Travis R. Martin, CPA, MBA

Business Lesson Plans and Insight

Personal Finance Lesson: Budgeting 101

Lesson Background

Budgeting helps us piece together our financial picture

It’s hard to find the subject of budgeting entertaining. Maybe that’s why so few people actually create and follow a budget.

When I was in college, I had a professor who liked to talk about the Constipated Accountant. As it turns out, the Constipated Accountant couldn’t budge-it, so he got a pencil and worked it out. That’s about the only encounter I’ve ever had with budgeting humor.

Even though it may be a dry subject, I can’t understate the importance of budgeting, especially in the context of teaching students Personal Finance. Today, I’m sharing my lesson on budgeting with this caveat: I know it doesn’t work.

Does it teach students the importance of completing a budget? I think so. Does it show students how to construct a budget? Yes. Does it allow students the opportunity to practice creating their own budget? Sure.

But, does the lesson work in the sense that it will cause every student to go out into the real world, create a budget, and dutifully follow it? Maybe not.

And that is the biggest challenge of Financial Education. We can give students the how’s and the why’s, but getting them to change their existing financial habits and behavior is harder. That being said, the reason I’m a believer in Personal Finance at the high school level, is that we have a better chance of changing poor habits early on, as opposed to trying to change them after they have had 30 years to take root.

Lesson Steps
The budgeting lesson itself consists of a PowerPoint discussion, two activities, and a budgeting project – all of which I will attach below.

I introduce the lesson by posing the following question to the students: imagine you have just been given $100…what will you do with the money?

How the students answer this question provides a glimpse into how they view spending and saving.

Next, I bring up the PowerPoint and we discuss goals. During this portion,

Sample PowerPoint Slide from Budgeting Presentation

students are given the opportunity to jot down some of their own short, mid, and long-term goals as well as their estimated costs.

After the students have written down some of their goals, the discussion continues with a focus on how to use a financial plan (i.e., budget) to achieve goals.

The in-class portion concludes with the students logging onto www.themint.org and completing the “Determining Your Budget” simulation. As the students complete this, most of them find it is hard to create a balanced budget. This provides the perfect opportunity to share with the class the two ways to fix a budget that is out of whack. Namely,

*Make more money (which can be hard to do)
*Spend less money (which can be hard to do, but sometimes more realistic than option 1)

After the lesson, I assign what I have creatively titled “the budgeting project.” Using the attached budget template, I have the students estimate their income and spending for an entire month.

Then, I ask students to keep track of all of their income and spending for a period of time (depending on the group, I may do 2 weeks or 1 month). I normally provide small, pocket sized notebooks for them to record their information.

At the end of the month, the students take the information from their notebook and compare it to their estimated budget. The last step of the project requires students to develop a plan for the following month based on what they learned from their recordkeeping.

Resources
PowerPoint Discussion: Budgeting 101
Worksheet: Excel Budget Template
Link: Themint.org – “Determining Your Budget”
Link: Suggested Reading – “Put Savings (and yourself) First”

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