Financial literacy: income and decisions (lesson 1)  (Page 5/9)

Step 7.- Given the above explanation it would be useful for students to refer to Activity 2 , which shows how to design a budget. The instructions are explained as follows:

1. Fill in your gross monthly salary.
2. List, or “itemize,” taxes and other amounts withheld from your monthly paycheck.
3. Total the itemized amounts withheld from your monthly paycheck, and subtract that amount from your gross monthly salary to determine your monthly net income. This is the amount available to you for budgeting.
4. Itemize fixed expenses (such as car and insurance payments, or club dues).
5. Itemize variable expenses (such as gasoline or transportation costs, entertainment expenses or gifts).
6. