending Plan
Do you need to Step 3 -
make any Allocate
Money to
adjustments? Each Category
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 24
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

25. 1.15.2.G1
The Brown Family
Step Five: Evaluate and Make
Adjustments
How could
• John and Tia • Increase their creating a
realized that if grocery budget spending plan
they dine out at by $20.00
• How has help you now
restaurants less
often they will developing a and in the
need to increase spending plan future?
their monthly helped the
grocery expense Brown family?
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 25
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

26. 1.15.2.G1
Summary
Step 5 - Evaluate Step 1 - Track
• A spending plan is an Current Income and
and Make
important financial Adjustments Expense
planning tool
▫ Helps achieve goals
• Make your spending
Step 4 - Step 2 -
plan work for you Implement and Personalize Your
• Make sure to control, Control Spending Plan
evaluate, and adjust Step 3 -
your spending plan Allocate
Money to
Each Category
© Family Economics & Financial Education – Updated May 2012 – Spending Plans – Slide 26
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona