Lesson 4: Budgeting

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Name(s) of student(s):

Goal from IEP connected to lesson:

Objective from IEP connected to lesson:

Purpose of lesson: To create a mock budget.

Materials needed: Internet access, word document or spreadsheet

Introduction

“Last time we met, we discovered a variety of living expenses and their general costs. Today I will teach you the usefulness of a budget, and we will create a basic mock budget.”

Discussion: Benefits of a Budget

“A budget is a plan for your incoming money. The boundaries you establish are in place to protect yourself from overspending and living outside of your means. An enforced budget alleviates financial stress because expenses are predetermined, and priorities are established. You know you have allocated enough money to pay for fixed expenses such as bills and living expenses, placed money into savings, and given yourself spending money. If your budget determines you cannot afford an expense, you can save toward the goal or live without it.”

“If you had a steady income and an instituted budget, how would you benefit?” (You are responsible with your income, you are preparing for the future, you are eliminating and/or preventing debt, you are spending wisely, you are setting and achieving goals, you don’t have regrets about spending money you don’t have, etc.)

Discussion: Proposed Percentages

“A budget is based on distributing a certain portion or percentage of your income to every expected expense category. If you receive a raise in pay, you can allot more money to each category or, ideally, you can begin to save the increased income. There are many methods for creating an initial budget. One method determines the percentage of income you will spend on each expense category and then requires that you spend accordingly. Another method is to first record your spending for several months. If you are spending less than you make and are saving, record it and spend consistently. If you are spending more than you are making or not saving, analyze your spending patterns to decide how to cut spending and save money. After cutting expenses, record it and spend consistently.”

“For this lesson, I will give you a basic budget, and you may choose to increase or decrease certain percentages.”

Housing (including furnishings): 20%
Transportation: 15%
Food: 10%
Personal care: 5%
Health care: 15%
Loan repayment: 10%
Utilities: 7%
Entertainment: 3%
Savings: 10%

Exercise: Mock Budget

Assist the student with searching for the likely starting salary for his career interest in the local area. The student should use this proposed income to draft a mock budget. Discuss the workability of the budget.

Review

“Today we drafted a budget. I hope you see the value in laying the groundwork to succeed financially. Financial success isn’t defined by a high salary, but by freedom from debt and overspending, meeting needs, and preparedness for the future.”

Progress notes, data collection, comments, and modifications: