2.15.2.G1

Major Expenditure Mania

“Get Ready to Take Charge of Your Finances” Introductory Level

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

My Money Bag

Are your money bag expenses the

same as the person sitting next to you?

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

How do people decide how to spend money?

Need - something required to

live

Values - what is

important to a

person

Want - something

unnecessary but desired

Consider needs versus wants

Depends on personal values

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

Meet the Lopez Family!

Zach and Anita Lopez have four children, two girls and two boys ages 7-13Family enjoys spending time together, especially during meal times when the family sits around their large dining room table enjoying home-cooked foodCurrently do not own a vehicle of their own but have been looking to purchase a vehicle to use for family outings and vacationsSave a large amount of money every month to help pay for their children’s future college education

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

The Lopez Family

How do your values, needs, and wants influence the spending decisions in your

money bag?

Value? Need? Want?

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

What is a Spending Plan?

Everyone has an individualized spending plan

Income – money earned

Expense –

money spent

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

Why is it important to create a spending plan?

Helps to determine needs versus wants

Prevents overspendingWhat information would you need to add

to your money bag in order for it to become a complete spending plan?

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

What are Taxes? Required citizen charges by the

government•Provide public goods and services

One of the largest expenses Required

Spending plan expenses paid from net income

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

What are Major Expenditures?

Major Expenditures- largest expenses in

most spending plans Major Expenditures

Savings

Insurance

HousingTransportation

Food

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

Typical Major Expenditure Amounts

How might the Lopez families major expenditure percentages be

different than the typical percentage amounts?

•A reference when creating a spending plan

•Provides guidance•Can adjust

percentages to meet individual values, needs, wants

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

What is Savings?

Provides money in case of an emergency

Recommended – at least 10% of net

income

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

Pay Yourself First! Set aside money for saving before

spending any money Save then spend! 10-20% of net income is

recommendedDid you account for savings as an expense in your money bag?

Underline the expenses in your money bag that are related to

savings.

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

Lopez Family Savings Decisions

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

Insurance Arrangement between an individual

and an insurance company Protects people financially from

unexpected expenses caused by accidents or illness

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

Types of Insurance

Did you account for insurance as an expense in your money bag? Place an

arrow next to all of the expenses in your money bag that are related to

insurance.

Health Automobile Home• Pays for a

portion of health care bills

• Required by law• May pay for: • automobile

damages • injuries to people

involved in an accident

• Helps pays for damages to a home and its contents

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

Housing

Rent or Own?•Rent – make monthly payment to owner

of home•Own – may need to receive a loan and

make monthly payments to pay back loan Total cost of a home

•What may a person have to pay for to live in a home?

What should a person consider when choosing a

home to live in?

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

Housing Expenses

Monthly payment

Move-in costs

Utilities

Insurance

Taxes- Paid by owner of home

Maintenance

Circle all of the expenses in your money bag that are related to

housing.

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

Other Items to consider …

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

Lopez Family Housing Decisions

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

Transportation

What expenses should be considered when purchasing an automobile?

What types of transportation options are available?

If an automobile is purchasedconsider the total cost

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

Expenses Associated with Owning an Automobile

Monthly payment – if a loan is neededLicense and Registration-

Required by lawInsurance –Required by law

Maintenance

Fuel

Optional Upgrades

Place a star next to all of the expenses in your money bag that

are related to transportation.

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

Other items to consider …

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

Lopez Family Transportation Decisions

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

Food…

Least expensive

Most expens

ive

Meals from scratch at

home

Convenience foods at home

Fast Food

Sit-down

restaurant

What options are available for purchasing food?

Place a square around all of the expenses in your money bag that

are related to food.

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

How does the cost of eating out compare to preparing meals at

home? A spaghetti dinner for one person

•In a restaurant - $12.00•At home - $1.30 -hamburger ($.50 for 1

serving) -spaghetti sauce ($.70 for 1 serving)

-noodles ($.10 for 1 serving)At home In a

restaurant1 meal $1.30 $12.001 meal per month for 6 months

$7.80 $72.00

1 meal per month for 1 year

$15.60 $144.00

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

Other items to consider…

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

Lopez Family Food Decisions

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

What expenses are not included in the major expenditure

categories?

What category does the remaining expenses

in your money bag fit into?

© Family Economics & Financial Education –December 2010 – Get Ready to Take Charge of Your Finances – Major Expenditure Mania – 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

2.15.2.G1

Summary Everyone has an individualized spending plan

based on values, needs, and wants Major expenditures make up the majority of a

spending plan•Savings, insurance, housing, transportation, and food•Percentages are provided for guidance•Actual amounts should be adjusted to meet individual

values, needs and wants Should choose an expenditure option that meets

needs and wants but also fits spending plan