BudgetBudget

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Agenda• Why create a budget?

• What did you learn about your spending habits?

• How are you going to use the budget assignment when faced with financial challenges now and in the future?

Rationale:Good budgeting skills will help teens

effectively manage their personal finances. The earlier they begin keeping a budget, the better. Encouraging your teen to develop one

helps them become more accountable for their own finances.

• Show Me the Money!

• After the Tracking.

• Monthly over Weekly.

• Making the Wish List.

• Needs vs. Wants. Shortfalls.

• Control Impulse Buying.

• Responsibilities and Age

• No Bail Outs.

• Some rapid-fire, quick tips.

• First, your teen should spend 1-2 months keeping a money diary – writing down every purchase, even the smallest expense. With their expenses down on paper, they can see where their money is going, and what spending habits need to change. Record-keeping must be as specific as possible.

• After keeping their money diary, help your teen make a list of potential cutbacks – areas where they can get by with spending less. Help them make adjustments each month as they discover what works, and what doesn't.

• Consider providing your teenager a monthly allowance, rather than weekly. Require that they make the money last an entire month, and encourage him or her to accurately record what's been spent and where it was spent. Here's a suggestion: consider giving them a Prepaid Student Card and each month add their allowance to the card. A spending record will be available for them (and you) to review. They will feel very adult-like with a plastic card of their own and you have a great tool to help them manage their money. When the money is gone, don't add any more until the beginning of the next month.

• After devising a budget, your teen should create a "Wish List" of things they'd like, or need, but can't afford right now. A lot of teens can achieve their Wish List once they stick to a budget. Help them make it a goal to purchase at least one Wish List item.

• To help address budget shortfalls, suggest ways your teen can earn more money, or cut back on expenses, such as renting a DVD to watch with friends rather than going to the movies; or maybe car pooling through the week to save on gas for the weekend.

• Show your teen how to modify a budget by categorizing expenses as needs (expenses that are unavoidable) and wants (expenses that could be cut if necessary).

• Encourage your teen to think through spending decisions, rather than impulsively buying items right away. Show your teen how comparing prices or waiting for an item to go on sale can save money.

• As spending responsibilities are shifted to your child, he or she will have to budget for them accordingly. For example, if they are the one to pay for weekend activities, they'll need to effectively manage their money by putting these items into a spending plan. Also, let them know spending responsibilities will typically increase with their age. But they can also increase if your teen starts to exceed your ability to provide. For example, if junior wants a car and you're not going to buy him one, he'll have to adjust the budget to expand his savings so he can purchase the car on his own.

• It's very important to resist being your teen's financial savior. If he or she can depend on you to come up with all the extra cash, they may never fully learn to manage money wisely. But at the same time, don't be preachy and judgmental – no doubt he or she will make spending mistakes along the way. Your teen needs to know they can always come to you for information, support, and advice.

• Advise your teen to do the following in order to achieve a healthy balance between money in & money out:

• Resist impulse buys.

• Don't go shopping with friends who spend a lot.

• Tote their lunch to school (or work) as much as possible.

• Stay away from vending machines and convenience stores.

• Only visit an ATM once a week (plan ahead for needed cash).

• Entertain at home.

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Directions: Budget

• Using the 9th grade template in Navigation 101, each student will research for the cost for each item on the budget sheet.

Budget WorksheetThe budget assignment has two components: shopping around for prices

and completing the budget sheet. 

1) For this assignment, we will assume that your are 18 or older, getting ready to move out of your parent's home, and with a minimum wage paying job. You are either working only or working and going to college. Your monthly income is $2000 before taxes (taxes in Hawaii are about 30% of your wages, so that means you have $1400 to live on.

2) For the first part, go will go to Craig's list and search for a place to live. If you are going to live by yourself, your rent must be under $800 a month ( unless all of your utilities are included). Where to look? If you want to look for a place to live near your college of choice, go to that city. You cannot stay with your family, so you must look elsewhere. Staying close to a bus line is recommended, as you will most likely not be able to afford the expense of a car.

