Budgetting Level 2

Copyright © Pamela Fraser & TeeJay Publishers August 2013 Budgeting Level 2

CfE Level 2 - Lesson Plan

TeeJay PublishersTeeJay Publishers

Financial Maths - Life SkillsFinancial Maths - Life Skills

BudgetingUNIT

BudgetingUNIT

Produced for TeeJay Publishers by Pamela Fraser, Financial Education Training Officer, Dumfries & Galloway.

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Guidance Notes for TeachersManaging a Budget Lesson

Lesson Objective: By the end of the lesson, pupils will be expected to understand the purpose of a budget and the impact changes to income and expenditure will have to the overall budget.

Curriculum for Excellence Money Outcomes: MNU 2.09b – I can understand and realise that budgeting is important.

Lesson IntroductionA budget is a way of finding out how much money we have to spend on something. To do this, we need to have an income (money coming in) each week/month or year and from this we take away all our expenditure (things that we spend money on). A budget lets us know how and where we spend our money (our spending patterns). A budget can also show us where we can reduce our spending and save money if something happens suddenly which affects the money that we have coming in.The most important part of setting a budget is to stick to it ! By not sticking to it we would be overspending - spending money that we do not have available. Overspending can lead to debt and borrowing, which for some people can mean that they get into financial difficulties with not enough money to live on.Sometimes sticking to our budget can be difficult, especially when we have to make choices about the things that we spend our money on (our expenditure). In those situations we have to decide whether the item is something that we really NEED or is just something that we WANT.Budgets are made by everyone from governments, schools, families and all of you - even though you might not realise it !We are going to look at planning a budget today and think about the things that might affect our budgets and the changes we have to make as we go along to make sure that we stick to it !

Discussion

Once the introduction has been completed with the class, the attached discussion notes sheet will assist you in prompting more discussion between the pupils on the subject of budgeting. The list provided is not exhaustive and can be supplemented with your own questions.

Worksheet - Pupil Activity

Through discussion, it should be ascertained that the pupils understand the purpose of a budget and how it is calculated, then the pupils can progress to the worked example. There are 2 worksheets attached for each pupil. The first contains the questions to be answered by the pupils and the second sheet has a blank budget planner which the pupils will complete as part of the exercise. The questions are set around a scenario using real life monetary figures.

Plenary

This sheet summarises the learning and highlights the key points of the budgeting lesson.

Pamela Fraser


Discussion NotesManaging a Budget

Q1: What is a budget ? A: A budget is a future plan for your spending.

It involves taking all your income and deducting all your expenditure from that figure to see how much you have left for a particular reason.

Q2: Give 3 or more examplesof income (money you could receive).

A: Answers will vary, but any of the following would be accepted. (However list is not comprehensive) - wages, pension, benefits including tax credits, child benefit, pocket money, allowances, money for doing chores, birthday money, Christmas gift money, money from selling something and winnings.

Q3: Give 5 or more examplesof expenditure.

A: Answers will differ again, but you should look for a variety of expenses. Possible answers include - rent or mortgage payments, loan repayments, electricity bills, clothes, food, holidays, TV, toys and pets.

Q5: Why do we needa budget ?

A: A budget shows us how much money we have to spend on a certain item or items. It helps us to make sure that we do not get into difficulties from overspending. It may also show us that we cannot afford to do something at all.

Supplementary Questions

Q6: What kind of things might happen within a family that would mean that they might have to change their budget ?

Income - Losing job, reduction in hours worked, having a baby, overtime, new part time job, increase/decrease in tax paid, change of job, ill health etc. Expenditure - increase in rent payments, car breaks down, new baby, fuel price increases, etc

Q7: Think of an example of when you might have made a budget (perhaps without realising it).

Answers may include, buying a birthday present for a friend, working with holiday spending money or saving up to buy something special.

Q4: How can we increase the money left if we need it for some other reason ?

A: There are 2 ways to do this. The first would be to increase the amount of income that you have, for exampleby working more hours, taking a part time job, selling something. The other way would be to cut back on your spending, such as stop eating out, walk rather than take the car or reduce the amount you spend on clothes.


Managing a Budget Worksheet

Eve is a single mother with two sons Alfie & Finn. Both boys want to go on a weekend school trip to York but the trip will cost £200 per pupil. Eve explains to her sons that the only way they can go is if they pay half of the cost themselves.

1. The boys each receive pocket money of £5 per week, but they also like to spend their pocket money every week.

Below are pages from their notebooks showing how they spent their money last week ?

a How much did Alfie spend last week ?

b How much did Finn spend last week ?

2. The boys decide that they will have to do something to make sure that they have more money to save for their trip.

What are the 2 different ways that they can do this ?

