Budgeting
Starter questions....
What is budgeting?
Definition
•A budget is a plan of expected
income, expected expenses,
expected savings for a period of
time.
Why Budget?
• In groups identify as many reasons
WHY you would need to budget.
Why Budget?
• To prevent a person from forgetting
about irregular but necessary
expenditure eg; annual insurances or
emergency expenses like car repairs.
• So you don’t run out of money before
next pay day.
• To stop you getting into debt.
• To avoid unnecessary spending.
Why Budget?
But the main reason is a positive one: it
allows you to take control of your finances
and make sure that your spending and
saving allows you to achieve your goals –
like getting that car, or going for a trip
overseas.
Activity give an example of what you could do
instead of spending money on the following
Takeaways
New SMART phone
New computer game
New school jumper
$5 on lunch for
school
$2.00 on soft drink
everyday
$200 a month on
heating your home
Cook at home
Budget Format
There are 4 main areas to consider
when preparing a budget.
1. Income
2. Expenses (Essential and Non
Essential)
3. Intended Saving
4. Surplus OR Deficit
Terms and Definitions Matching
Game
• HANDOUT to students match the
terms with definitions
Terms and Definitions
Income = money received from employment,
investments, or interest from deposits
Expenses = an amount of money that is needed to
pay for or buy something.
Essential = something that is an absolute necessity
Non Essential = spending on things that are a want
rather than a need
Saving = an amount of money that is not spent or
used
Surplus = When income is greater than expenses
Deficit = When expenses are greater than income
Identify the following as either:
Essential – spending on something that is an
absolute necessity OR
Non Essential - spending on things that are a
want rather than a need
1.
2.
3.
4.
5.
6.
Clothing
Rent
Car repairs
Entertainment
Petrol
Cell phone
payments
7. Food – grocery
8. Food - snacks
Identify the following as either Essential
or Non Essential Expenses ANSWERS
•
•
•
•
•
•
•
•
Clothing – Non Essential
Rent - Essential
Car repairs - Essential
Entertainment – Non Essential
Petrol - Essential
Cell phone payments – Essential
Food – grocery - Essential
Food – snacks – Non Essential
Group Brainstorm - on an A4 paper write
as many different types of expenses that
you can think of for yourselves and your
families
Students to write these on the white board and then
ask students which ones are ESSENTIAL.
CIRCLE these ones. Does everyone agree??
Essential or Non Essential Activity
HANDOUT an activity sheet to each group.
Students have 3 mins ONLY to categorize the
expenses as either essential or non essential.
When time is up the group must swap with
the group beside them.
The winning team is the one with the most
expenses correctly categorized.
How do you prepare a budget?
STEP 1
You need to list our income.
STEP 2
You need to list all our expenses.
STEP 3
You need to sort out our expenses into
Essential and Non- essential expenses.
STEP 4
Now prepare the budget. It must balance
i.e. your income must equal your expenses or
your expenses plus savings if we have
money left over.
Budget Format Example
Income
Wages
400
Less Essential Spending
Rent
100
Petrol
50
Car repairs
40
Cell Phone payments
20
Food – Grocery
100
310
Less Non Essential Spending
Entertainment
50
Clothing
50
Food - Snacks
30
130
Total Spending
440
Balance (deficit)
(40)
The aim is to Balance the Budget so
there is NO deficit or surplus!
A deficit is when ......... are greater
than income
A surplus is when .......... is ..........
than expenses
QUESTION?
What should you do to get
rid of a deficit?
What should you do to get
rid of a deficit ANSWER
You must reduce your non essential
expenses
What do you do with a surplus?
What do you do with a surplus?
You can either:
▫ increase your savings
▫ increase your spending.
However in life it is more
beneficial if you increase
your savings!
Maths note....
Sometimes, we will be approximating weekly figures
rather than worrying about getting things to be
mathematically perfect. So if you are given
monthly figures and need to convert to weekly
figures, divide by 4.
If you are given a yearly (annual) figure – What
would you divide it by to get a weekly figure?
Do Now – Personal Budget for Jerome
Kamo
HANDOUT a copy of the budget to each student.
Students to replace the ?’s with the correct figures
Your turn! Prepare a WEEKLY budget for
Reginald Singh
Reginald’s main job pays $500 a week. His rent
per week is $120 and he spends $75 a week on
food. His bus fare per month is $100 and his cell
phone expenses are $20 per month. He spends
$50 a week going out with friends and another $25
a week on takeaways.
Create a budget for Reginald. How much is
Reginald able to SAVE to balance his budget?
Weekly budget for Reginald Singh
Income
$
$
$
Wages
500
Less Essential Spending
Rent
120
Food
75
Bus Fares
25
Cell Phone payments
5
225
Less Non Essential Spending
Entertainment
50
Food - Takeaways
25
75
Total Spending
300
Budget SURPLUS
200
SAVINGS
Balanced BUDGET
(200)
NIL
Prepare a budget for the Leota
Family
HANDOUT a copy of Leota Family,
Each student to prepare a budget for the Leota
Family.