3) Open a Google doc and label it last name, Budget Worksheet

4) Copy and paste all of the information about your new place onto the document. You are looking to see what is included in your rent like the electricity, cable, phone, sewer, water, garbage. You may also look to see if they allow pets or if they have a washer and dryer in the home/apartment. Make sure you put down the rent costs.

5) To obtain the amount of rent you need to put on your budget, you will divide the total rent by the number of bedrooms in the home/apartment. (example: 1 bedroom divide by one, two bedroom you will divide the rent cost by 2- 800/2= 400) Make sure that you do not go over the $800 limit.

Budget worksheet Cont.• 6) The next part of this assignment is to go grocery shopping. You may do

this online or in the grocery store. You are to build a grocery list for a weeks worth of groceries (breakfast, lunch, dinner, snacks, and beverages). This is one of the largest bill you will pay beyond your rent, but it must be kept under $300 for the month. To break this down, that means $75 a week, roughly $ 10 a day for all three meals and beverages. Once you have your weekly grocery list, go to the store and find out what it cost for each item (you may shop sales). Once this is done, take the total for the week and multiply it by 4 to get your monthly grocery bill. Make sure you do not go under $8 a day.Post your grocery list, prices, and total cost for the month on your worksheet.

• 7) The next part is to determine how much money you spend on clothes. The best way to calculate this sum is on a yearly (annual) basis. Make a list of the following items, and then determine how much you buy a year. Once you have the amount for each item, add this up and divide it by 12 to determine how much you need to budget a month for clothes. List: footwear, pants (shorts skirts swimwear), shirts (tshirts, undershirts, dresses, tops), outerwear (sweatshirts, sweaters, coats), underwear (tanktops, bras, underwear, socks, nylons).

• 8) The next step is to fill out the budget sheet.

 

 

Budget: Maximum $2000 before Taxes ($12.50 per

hour)Minus taxes: $560.00 from $2000= $1440 after taxes

• Enter your rent that you found on Craig's list- you will only put down your portion so be sure to divide the amount of bedrooms into the total rent to arrive at your share (NOT to exceed $800).

• Grocery bill- cost for food at home, cost for food if you eat out (must be above 250-but not exceed 400

• Insurance: only life insurance is needed here as your parents should be able to cover you until you are finished with college $25

• Car payment: You will most likely not have enough money to buy or run a car so you will taking the bus. Google the current cost of a bus pass for a college student $60

• Charity: donations to the church or any other fund you like (about 5-10 dollars) 

• Savings: should put away some money for a rainy day-20-50 dollars a month is fine Gifts) 30=360, 40=480, 50= 600, pick one of the numbers that reflects the amount of funds you spend on gifts throughout the year. Remember Valentines day, Easter, St. Patty’s day, 4th of July, Halloween, Christmas, birthdays-

•Electricity- for an average two bedroom apartment, the electricity is about $100 (no air conditioning)

•Water is included in apartments, but you will have to pay for this in a house. You will need to Google the current price of water in your city

•Telephone: This cost is a land line and a cellphone, so you will need to Google this price or you can set the price with the pay as you go phone

•Internet access (may be included in your apartment or house) Google current cost if not included

•Clothing- You will calculate what it cost a year for clothes and divide this number by 12- your list should include: shoes, underwear/socks, shirts/dresses, pants/shorts/skirts, jackets/sweaters, and accessories.

•Entertainment: this is your "pocket money" figure out the amount of money you need to carry on you at all times and put that number here.

Total Expenses must NOT be higher than $1440.00

Agenda

• Why create a budget?

• What did you learn about your spending habits?

• How are you going to use the budget assignment when faced with financial challenges now and in the future?

Common Core Standard

• A-REI. Students extend their understanding of ratios and develop understanding of proportionality to solve single- and multi-step problems.Students use their understanding of ratios and proportionality to solve a wide variety of percent problems, including those involving discounts,interest, taxes, tips, and percent increase or decrease.

• W.9-10.8 Research to build and present knowledge.

• 8. Gather relevant information from multiple authoritative print and digital sources, using advanced searches effectively; assess the usefulness of each source in answering the research question; integrate information into the text selectively to maintain the flow of ideas, avoiding plagiarism and following a standard format for citation.