A Monthly Budget

Planning a monthly budget can be a particularly important exercise for students. Often students have unrealistic expectations about earning a living once they leave high school. They dramatically underestimate the extent of everyday living expenses. Building monthly budgets using actual expenses has long been a staple activity of life skills math. By transferring this activity to a spreadsheet, students can adjust and tinker with their budget, play with "what if" scenarios, and make plans for long-term changes such as having a family. They can also use charts such as pie charts to represent the major portions of their monthly budget.

Note: a more complex form of this exercise can be found in Budgeting #2.

Files to Use Download Info/Instructions	budget.doc budget.xls Grid Worksheets (math concepts lesson)
Materials	phone books, classified section of newspaper, sample of utility bill, access to telephones

Classroom Discussion and Activities

Computer Lab Activities

Added Exercises

Classroom Discussion and Activities

• Develop a Monthly Income

   

  Students need to work from realistic incomes. There are many ways to do this. Gather hourly wage income from a variety of sources (school district, fast food chains, etc.), make up the data based on the current minimum wage, or have the students collect this information before they start this assignment.

   

  It's up to you how detailed you want to be about this income. You can start from an hourly wage to get a monthly gross income (hourly wage x 40 hours per week x 4 weeks) and then subtract all of the deductions (income tax, FICA, etc.). You may want to do this on a spreadsheet file as well. If you want to keep it simple, just approximate a monthly net income based on the gross income.

   

• Build a List of Monthly Expenses

   

  Help students build a list of all the expenses they would need to live on their own. Either research prices/costs in your area or have students research some of the expenses. Use phone books to call insurance agents and apartment managers. Classified adds will give prices for used cars and apartments. You can use budget.doc as a take home sheet for collecting these expenses.

   

  Discuss the difference between fixed and variable expenses. A sample budget is outlined in budget.xls. Help students build a list of categories which vary from month to month and may be optional such as:

   

  a) going out/dating

  b) tuition (college or trade school)

  c) hair cuts/beauty supplies

  d) gifts

  e) dry cleaning/laundry

  f) newspaper/magazines

   

• Make a Budget for Start-up Costs

   

  In addition to the normal monthly expenses, there are "one time" expenses incurred when moving into an apartment or house. An example of what that looks like can be seen below.

   

  a) Apartment or house rental damage deposit

  b) Utility deposits or hook-up fees, water, sewer, electricity, phone

  c) Moving costs (rental of truck)

  d) Basics of stocking an apartment-cleaning supplies, toiletries, paper supplies, basic groceries, dishes, etc.

 

Have student devise a plan for how funds will be acquired for these expenses. You can ask the following kinds of questions: "How would you obtain the money for these start-up expenses?" "How long would it take you to save for them?"

 

• Build a Spreadsheet to Calculate the Expenses

   

  Using spreadsheet grid paper (see Grid Worksheets) have students write in their expenses and formulas. This spreadsheet uses only addition and subtraction formulas. See sample in budget.xls.

Computer Lab Activities

• Have students enter data from their worksheets into a spreadsheet and have them check their work for accuracy.

   

• Develop methods to reduce expenses such as:

   

  a) get a roommate to share rent and utilities

  b) use the bus or a bicycle instead of buying a car

  c) wait to make a major purchase such as stereo or new snowboard

  d) live at home

   

• Provide a list of changes and have students adjust their budget. You can create a variety of scenarios such as:

   

  a) You get sick and have to pay a doctor's bill of $50.

  b) Your car breaks down or needs new tires which cost $200.

  c) You get a Christmas bonus of $100.

Added Exercises

• Add expenses for starting a family (e.g., getting married, having a baby).

   

• Multiply the monthly expenses to come up with a yearly budget (see budget.xls).

   

• Make pie chart of one month's expenses (see Pie Charts).