Why We Use Money

 Money is anything you exchange for goods or services.

 Before money, people bartered, or traded, to get things
they needed or wanted.
 The face value—or denomination—of money is the
number printed or stamped on it.
 Face value is determined by the Bank of Canada, the
government agency responsible for creating and tracking
all of the money in Canada.
 The real value of money is what it is worth to you.
 Purchasing power is the amount of goods or services that
can be purchased with a unit of currency, or type of money.

1
 Comparing Financial
Needs and Wants
 Your financial needs are the things you must buy in order to
survive.
 Your financial wants are the things you need to maintain a
certain standard of living.
 When you understand the difference between financial needs
and wants, you can make responsible choices.
 Financial needs and wants are different depending on your
stage of life.
 A financial decision is a decision about how to manage your
money.
 You can use the decision-making process for important
financial decisions.

2
 Setting Financial Goals
 Financial goals are the plans you have for using your money.
 Setting financial goals helps you focus on how you want to
use your money.
 When you set financial priorities, you make decisions about
which goal is most important to achieve first.
 When you set financial goals, most often you think first about
your spending. You will have both short-term and long-term
spending goals.
 It’s harder to set saving goals. Try to think about your long-
term plans and objectives.
 You can set open-ended and flexible savings goals rather
than being specific about what you are saving for.

3
 Managing a Budget
A budget is a plan for spending and saving money.

 A budget gives you a clear picture of where your money

comes from and where it is going.
 Every budget has two main parts: income and expenses.
 The goal is to balance your budget, or make sure that your
income is equal to or greater than expenses.
 You can set up a budget for any length of time, however,
monthly is the most common format.
 Some income and expenses are fixed, which means you
know what they are and have to pay them each month.
Others are flexible or variable, which means they change
from month to month.

4
 Setting Up a Budget
 To enter flexible items in a budget, estimate these items
by looking at past income and expenses.
 You can adjust the estimated amounts each month by
entering the actual amounts you earned or spent.
 There are four basic steps for setting up a budget.
1. List the categories or types of your monthly income.
2. List the categories of your regular expenses.
3. Balance your budget. At the end of the month, go back and
replace the estimates with the actual amounts that you spent.
4. Do the math! Add your total income and your total expenses,
then subtract your total expenses from your total income.

5
 Making Your Budget
Work for You
 After you set up your budget, you can see exactly how
you are spending your money.
 Use the Miscellaneous category in your budget to pay for
unexpected expenses.
 Staying on budget means using your money according to
your plan to achieve your financial goals.
 If you have a deficit, it means you are spending more
money than you are earning every month.
 To stay on budget, you’ll have to eliminate the deficit by
reducing or eliminating expenses and determining if you
can increase your income.

6
 Activity #1
Imagine you are planning a vacation, but you are on a limited budget. Think of ways you
could have a vacation without spending a lot of money. Answer the following questions.

1. Brainstorm where you could go and where you would stay for a budget friendly
vacation. List all your suggestions. Then decide and select one of the suggestions
and answer.
1. Where will you go?
2. How do you plan to make this a budget friendly vacation?
3. What resources do you have available to help plan your vacation?

 Explain how you will save money on each of the following categories..
1. Lodging
2. Meals
3. Activities/sightseeing
4. Transportation/travel
1. After making your plans, discuss how you think your vacation would be? Would it be
a fun vacation? What could be better about your vacation? Explain your answers.
 Activity #2
Track all your spending from last week. Include what you bought, where you bought it,
where you got the money, and if you where happy with your purchase. Do this by
preparing a table like the example below.
Item Purchased Where did you Where did you get Are you satisfied with your Amount spent
purchase it? the money? purchase? Explain.

1. How did you spend the majority of your money?

2. Were you satisfied with the majority of your purchases? Explain.

3. What would you change concerning your purchases during this week?
Explain.
 Analyzing Your Paycheck
 A paycheck is a written document that tells your employer’s
bank how much money to give to you.
 You take the paycheck to the bank to exchange for cash or to
transfer funds into your account.
 The pay stub provides information about your pay, including how
much you have earned and how much your employer has deducted
from your pay.
 A deduction is an amount that your employer withholds from your
earnings to pay for things such as taxes or insurance.
 Even if you have a direct deposit, you will receive a pay stub
that showing your earnings and deductions
 A pay period is the number of days for which you are being
paid.

9
 Understanding
Your Paycheck
 Most paychecks include:
 Your employer’s name and address in the upper-left corner
 A check number
 The date of the check
 Your name as the recipient, or payee
 The amount of the check written in numbers and spelled out
 The signature of a person authorized by your employer in the
lower-right corner
 You must endorse, or sign the back of your paycheck to
before you can deposit it or cash it
 A pay stub is attached to the paycheck and provides a lot
of information about the money you earned.

10
 Choosing a Method
of Payment
 The type of money you use to make a payment depends on
many things, including the type of purchase.
 Cash is a good option for most purchases.
 When you use cash, you know you have enough money to make
the purchase.
 Cash is universal. Just about everyone takes cash.
 The biggest drawback to cash is that it can be lost or stolen.
 When you write a check, you are permitting your bank to
transfer money from your account to the payee’s account.
 If you use a checking account, you must keep the account
balanced. That means keeping track of the deposits and
payments you have made.

11
Debit and Credit Cards, EFTs,
and Installment Plans
 A debit card is more convenient than cash. You must have a
bank account with enough money to cover your purchases.
 Most debit cards require you to enter a personal
identification number (PIN) with each use.
 When you use a credit card, you are borrowing money from
the business that issued the card.
 With installment buying, you agree to make with a series of
future payments at specified intervals for a large purchase.
 You use electronic fund transfers (EFT) to transfer money
from one bank account to another. You must have electronic
access to your bank account and enough money in your bank
account to cover your purchases.

12
 Personal Money Management Review

 Money is anything you exchange for goods or services.

 Purchasing power is the amount of goods or services that can
be purchased with a type of money.
 Your financial needs are the things you must buy in order to
survive.
 Your financial wants are the things you need to maintain a
certain standard of living.
 Financial goals are the plans you have for using your money.
 A budget is a plan for spending and saving money.
 Staying on budget means using your money according to your
plan to achieve your financial goals.

13
 Review (continued)
 A paycheck is a written document that tells your
employer’s bank how much money to give to you.
 A pay stub is attached to the paycheck and provides a lot
of information about the money you earned.
 The type of money you use to make a payment depends
on many things, including the type of purchase.
 A debit card is like cash but more convenient. You must
have a bank account with enough money to cover your
purchases.
 When you use a credit card, you are borrowing money
from the business that issued the card.

14