Day 9 (PF)

BUDGET CHALLENGE

WATCH THIS LESSON OVERVIEW VIDEO: https://screencast-o-matic.com/watch/cqnV3X3g2I

EVERYTHING IN THIS LESSON NEEDS TO BE DONE; HOWEVER, EVERYTHING IN BOLD MUST BE DONE FOR A GRADE!!

Pit Stop Summary: The Budget and Cash Flow Spreadsheet (CFS) is really two tools in one: 1. Budget – A plan for your money (for projecting over a long term). 2. Cash Flow – Tracks money going into and leaving your bank account (for balancing and projecting cash position on a daily basis).

Terminology Tune-Up:

  1. Credit – Money added to your bank account. Also referred to as a deposit.
  2. Debit – Money deducted from your bank account. Also referred to as a withdrawal.
  3. Negative Balance – The bank account has less than $0.
  4. Net Income – The dollar amount of your paycheck. This is your “take-home” pay.
  5. Minimum Balance – The lowest balance possible without receiving a fee.

Navigation Tips:

  1. Determine the best time of day to dedicate 10-15 uninterrupted minutes to managing money in the simulation. Use this time to update your budget and schedule bills.
  2. Actively manage your budget on a regular basis.
  3. Reconcile the CFS to the bank account activity regularly to ensure it is accurate.

Navigation Tip #1: Students should not wait until a bill is due to issue the check. In Budget Challenge, there is a two-day processing window for checks. Plan ahead and schedule checks to pay bills on time. It is important for students to remember that entering a payment on their CFS does not schedule the bill to pay. They must schedule bills to pay at Student Home>Bank.

Navigation Tip #2: After building budgets with expected inflows (credits) and outflows (debits), students should ask themselves these questions: • Is my bank account projected to be positive every day in the simulation based on the current budget? Will I be below my bank account minimum balance requirement? • Do I have the right bank account type for me? • Do I have enough Net Income allocated to allow for enough liquid cash flow to pay my bills on time? Should I change my 401(k) percentage? • Should I pay more or less on my credit card to fit my budget?

Navigation Tip #3: The CFS is a great tool for guiding students through the simulation when it is reconciled regularly

Turn-by-Turn Navigation: Building a budget is like making a plan.  Use the Budget and Cash Flow Spreadsheet “CFS” to build a budget during registration and to maintain your budget throughout the simulation. Download the CFS and use the following steps to set up your CFS and build your budget based on your net pay and vendor selections. By building a budget you will be able to determine the amount you are able to contribute to your 401(k) for each payroll period in the game. Make sure to select a contribution percentage that allows you to achieve the goal of saving $500 in your emergency fund and still have enough money to pay all bills on time and achieve the other financial goals in the game. Use the scenario, information provided during vendor selections, and the goals of the game (included on the Dashboard) to build your plan for the game.

  1. Watch Video #3: How to use the Cash Flow Spreadsheet video. Watch the Cash Flow Video
  2. DOWNLOAD THE CFS EXCEL VERSION — WATCH THIS VIDEO TO SEE HOW TO DOWNLOAD THE FILE TO YOUR ONEDRIVE AND OPEN IT IN EXCEL ONLINE TO WORK ON IT
  3. WATCH THIS VIDEO TO HELP –HOW TO GET STARTED WITH YOUR CFS, HOW TO ENTER YOUR OPENING BALANCE, HOW TO CHOOSE YOUR 401(k)–https://screencast-o-matic.com/watch/cqVTYa3Uj5
    1. Go to Student Home>Info Packet. Find and enter the simulation start date in cell A9 and the beginning bank account balance in cell B9 of the spreadsheet.
  4. Read through the offer letter from ProperLiving Widget Engineering & Design found in the Info Packet. Notice that this is the letter you received prior to starting work (almost a year ago). It is included to provide context for the simulation scenario, however pay dates and specific net pay information are obtained from Student Home>Vendor Selections> Employer tab.
  5. Go to Student Home>Vendor Selections>Employer tab, select the 401(k) plan and contribution percent.
  6. Scroll down to find the Paycheck Calculator. Notice that the row for your selected contribution percent is highlighted in yellow. You may need to refresh screen if it does not happen automatically.
  7. From the Employer tab, determine the number of days from the start date until the first payday. Paychecks arrive every two weeks going forward from that date.
  8. Your net pay is money remaining from your paycheck once taxes and pre-tax deductions have been taken out. Net pay is the amount your employer deposits into your checking account.
  9. Using the Paycheck Calculator, enter the net pay in the column B cell for the day after you get paid. This is important because the bank has a one-day Funds Availability Hold. That means you can use the money the day after it is deposited.
  10. WATCH THIS VIDEO TO HELP YOU SELECT YOUR BANK ACCOUNT: https://screencast-o-matic.com/watch/cqVTrn3U6k
  11. Now, using the information on the remaining Vendor Selections tabs, enter the bill payments due before your first paycheck. Make sure to enter the bill amount for each vendor in their respective column in the spreadsheet on the date it is due.

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