Week 2 Objectives: In this week you will be introduced to Household Budgeting Upon successful completion of this Lesson, the student will be able to: Compare opportunities and strategies for attaining personal wealth Develop a plan for future financial need and retirement Make sure to utilize the "My Notes" section to organize your thoughts with regard to what is the most important information within the lecture that is being imparted. Focus on factual information relevant to each discussion topic such as definitions and processes. Helpful tips for using this VIP Guide: This icon means that there is a video to watch This icon means that there is something interesting to read Reading Assignment and/or Lecture Key Points: What opportunities do you have to attain personal wealth? You can make more $ You can spend less $ Pretty simple? Well, it may sound like it but it is a little more complex than that! You have to think about what is important to YOU and your family. No, not just once as an assignment but each and every time you make a financial decision! Do you need that new pair of golf shoes? Does your son/daughter need that new video game? Do you need to go see that new movie? Maybe so but can you go on a Saturday morning when the tickets cost less, or use a coupon? Grantham University 2013 Page 1 of 5
Where do you start? Develop a plan for future financial need and retirement. How do you do that? You prepare a household budget. A household budget is not really as bad as it sounds at first, you basically track your income and expenses. Keep in mind this is not just credit or debit card purchases but also cash spending (Cash Budget). Just carry around a small notebook or use your phone to record a note and transfer to a paper binder later. A budget is just a way to PLAN to spend your money. That way when you are confronted with an impulse purchase, you know your plan of how the money is to be spent and you (or you and your family) can decide if a revision should be made. The important thing is that once you start a budget you need to record everything! You will find that it will become a decision like Do I buy the $6 coffee or do I make a cup at home? If you want two cups of $6 coffee per week that is ok, just decide that you will buy TWO cups a week and then do not buy more than two. If one week you buy only one cup of coffee, you now have a surplus. That is good! However if you decide to buy three, that is a deficit not so good, now you have to decide what you need to give up to make up for the $6! Some expenses are fixed that means that no matter what they do not change (or do not change very often) this might be your car payment. Variable expenses on the other hand will change, like gasoline expenses, the price of gas changes and the amount you drive may change. If you want to try to keep your gas a fixed expense, you need to drive less when the price goes up! After reading you should compare the formal budget with a No Budget Budget one way to do this is to make a Venn diagram. If you have not done this before, watch the video that is listed at the end of this course. You basically create two circles that intersect. In one circle you put the topics that apply only to the formal budget, in the other large circle you write what is unique to the No Budget Budget and in the intersecting area you write things that are common to both. A budget control schedule is a document that shows the predicted budget amounts compared to the actual amount that you spent. You can do this on paper or in Word or Excel. We recommend Excel if you have access to it. Scientists say that it takes just three weeks to make or break a habit you can read about it at this web site: Is it true that if you do anything for three weeks it will become a habit? http://science.howstuffworks.com/life/form-a-habit.htm Grantham University 2013 Page 2 of 5
W2 Discussion Introduction Virtual Field Trip "Career Choice" Embark on a virtual field trip. Researching online, explore different career fields that interest you. Share with your classmates which career field or fields you found most interesting. Why do you find it interesting? What is the salary range and average income for people working in that field? What level of education is required to work in that career field? How do your findings affect your career, educational, and financial plans? VIP Suggestions: Note that the question from the course has been edited to have bullet points. This is always a good idea when answering a question that has multiple parts. It makes it easier to see that you have answered all of the parts so you have a chance to get full credit for the question! If you find a really good web site put a link to the web site in your post so other students can look up their job interests at that site! Maybe they will do the same for you next week! Example of how to get started: The best way to get started on this question is to search the internet for facts. Once you find details you can document the parts you want to include in your initial post. Be sure to reply to all parts of the question in one post. When you reply to others, be sure to tell them which part of the question you are responding to. For Example Bob, you mentioned the annual salary, I was wondering if the salary changes based on where you live? you get the idea! Grantham University 2013 Page 3 of 5
W2 Assignment Using the information in the Lectures & Presentation, answer the following: 1. Create a simple household budget, including all income and expenses. There are various templates available online to help you do this. Find one that you feel comfortable with and that fits your needs to complete this activity. 2. Were you surprised by anything when you created the budget? Do you think you will use it and follow it? 3. How might a career change (perhaps into the field you researched for the discussion forum) and further education affect your budget? Consider the following: Make sure to reference the Key Points from the lectures above. Remember that an assignment is only seen by your instructor so you can use actual categories and real numbers. This will make your house budget AND get your credit for your class work! If you feel the formal budget is better for you, use it! Search the internet for budget templates in Excel or sample documents that you can print. Resource Sites on Studying Strategies: How to make a Venn Diagram http://www.youtube.com/watch?v=1gb3ivbichw Grantham University 2013 Page 4 of 5
Budgets For Dummies - Learn How to Create a Household Budget in 5 Easy Steps http://www.youtube.com/watch?v=ifre2n4hbbw (5 min) Really good summary! Monthly household budget http://office.microsoft.com/en-us/templates/monthly-household-budget-tc101927369.aspx 10 Free Household Budget Spreadsheets http://christianpf.com/10-free-household-budget-spreadsheets/ Grantham University 2013 Page 5 of 5