Budgets A simulation of the realities of balancing a budget

Why teach students about budgeting money? We all have limited amounts of money to spend Children who don’t receive practical financial education get into financial trouble Financial troubles spill over to other areas of life.  Top cause for divorce  Top cause of health problems  Top cause of emotional stress

How much debt can child accrue? The average college graduate will move back home after they graduate with over $20,000 in debt The average American household has $10,000 in credit card debt. Young people’s money problems include student near record credit card debt. Over 1/3 of today’s youth will have $0 saved in a retirement account in 2050.

Budget simulation Everyone will get a “selection” sheet to choose your “lifestyle”

Budget simulation Everyone will get a “selection” sheet to choose your “lifestyle” Complete the budget sheet for your selected “lifestyle”

Budget simulation Everyone will get a “selection” sheet to choose your “lifestyle” Complete the budget sheet for your selected “lifestyle” Now you will randomly be given an occupation

Budget simulation Everyone will get a “selection” sheet to choose your “lifestyle” Complete the budget sheet for your selected “lifestyle” Now you will randomly be given an occupation Complete the occupation sheet to compute your net monthly income

Budget simulation Everyone will get a “selection” sheet to choose your “lifestyle” Complete the budget sheet for your selected “lifestyle” Now you will randomly be given an occupation Complete the occupation sheet to compute your net monthly income Compute your budget’s balance

Budget simulation Now, you are either a cutter or spender ▫Cutter – you need to cut your spending in order to balance your budget  There are rules to cutting your spending ▫You may change any of your variable expenses with no penalty ▫Changing fixed expenses, like moving or selling your car involves a penalty ▫You may get an extra job ▫You may eliminate a variable expense category without penalty ▫Write all changes on the change sheet provided.

Budget simulation Now, you are either a cutter or spender ▫Spender – you may make an additional purchase  You may save your extra money or buy something else that you want.

Budget Simulation Regardless of whether you are a cutter or spender, complete a new budget sheet that shows you have a zero balance

Budget Simulation Regardless of whether you are a cutter or spender, complete a new budget sheet that shows you have a zero balance Once you have completed the zero balance budget sheet, watch life happen. Choose an oops card. Change your budget using the same rules as before to cover the expenses you have recently incurred.

Completing the Simulation Have students write a description of what occurred to them during the simulation. Have them tell you how they solved their problems and covered their expenses. Have them tell you what they learned from the experience. Attached is a grading rubric that I would use to help me measure how students performed on the project.

Important lessons that students will learn during this Budget simulation

Basic Money management guidelines Saving by cutting your spending  Yin and Yang of opposing but necessary forces in nature.  when you practice proper money management techniques you will find your spending and saving equally support each other if kept in balance

Basic money management guidelines Separating wants and needs  Need is something you NEED for survival  Want is something you would like to have  Put away 15% of your paycheck, have no debt  Make sure you have enough to pay for your needs  Plan for your wants

Basic money management guidelines Make a monthly budget and stick to it  Write down all of your expenses for the month  Categorize those expenses as fixed and variable  Look for ways to cut expenses where necessary  Save extra money for something you want or for emergency expenses  Pay off your debt before taking on new debt