Review the following information with students. (Note: This information is included in the students’ handout.)
You can’t create a healthy financial situation unless you have more income than expenses. Understanding how to allocate your income and expenses is called setting a budget.
When creating a budget, you need to prioritize what you spend your money on and decide which expenses are essential and which are luxuries.
Many financial planners suggest that when creating a budget, you should pay yourself first. This means setting aside money to save before you pay the bills and buy things for yourself. This encourages you to build good financial habits and to be in a position to take advantage of investment opportunities.
After you have saved money, you can learn how to invest your money responsibly to help you reach your future goals.
Prior to working on the handouts, ask students to identify the items they spend their money on each month and how much they spend for each category. This provides for a good jumping-off point for students to do the handout.
Divide students into groups of three or four to work together to allocate Ethan’s budget.
As a whole class, discuss student responses to the handout.