Managing Money: Creating a Budget S.S.4.FL.2.5 Explain that costs are things that a decision maker gives up; benefits are things that a decision maker gains. Make an informed decision by comparing the costs and benefits of spending alternatives. S.S.4.FL.2.7 Planning for spending can help people make informed choices. Develop a budget plan for spending, saving, and managing income. Gr. 4 Financial Literacy

Vocabulary Allowance: to give someone a sum of money regularly Budget: a plan for spending Expenses: the things you spend your money on Income: the money you earn from your job Fixed Expense: expenses that do not change on a monthly basis Labor: work Periodic Expense: expenses that do not occur on a monthly basis Variable Expense: expenses that may change on a monthly basis Grade 4 Financial Literacy S.S.4.FL.2.5,, S.S.4.FL.2.7

Essential Question How can creating a budget help you monitor your spending and save money? Grade 4 Financial Literacy S.S.4.FL.2.5,, S.S.4.FL.2.7

What message does the quote reveal about a budget? (LAFS.4.L3.5) What information can be gained by analyzing the image? (LAFS.4.RI.3.7) Image Source: rchq7/media/AuthorPhotos/Section%20 B/budgetsquotes.jpg.html Grade 4 Financial Literacy S.S.4.FL.2.5,, S.S.4.FL.2.7

Types of Expenses Fixed Expenses are typically the same amount each month Grade 4 Financial Literacy S.S.4.FL.2.5,, S.S.4.FL.2.7 Variable Expenses may vary in amount each month Periodic Expenses do not occur monthly, rather a once or a few times per year

Budget Basics Income > Expenses A monthly budget helps you monitor where your money goes. It is easy to spend more than you make, especially since the majority of adults make purchases using credit cards. Do you notice any patterns in your spending? Are there any expenses you can reduce? Do you have leftover money each month? Are you saving money? Grade 4 Financial Literacy S.S.4.FL.2.5,, S.S.4.FL.2.7

Mariah’s Budget Let’s analyze Mariah’s spending patterns to help her save up for a new bicycle. IncomeExpenses $10 weekly allowance $1 ice cream on school days school store once per week Income per Month Itemized Expenses per Month Money Remaining Calculate how much she earns and spends each month. $10 x 4 wks = $40 Ice Cream: $5 x 4 wks = $20 School Store: $3 x 4 wks = $12 $40 - $32 = $8 Discuss what you think Mariah can do to increase her savings so that she is able to save up for her bike faster. Total: $20 + $12 = $32

Grade 4 Financial Literacy S.S.4.FL.2.5,, S.S.4.FL.2.7 Darren’s Budget Let’s analyze Darren’s spending patterns to find out if he can afford a $300 plane ticket home for the holidays. IncomeExpenses Wages: $250 per week $300 housing per month $100 groceries/toiletries per week Allowance: $200 per month$100 cell phone per month $50 on entertainment each week Income per MonthItemized Expenses per Month Money Remaining $250 x 4 wks + $200 = $1200 Housing: $300 Groceries/Toiletries: How much money can Darren save each month? Discuss what he do to increase his savings? $400 Cell Phone: $100 Entertainment: $200 Total: $1,000 $ $1000 = $200

Grade 4 Financial Literacy S.S.4.FL.2.5,, S.S.4.FL.2.7 Now it’s your turn… You will be working in small groups to create and analyze a sample budget. Which character is able to save the most money each month? How to Play 1.Each student in your group will take turns selecting a character card and one wild card. 2. Fill in your budget plan worksheet using the information from your character and wild cards. 3. Analyze your budget plan. How much is your character able to save? Compare your character’s budget with members of your team. What character was able to save the most money? Explain why.

Grade 4 Financial Literacy S.S.4.FL.2.5,, S.S.4.FL.2.7 Wildcards Think of wildcards as life’s unplanned for events which have an impact on our finances. Some are good others are not. Automobile repairIllness requiring medical treatment Holiday Bonus Inheritance Roof leak Raise in Salary Gift giving Increase in Rent Home Damaged in Storm

AmyNickClaudiaJuanSueAlexDeniseRay Grade 4 Financial Literacy S.S.4.FL.2.5,, S.S.4.FL.2.7 Let’s Share… Click on each character to review their budget plan and click on to return to this slide. What impact did the wildcards have on this character’s budget?

Amy Income: $500 per week Car Payment: $300 per month Gas: $30 per week Rent: $400 per month Internet/Cell: $150 per month Groceries: $60 per week Going out with friends: $50 per week Car Insurance: $600 every six months Wildcard: Grade 4 Financial Literacy S.S.4.FL.2.5,, S.S.4.FL.2.7 $2000 Amy’s Monthly Budget Plan Car Payment: $300 Rent: $400 Gas: $120 Internet/Cell: $150 Groceries: $240 Going out: $200 Car Insurance: $100 Total: $850Total: $560Total: $150 Income – Expenses = Money to Save $2000 – $1560 = $440 Did your wildcard hurt or help your character’s budget? Return

Nick Income: $800 per week Tuition: $1500 twice per year Health Insurance: $2400 per year Rent: $1000 per month Utilities: $150 per month Groceries: $100 per week Going out with friends: $70 per week Books for School: $200 per month Wildcard: Grade 4 Financial Literacy S.S.4.FL.2.5,, S.S.4.FL.2.7 $3200 Nick’s Monthly Budget Plan Rent: $1000 Utilities: $150 Books: $200 Groceries: $400 Going out: $280 Health Insurance: $200 Total: $1350Total: $680Total: $450 Income – Expenses = Money to Save $3200 – $2480 = $720 Did your wildcard hurt or help your character’s budget? Tuition: $250 Return

Claudia Income: $600 per week Health Insurance: $100 per month Mortgage: $1500 per month Utilities: $200 per month Groceries: $40 per week Concert Tickets: $200 Mini Vacation: $1000 Wildcard: Grade 4 Financial Literacy S.S.4.FL.2.5,, S.S.4.FL.2.7 $2400 Claudia’s Monthly Budget Plan Mortgage: $1500 Utilities: $200 Groceries: $160 Concert: $200 Total: $1800Total: $1060 Income – Expenses = Money to Save $2400 – $2860 = -$460 Did your wildcard hurt or help your character’s budget? Health Ins.: $100Vacation: $700 Return

Juan Income: $700 per week Health Insurance: $50 per week Mortgage: $1100 per month Utilities: $100 per month Groceries: $120 per week Gym Membership: $600 per year Dining Out: $300 per month Cell Phone: $100 per month Wildcard: Grade 4 Financial Literacy S.S.4.FL.2.5,, S.S.4.FL.2.7 $2800 Juan’s Monthly Budget Plan Mortgage: $1100 Utilities: $100 Groceries: $480 Dining Out: $300 Total: $1500Total: $780 Income – Expenses = Money to Save $2800 – $2330 = -$470 Did your wildcard hurt or help your character’s budget? Health Ins.: $200 Gym: $50 Cell Phone: $100 Total: $50 Return

Sue Income: $1000 per week Health Insurance: $50 per week Mortgage: $800 per month Utilities: $200 per month Groceries: $100 per week Biweekly Manicures: $30 twice per month Movies: $50 Cell Phone: $100 per month Wildcard: Grade 4 Financial Literacy S.S.4.FL.2.5,, S.S.4.FL.2.7 $4000 Sue’s Monthly Budget Plan Mortgage: $800 Utilities: $200 Groceries: $400 Manicures: $60 Total: $1500Total: $780 Income – Expenses = Money to Save $4000 – $2280 = -$1720 Did your wildcard hurt or help your character’s budget? Health Ins.: $200 Cell Phone: $100 Movies: $50 Return

Alex Income: $1000 per week Mortgage: $1300 per month Utilities: $200 per month Groceries: $150 per week Car Payments: $400 per month Gas: $50 per week Going Out: $100 per week Wildcard: Grade 4 Financial Literacy S.S.4.FL.2.5,, S.S.4.FL.2.7 $4000 Alex’s Monthly Budget Plan Mortgage: $1300 Utilities: $200 Groceries: $600 Going Out: $400 Total: $1900Total: $1200 Income – Expenses = Money to Save $4000 – $3300 = -$700 Did your wildcard hurt or help your character’s budget? Car: $400 Gas: $200 Return

Denise Income: $4000 per week Utilities: $100 per month Groceries: $100 per week Car Payments: $300 per month Car Insurance: $1200 per year Gas: $50 per week New Outfit: $150 Going Out: $50 per week Wildcard: Grade 4 Financial Literacy S.S.4.FL.2.5,, S.S.4.FL.2.7 $1600 Denise’s Monthly Budget Plan Car: $300 Utilities: $100 Groceries: $400 New Outfit: $150 Total: $400Total: $950 Income – Expenses = Money to Save $1600 – $1450 = -$150 Did your wildcard hurt or help your character’s budget? Gas: $200 Car Insurance: $100 Going Out: $200 Total: $100 Return

Ray Income: $2000 per week Utilities: $300 per month Groceries: $200 per week Car Payments: $500 per month Mortgage: $2000 Gas: $80 per week Going Out: $200 per week Wildcard: Grade 4 Financial Literacy S.S.4.FL.2.5,, S.S.4.FL.2.7 $8000 Ray’s Monthly Budget Plan Car: $500 Utilities: $300 Groceries: $800 Total: 2800Total: $1920 Income – Expenses = Money to Save $8000 – $4720 = -$3280 Did your wildcard hurt or help your character’s budget? Gas: $320 Going Out: $800 Mortgage: $2000 Return

Review Questions 1.What purpose does a budget serve? 2. What is the difference between a fixed and variable expense? 3. How do you budget for a periodic expense? 4. Which type of expense is easiest to reduce in order to save money? Grade 4 Financial Literacy S.S.4.FL.2.5,, S.S.4.FL.2.7

Review Questions 1.What purpose does a budget serve? 2. What is the difference between a fixed and variable expense? 3. How do you budget for a periodic expense? 4. Which type of expense is easiest to reduce in order to save money? Grade 4 Financial Literacy S.S.4.FL.2.5,, S.S.4.FL.2.7 A budget helps you monitor your spending and better plan for saving. A fixed expense remains the same each month while a variable expense varies from month to month. Calculate the total amount paid per year and divide by 12 to determine what monthly amount to budget for. Variable expenses are the easiest to reduce. You can take the initiative to find ways to spend less on goods and services.

What message does the quote reveal about a budget? (LAFS.4.L3.5) What information can be gained by analyzing the image? (LAFS.4.RI.3.7) Image Source: rchq7/media/AuthorPhotos/Section%20 B/budgetsquotes.jpg.html Grade 4 Financial Literacy S.S.4.FL.2.5,, S.S.4.FL.2.7

Sources Discovery Education, (2010). Creating a Budget. [Video Segment]. Available from Grade 4 Financial Literacy S.S.4.FL.2.5,, S.S.4.FL.2.7