3. The trip is 30 weeks away, so how much will each boy have to save each week to achieve the £100 ?

4. Alfie plans to wash some cars. He borrows the equipment for washing the cars from his mum then he charges £1·50 for a wash and £3·00 for a wash & polish. Alfie manages to wash 12 cars - 4 cars wanted a wash only and 8 cars had a wash & polish.

a How much money did Alfie make from the car washing ?

b How much money does he still have to find to make the total of £100 ?

AAll ff iiee

Sweets £1·00

Swimming £1·35

FFiinnnn

Sweets £0·65

Football Club £1·10

Stickers £0·45

Mum’s Birthday £1·95Card

New Pencil £0·15

Felt Tip Pens £0·99

Chocolates for £2·00Mum

Crisps £0·20


5. Alfie had forgotten that he hadn't bought a birthday present for his mum. He needs to get her something.

What could Alfie do for his mum's birthday gift which wouldn't cost him any money ?

6. With 20 weeks left to go before the school trip, Alfie gets a job as a paperboy delivering the local paper every Friday after school. The newsagent pays him a wage of £2·50 per week.

a How much money will he make from the new job before his trip ?

b Alfie is offered £25 by the newsagent for helping him count stock one Sunday, but Alfie is taking part in a football match on that day.

What should he do ?

7. Alfie helps the newsagent with the stock count.

So how much does he have in total for the cost of the school trip ?

8. Finn has decided to review his spending to see if there are any items that he can cut back on.

Shown is a list of the items which he buys most often.

Which of these things should he spend less money on ?

9. Finn goes to Football every week and to the cinema every second week.

a How much would Finn save, over the 30 week period, if he only went to Football every 2 weeks instead of every week ?

b Which item should Finn stop paying for to save the most money and how much money would he save over the 30 weeks ?

c How much money would Finn save after 30 weeks if he stopped all of the items on his list ?

10. Finn only decides to stop going to the cinema and buying comics until his trip.

He also gets £40 for his birthday but spent it allon a new pair of trainers with his birthday money.

What was the consequence of doing this ?

11. At the end of the 30 weeks, Eve reviews the boys' budget to check how much they have managed to save.

Who gets to go on the trip ?

FFiinnnn

Crisps£0·25

Chocolate £0·75

Comics£0·99

Football Club £1·10

Cinema£2·25


Managing a Budget Worksheet - Answers

1. a Alfie spent £4·90.

b Finn spent £4·94.

2. The two ways that they can make more money is by reducing their spending or by increasing their income.

3. They have to save a minimum of £3·34 per week.

4. a Alfie made £30 from car washing.

b He still needs to save another £70.

5. Alfie could make his mum a gift. He could plan a walk with his mum. He could offer to do the housework for his mum while she puts her feet up -

Answers will be of pupils own thinking. The more creative the answer the better.

6. a Alfie will make £50 from his new job.

b Alfie should work on the Sunday because the money will help him meet his trip total.

7. Alfie makes £105 in total.

8. The answers may differ but you are looking for the items which will allow Finn to save the most money.

9. a Finn would save £16·50 from reducing the football club to every 2 weeks.

b Finn should stop going to the cinema and he would then save £33·75.

c Finn would save £126·45 if he stopped all of the items on the list.

10. Finn needs the £40 to make his trip budget amount so if he buys the trainers he won't have enough money to go on the school trip.

11. Alfie gets to go on the trip.

Finn has only managed to save £63·45.


Questions to assess student understanding

Why do you think Finn chose to buy the trainers rather than use the money for the trip ?

D To be the same as or better than his friends. D Spending his money was more important than saving it. D He wanted to get something special with the money. D He decided that the trainers were more important than the trip.

What types of things might people budget for ?

D Buying a new house, Wedding, A Holiday, Weekly food shop,

D To buy a car, Having a baby, etc.

Do you think it is more difficult to increase your income (like Alfie) or to reduce the amount you spend (like Finn) ? Why ?

D Reasons for increasing income should include :- Alfie had to look for a job. Alfie had to choose to give up playing in a football match so that he could work for more money. Alfie had to work hard washing all the cars. He might not have got any customers for his car washing etc ....

D Reasons for reducing spending should include :-��D��277�1*-�=8�<=89�=1270<�1.�524.-�-8270��D��277�<�98,4.=�687.B�@*<�12<�6*27�27,86.�@12,1�6*-.�/8;�*�=201=�+>-0.=��D��277�1*-�5.<<�8998;=>72=B�=8�*,12.?.�12<�08*5��.=,

Summary/Plenary SheetSummary/Plenary Sheet

The exercise teaches us how to manage a budget so that we that we can achieve a particular financial goal. Alfie & Finn both had to make choices which had an impact on their money and eventually on them being able to go on the trip. Budgeting is all about learning to make the right choices especially when they are difficult, so that we can look after our money properly and stick to our budget.

