Download Year-Long Expense Budget Plan

Date:
11.4 Notes:
Lesson Objective: Develop and interpret a cash
flow chart, frequency budget plan and a year-long
expense budget plan.
CCSS: A.SSE.1, F.BF.1
You will need: your book
This is Jeopardy!!!: John makes $11 per hour. He
makes time and a half on the hours he works beyond 40 hours in a week. His income tax withholdings are 20%. What would his net pay be if he
works 46 hours in one week?
Lesson 1: Not-So-Quick Write
A. What is cash flow and a cash flow analysis?
B. What is included in income?
C. What are fixed expenses? Variable
expenses?
D. Why should savings be considered as an
expense? Explain your rationale.
E. What does it mean to prorate, and why
would you need to do this?
Lesson 1: Not-So-Quick Write
F. What are assets and liabilities?
G. What is net worth, and what does this tell
you about your financial situation?
H. What is debt-to-income ratio, and
how/when should you use it?
I. When do you need to create a debt
reduction plan?
Lesson 2: Cash Flow Analysis
A. What is cash flow and a cash flow analysis?
Lesson 2: Cash Flow Analysis, p. 691
Lesson 2: Creating, Using & Modifying a Budget
Envelope Accounting System:
Frequency Budget Plan:
Year-Long Expense Budget Plan:
Lesson 3: Frequency Budget Plan, p. 694
Frequency Budget Plan:
Lesson 3: Frequency Budget Plan, p. 694
Frequency Budget Plan:
Lesson 3: Frequency Budget Plan, p. 694
Frequency Budget Plan:
Lesson 3: Frequency Budget Plan, p. 694
Frequency Budget Plan:
Lesson 4: Year-Long Expense Plan, p. 695
Year-Long Expense Budget Plan:
Lesson 4: Year-Long Expense Plan, p. 695
Year-Long Expense Budget Plan:
Lesson 4: Year-Long Expense Plan, p. 695
Year-Long Expense Budget Plan:
Lesson 4: Year-Long Expense Plan, p. 695
Year-Long Expense Budget Plan:
Lesson 5: Assets and Liabilities
Decide whether the following are an asset or a
liability.
Lesson 5: Assets and Liabilities
Decide whether the following are assets or a
liabilities.
A.
B.
C.
D.
E.
Balance in checking account
Current value of home
Remaining balance on mortgage of home
Current value of computer
Amount of love of money
Lesson 5: Assets and Liabilities
Decide whether the following are an asset or a
liability.
F. The difference between total assets and
total liabilities
G. Combined credit card balance
H. Current value of retirement account
I. Current value of video equipment
J. Remaining balance on car loan
Lesson 6: Net Worth
Liam Brown is single, in his mid-20s, and owns a
condo in a big city. He has calculated the
following assets and liabilities.
Lesson 6: Net Worth
Assets:
Current value of condo: $580,000
Current value of car (as listed in Kelley Blue Book):
$17,000
Balance in checking account: $980
Combined balance in all savings accounts: $22,500
Current balance in retirement account: $24,800
Current value of computer: $2,900
Current value of collector bass guitar: $6,700
Current value of stocks/bonds: $18,300
TOTAL ASSETS:
Lesson 6: Net Worth
Liabilities:
Remaining balance owed on home mortgage:
$380,000
Remaining balance owed on student loans:
$51,000
Combined credit card debt: $1,600
TOTAL LIABILITIES:
Lesson 6: Net Worth
Calculate Liam’s net worth.
Last year at this time, he calculated his net
worth as $205,780. Compare both values. What
do the changes mean?
Lesson 6: Net Worth
Calculate Liam’s net worth.
Last year at this time, he calculated his net
worth as $205,780. Compare both values. What
do the changes mean?
TOTAL ASSETS:
TOTAL LIABILITIES:
NET WORTH:
– _____________
Lesson 6: Net Worth
Calculate Liam’s net worth.
Last year at this time, he calculated his net
worth as $205,780. Compare both values. What
do the changes mean?
TOTAL ASSETS:
TOTAL LIABILITIES:
NET WORTH:
Previous Net Worth:
Change in Net Worth:
– _____________
_____________
=============
Lesson 7: Debt
Debt-to-Income Ratio:
Lesson 7: Debt
Debt-to-Income Ratio:
Liam’s Liabilities:
Remaining balance owed on home mortgage:
$380,000
Remaining balance owed on student loans:
$51,000
Combined credit card debt: $1,600
TOTAL LIABILITIES:
Lesson 7: Debt
Liam’s Monthly Liability:
Mortage:
$ 2,500
Student Loan:
510
Credit Card Payment:
150
Total Monthly Liability: $
Liam’s Total Monthly Income:
Gross Salary:
$ 7,000
Investment Income
500
Total Monthly Income: $
Debt-to-Income Ratio:
11.4: DIGI Yes or No
1. The frequency budget from p. 694 states
that Dave and Joan have an annual surplus
of $1,284. How does this relate to the
monthly positive cash flow from p. 691?
2. In Example 5, what would Liam’s net worth
be if the current value of his condo increased by 10%, he paid down his student
loan $5,000 and he paid off his credit card
debt?
Continued on next slide
1.2: DIGI Yes or No
3. Thome anticipates that next year, his car
and student loans will have been paid off
and he will have received a 10% salary
increase. If everything else remains the
same, calculate the debt-to-income ratio in
Example 6.