22.2.3
Benefits of saving
Basic budgeting for short-term goals, as shown in the example above, is beneficial as it allows you to develop a savings plan. Saving comes with many benefits for an individual, such as: • more independence and security • a sense of satisfaction • ability to pay for unexpected expenses • avoiding the need to borrow money and the worry about repaying the debt • ability to plan for buying big items, such as a bike or a car.
FIGURE4 What short-term goals do you have? You might wish to try a new sport or hobby, which may mean that you must save money to pay for it.
22.2 SkillBuilder activity INTERPRETING AND ANALYSING DATA AND INFORMATION 1. Identify two short-term achievable personal financial goals that you or another student in a secondary school might have. It may help to think about things that a student may wish to save for and buy. Examples might be
a new pair of sneakers, gaming console or some new clothes. a. Determine how long it might take you to achieve each goal.
b. Compare your goals with those of others in your class. Determine whether they are similar or different. c. Determine what you can learn about financial goals by comparing them with the goals of others. 2. Prepare a cash budget for the next three months which will allow for the financial goal to be met. Copy the format used for Minh’s budget in TABLE2 , but with the typical income and expenses of a secondary school student. (You may wish to refer back to the Tune in activity for a list of expenses that a student may have.) 3. Compare your budget with that of the person next to you. Explain what similarities and differences you have. a. Determine whether your budget allows for any savings. b. If you wanted to save more to meet one of the short-term goals in Question 1, determine how you could adjust the budget. Identify any extra sources of income you could access, or any possible savings within your expenses. c. Create an amended budget to show the changes.
22.2
Exercise
Learning pathways LEVEL1 1, 3, 4
LEVEL2
LEVEL3
2, 5
6, 7, 8
REMEMBER AND UNDERSTAND 1. Determine which of the following best describes the term budget . A. Anything to do with money — particularly income, expenses and savings B. A compulsory savings scheme C. A person’s wage or salary before it is taxed by the government D. An estimate of future income and expenses used to assist financial planning 2. Define what is meant by short-term financial goal . 3. Complete the following sentences.
a. Income is otherwise known as money coming in / goingout . b. Expenses are otherwise known as money coming in / goingout .
TOPIC22 Financial goals and decision-making 631
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