Recap on Key Learning Points

D A budget is a financial plan which projects income and expenditure to prove you are not overspending .

D A successful budget should show an under spend, or at worse, breaking even.

D You will have to make choices with expenditure – is it a NEED or a WANT ? Can I afford it ?

D Budgets adapt and modify to changes in circumstances.

Extended Learning

For teachers wishing to further the lesson by issuing homework or extended learning opportunities to pupils, the following is suggested activities :-

D Working in pairs, set the pupils a budget for decorating a room. Give them internet access to a home store so that they can calculate their expenditure using real life costing.

D Explain to pupils how a class budget works and then ask them to list all the items that have to be bought from that budget.

D Linked to the above item ask the pupils to suggest ways that money could be saved within the class budget.

Copyright © Pamela Fraser & TeeJay Publishers September 2012

CfE Level 3 - Lesson Plan

TeeJay PublishersTeeJay Publishers

Financial Maths - Life SkillsFinancial Maths - Life Skills

BudgetingUNIT

BudgetingUNIT

Produced for TeeJay Publishers by Pamela Fraser, Financial Education Training Officer, Dumfries & Galloway.

MMNNUU 33..0099bb


Guidance Notes for TeachersManaging a Budget Lesson

Lesson Objective: By the end of the lesson, pupils will be expected to understand the purpose of a budget and the impact changes to income and expenditure will have to the overall budget.

Curriculum for Excellence Money Outcomes: MNU 3.09b – I can budget effectively, making use of technology and other methods, to manage money and plan for future expenses

Lesson IntroductionBudgets are used by governments, companies, households and individuals to manage and control spending. Often we are not aware that we are really even setting ourselves a budget but think about the last time you bought someone a birthday present. You might have just bought the first thing that you saw but most likely you set a limit to the amount that you wanted to spend and chose a gift within that limit. In other words you were working within a budget. A budget is a financial document which projects how much money we have to spend. To do this, we need to have an income (money coming in) each week/month or year and from this we subtract all our expenditure (things that we spend money on). By maintaining a budget we can recognise how and where we spend our money (our spending patterns) and if circumstances require it, we can identify where we can cutback our spending and save money. The most important part of setting a budget is to stick to it! There is little point in calculating the amount that you have to work with, and then overspending. This can lead to debt and borrowing, which in turn may escalate to major financial difficulties. A successful budget means that you have to make choices about the things that you spend your money on (your expenditure). You might have to decide whether the item is something that you really NEED or whether it is just something that you WANT. We are going to look at a budget today and think about the things that might have an effect on the budget. By calculating your own budget you will have to decide the best way to spend your money while still keeping within your budget.

DiscussionOnce the introduction has been completed with the class, the attached discussion notes sheet will assist you in opening up the subject of budgets to the class.

Worksheet – Pupil ActivityThrough the discussion it should be ascertained that the pupils understand the purpose of a budget and how it is calculated, and the pupils can progress to a working example. There are 2 worksheets attached for each pupil. The front sheet contains the questions to be answered by the pupils and the back sheet has a blank budget planner which the pupils will complete as part of the exercise. The questions are set around a scenario using real life monetary figures.

PlenaryThis sheet summarises the learning and highlights the key points of the budget management lesson.

Pamela Fraser


Discussion NotesManaging a Budget

Q1: What would you consider as income ?

A: Income is any money that we receive in. It could be wages, tax credits or other benefits, money we get from selling something, winnings from the lottery or bingo, birthday & Christmas money, pocket money or money from chores. Some income is more reliable and regular than other types.

Q2: What is expenditure ?

A: Expenditure is the money that we spend. Some expenditure is fixed amounts and others will be variable. Fixed expenditure could be rent or mortgage payments, car loan repayments, membership subscriptions. Variable expenditure might be electricity bills, clothing, food bills, car repairs, holidays, savings etc.

Q3: What is the difference between something that we NEED and something that we WANT ?

A: A NEED is something that we have to have in order to survive. A WANT is something that we would like to own but we would not die without it! A want is often a luxury item, such as a wide screen TV or a games console. Items that we want often are upgrades on items that we already own; think about the iPhone we are already on version 4!

Q4: There are 5 basic NEEDs that we have to acquire to survive. What are they ?

A: Drink, Food, Shelter, Warmth and First Aid

Q5: What changes in circum-stances could affect and necessitate changes to your budget ?

A: Income – Losing job, reduction in hours worked, having a baby, overtime, new part time job, increase/decrease in tax paid, change of job, ill health etc. Expenditure – increase in rent payments, car breaks down, new baby, fuel price increases, etc.

Supplementary Questions

Q6: When do you think it will be important to set a budget ?

