Financial Literacy

Budgeting

Budgeting is the process of deciding how much of one's profit or income should be put towards savings, expenses and wants. Both business and households can create budgets to help organize their money and decide what should go where.

Today we were creating our own budgets based off of either our preexisting job, or a theoretical job. We learned that for the majority of people, 50% of their income will go to needs, 30% to wants, and 20% to savings per month. I then adjusted this based on my own situation and filled out this chart. I believe the chart will become more helpful once I have more expenses and things to save up for, and also because my parents do still pay for the majority of what I need and want. That being said, I came up with my own percentages: 15% needs, 20% wants, and 65% savings.

Compound and Simple Interest

Compound interest leaves the interest in the bank for it to grow .

Simple interest is taking your interest out of the bank.

To find the growing interest and final amount for compound interest, use the P(1+r)t formula. To find the final amount for simple interest, we use the A=P+Prt formula.

P= initial investment

r= percentage rate

t= time

A= final amount

Here is a way to find the simple interest rate >>

This is important to know how to do when creating formulas that involve interest.

Interest and Investments

We learned how interest rates work and how to use formulas to find out the interest based on an initial investment. We were given some total interest payments for different years and had to figure out the percentage rate and interest per year. We were also given an investment and had to find the interest per year based on the percentage rate.