Setting Financial Goals: Money Smart For Young Adults

Setting Financial Goals
Money Smart for Young Adults
TIRSOLITO C. SALVADOR
PUP COLLEGE OF BUSINESS
Building: Knowledge, Security, Confidence

Purpose
• Learn how to manage

money by preparing a
personal spending plan
• Identify ways to decrease
spending and increase
income
2
Objectives
By the end of this course, you will be
able to:
• Track daily spending habits
• Prepare a personal spending plan or budget to
estimate monthly income and expenses
• Identify ways to decrease spending and increase
income
• Identify budgeting tools that will help you manage
your money
3
To make a Budget or to NOT
Make a Budget?
4
What is a Budget?
Budgeting is:
• An important step
to financial security
• About choices –
choosing how to
make and spend
money
5
Why Budget?
Usually
for
1 month
6
Preparing a Budget
Budgeting is about:
• Choosing how to
use your money
• Knowing what your

income and
expenses are every
month
7
Four Steps to Preparing a Budget
1. Keep track of your daily

spending
2. Determine what your
monthly income and
expenses are the month
before they are due
3. Decrease spending
4. Increase income
8
Step 1: Keep Track of Daily
Spending
Many people spend all their money—Do you
know where your money goes each month?
• Have you ever had any money
and then spent it?
• Do you remember exactly what
you bought?
Control Your Money!

• Know where your money goes
• Keep a personal spending diary
9
Set Your Goals
Consider them when planning a budget:
• Be realistic
• Be specific
• Have a time frame
• Say what you want to do
• Have milestones
10
Daily Spending Diary
Watch Spending Closely

• Use a daily
spending diary or
log
• Know where your
money goes
• Cut expenses to
save for goals
11
Activity 1: Daily Spending Diary
Complete Activity 1 in your

Participant Guide
– Write down what you
spend in a typical day
– Keep track of everything
you spend
12
Step 2: Income
Income comes in the form of:

• Allowances
• Wages from a job
• Miscellaneous work (like cutting
grass)
• Interest and dividends from
investments
13
Step 2: Expenses
Expenses: items you pay for each month

• Housing and car • Eating out or other
payments entertainment
• Insurance • Educational costs
• Food and clothing
• Utility bills
• Personal, child or
pet care
14
Activity 2: Monthly Income and Expense
Worksheet

Participant Guide
– Your instructor will
explain how to fill in the
worksheet
– You will fill it out as you
go through the section
15
What You REALLY Earn: Income
• Your employer must

subtract certain taxes
from your paycheck
• The time it takes

to meet goals for
saving may
increase
16
What You REALLY Earn: Income (continued)
Gross Income:
Total income without deductions
Net Income:
Gross income after deductions or
subtractions, such as Social Security
and other taxes
17
What You REALLY Earn: Income (continued)
Social Security:
Insurance for someone who works
• Retirement
• Disability
• Family
• Survivor
• Medicare
18
Expenses
Expenses:
Everything you pay for in a time period
There are two types of

expenses:
– Fixed
– Flexible
19
Expenses (continued)
Fixed Expenses do not change

• Car payment
• Rent
Flexible Expenses might change

• Electricity
• Food
• Clothing or entertainment
20
Step 3: Find Ways to Decrease Spending
21
Step 3: Find Ways to Decrease Spending
You can decrease spending by:

• Carrying little cash and controlling
your credit card use
• Not shopping “for fun”
• Remembering your savings goals
• Buying only what you need
• Paying your bills on time to avoid

extra fees and charges
22
Step 4: Find Ways to Increase Income
• Get a second job or a

job that pays more to
increase income
• Use certain tax credits
that can help you
increase your income
(or pay fewer taxes so
that you get more in
your paycheck)
23
Budgeting Tools
These help you manage your budget:

• Monthly payment
schedule
• Monthly payment
calendar
• Computer system
24
Budgeting Tools (continued)
We will focus on two:

• Monthly payment
schedule
• Monthly payment calendar
These help you:
• Record income in advance
• Plan ahead to pay your
bills
25
Activity 3: Monthly Payment Schedule

Participant Guide
– Use the Income and Expenses
Worksheet
– Follow your instructor’s
directions to complete the
Schedule
26
Activity 4: Monthly Payment Calendar

Participant Guide
Use the Monthly Payment
Schedule to fill in your
calendar
27
Monthly Payment Calendar
Month________________________________
Sunday Monday Tuesday Wednesd Thursday Friday Saturday
ay
1 2 3 4 5 6 7
$400 paycheck $16600 $25 interest $30 cell phone
$25 savings transportation (income)
$150 car
$25personal
$30 insurance
8 9 10 11 12 13 14
15 16 17 18 19 20 21
$40 phone bill $10 credit
card/ loan
22 23 24 25 26 27 28
$40 entertain-
ment
29 30
28
Help! I Can’t Pay My Bills!
Scenario: You add up

your bills and the total is
$900, but your income is
only $600…. Think about the
bills that would
be the most
What do you do? important!
29
Help! I Can’t Pay My Bills! (continued)
If you have to choose, think of major

obligations first:
30
Activity 5: A Hole in Todd’s Pocket

Participant Guide
Read the scenario and think
about what Todd did
31
CONCLUSION: To make a Budget or
to NOT Make a Budget?
32
Setting Financial Goals
Congratulations! You have completed
the Setting Financial Goals module.
You have learned:
• How to track what you spend each day
• How to prepare a personal budget to
estimate monthly income and expenses
• Ways to decrease spending and
increase income
• About tools for better money
management
33
Assess Your Knowledge
Don’t forget to complete the

Knowledge Check in your
Participant Guide
34

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Setting Financial Goals

Money Smart for Young Adults

Building: Knowledge, Security, Confidence

• Learn how to manage

• Knowing what your

1. Keep track of your daily

Control Your Money!

Consider them when planning a budget:

Watch Spending Closely

Complete Activity 1 in your

Income comes in the form of:

Expenses: items you pay for each month

Complete Activity 2 in your

• Your employer must

• The time it takes

There are two types of

Fixed Expenses do not change

Flexible Expenses might change

You can decrease spending by:

• Paying your bills on time to avoid

• Get a second job or a

These help you manage your budget:

We will focus on two:

Complete Activity 3 in your

Complete Activity 4 in your

Scenario: You add up

If you have to choose, think of major

Complete Activity 5 in your

Don’t forget to complete the

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