Starting to live on your own, becoming a student at university, planning a family, buying your first house, planning a holiday, Christmas shopping for presents, etc

Q7: What are the possible implications of not preparing a budget in any of the previous examples ?

You might not be able to afford what you are planning. Overspending which can mean less money for essential items. Having to borrow money which can be expensive. Not being able to pay off debts. Lose your home. Bankruptcy. Etc


Managing a Budget Worksheet

Eve is a single mother of two young boys Alfie & Finn, and she is concerned about managing her finances properly. She works part time in an office and receives benefits from the government to help her look after her children, but she has a lot of expenses each month. She decides to set up a monthly budget so that she knows how much money she is spending.

2. Transfer the items on Eve’s list to the income or expenditure sides of the budget planner

3. By subtracting her expenditure from her income Eve calculates how much money she has left each month. How much does she have ?

4. Eve has both fixed and variable amount expenses. List her fixed amount expenses.

5. Eve takes her car to the garage for a MOT and she gets a bill for £220 for repairs needed to be carried out. How much money will Eve have left this month once the bill is paid ?

6. Eve currently works 21 hrs a week at her job, but her manager asks if she could increase her hours to 28 hrs per week. This would mean her pay would go up to £820 per month but her working tax credit would decrease to £150 per month. What affect would this have on her budget? Should she increase her hours ?

7. Look at Eve’s income and expenditure, what other changes could have an effect on her budget ?

1. Eve has listed her income and expenditures but some of these are weekly and others are monthly.

Council Tax £55 per month Gas £80 per month

Wages £600 per month Food £80 per week

Electricity £45 per month Rent £350 per month

Child benefit £33.70 per week Fuel £70 per month

Child Tax Credit £113.50 per week Working Tax Credit £68 per week

Car Loan £108 per month Car Ins £51 per month

Credit card £100 per month TV Licence £15 per month

Clothing & Shoes £80 per month Mobile Phone top-up £60 per month

Can you calculate the monthly amounts to assist Eve ?

a Food per month – b Child Benefit per month –

c Child Tax Credit per month – d Working Tax Credit per month -


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Managing a Budget Worksheet - Answers

1. a Monthly costs Food - £346.67 (Find 52 x £80 ÷ 12)

b Child Benefit - £146.03

c Child Tax Credit - £491.83

d Working Tax Credit - £294.67

2.

3. £286·86

4. Council Tax, Rent, Car Loan, Car Insurance, (possibly Gas & Electricity if paid standing order).

5. £286·86 - £220 = £66·86

6. Pay rises by £220 per month. Tax Credit drops by £150. Net gain £70. Possibly should takethe extra hours but depends if she likes her job, how it will affect seeing/looking after her kids, unsocial working hours, etc. List other reasons for taking or turning down extra hours.

7. Children need extra new school clothes, - possible school trips, saving for Xmas, birthdays, holidays etc. List other things that could affect her budget.


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Wages £600 Council Tax £55

Child Benefit £146.03 Gas £80

Working Tax Credit £294.67 Food £346.67

Child Tax Credit £491.83 Electricity £45

Rent £350

Fuel £70

Car Loan £108

Car Insurance £51

Clothing & Shoes £80

Mobile Phone £60

Total £1532.53 Total £1245.67


Questions to assess student understanding

What do you think is the basic rule of a budget ?

I Not to overspend. I Not to spend more than the income.

What do you think the most difficult part of managing a budget would be ?

I Making choices on how best to spend your money. I Deciding what you can and can’t buy I Adapting if your income reduces or expenditure increases unexpectedly

What are the benefits of setting a budget ?

I You know how much money you have to work with I You can track what your money is being spent on I You calculate whether you can afford to buy or do something I Helps you avoid getting into debt

Summary/Plenary SheetSummary/Plenary Sheet

The exercise you have just completed shows how we use a budget to calculate how much money we have to spend either weekly or monthly and where it goes.

Good money management is a very important life skill and something that you will need to learn to do, so that you don’t get into financial difficulties.

A budget helps us manage our money efficiently.

Recap on Key Learning Points

I A budget is a financial plan which projects income and expenditure to prove you are not overspending

I A successful budget should show an under spend

I You will have to make choices over expenditure – is it a NEED or a WANT? Can I afford it?

I Budgets adapt and modify to changes in circumstances

Extended Learning

For teachers wishing to further the lesson by issuing homework or extended learning opportunities to pupils the following is suggested activities:-

I Set pupils a budget of £250 to design and furnish their new bedroom from IKEA/Argos etc catalogues

I To list the expenditures that families may have to pay for

Following on from the expenditure list separate the items into needs and wants

I Pupils to research examples of budget saving product promotions and collect adverts e.g. buy one get one free

Budgetting Level 2

Documents

Transcript of Budgetting Level 2