FIGURE4 Creating a long-term savings plan uses the same four-step process as a budget that is used for achieving short-term financial goals.
STEP 1 Calculate your total monthly income. This includes your wage, income from savings and investments, family benefits etc.
INCOME
STEP 2 Calculate your total monthly expenses. This includes money spent on housing, bills, food etc.
EXPENSES
INCOME MINUS EXPENSES
STEP 3 Subtract your monthly expenses from your monthly income.
STEP 4 Assess your position by comparing your total income with your total expenses. How much do you have left?
CASH REMAINING
22.3.4
Prioritising needs and financial responsibilities over
personal wants When you are planning your budget and examining your income and expenses to achieve a short- or long-term personal financial goal, it is important to know the difference between what you need andwhat you want . It also means knowing the difference between immediate financial commitments and things that can wait. Have a look at the following expenses in FIGURE5 .
FIGURE5 Common expenses
SkillBuilder discussion Communicating 1. Look at the images in FIGURE5 . Can you decide which things are an immediate need which must be paid for straight away and cannot wait? 2. Which things are long-term wants? 3. Is there anything that is in between an immediate need and a long-term want?
TOPIC22 Financial goals and decision-making 635
Made with FlippingBook interactive PDF creator