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After this lesson, you will be able to:
List the different categories of expenses
Explain how four different budgeting strategies work
Recognize problems that arise in budgeting and be able to reason solutions to these problems.
Millions of Americans are unemployed. Now imagine you’re one of them. Your savings are gone. You’ve lost your house. And you’re down to your last $1,000. Can you make it through the month?
Imagine this is YOU. Could you make it through the month? Why to you think so?
Play the SPENT Game.
Answer these questions about your experience.
Some popular budgeting strategies:
Some popular budgeting strategies:
50/20/30 Budget
50/20/30 Budget
50% of your income goes to NEEDS
20% goes to SAVINGS
30% goes to WANTS
Pay Yourself First
Pay Yourself First
Pay a set amount into your savings before anything else.
After that, pay off all of your bills.
Anything left over can be spent on anything you like.
Zero-Based Budget
Zero-Based Budget
Assign every dollar to some category of expenses until every dollar is accounted for (there are $0 dollars left)
Envelope Budget
Envelope Budget
Put certain amounts of money in envelopes for each category in your budget. You can only spend money from the appropriate envelope for a given expense. If you run out, too bad. If you have some left at the end of the month, you can:
1. Roll over the money to the next month
2. Transfer the money to a different envelope
3. Put the extra money in savings
Budgeting seems like a pretty straightforward thing.
But not everyone does a good job at it.
It can be a daunting task, but proper budgeting can help keep your finances healthy.
And healthy finances can help make a happier you.
Here are some struggles people face when budgeting their money and possible ways around them.
Questions to consider:
1. Andrea has set a goal to manage her finances better and has been trying to follow the 50-20-30 budgeting method for the past few months. Despite her efforts, Andrea notices that her savings aren't growing as expected, and her credit card balance seems to be increasing slightly each month. She also had to deal with an unexpected expense recently, which she paid for with her credit card. What recommendations would you make to help Andrea stick to her budget and improve her finances?
2. Tips #1 and #6 recommend automating some of your expenses and saving. How might automating your finances help you stick to a budget?
3. Identify 1-2 budgeting challenges that you think most teenagers struggle with. Explain your answer.
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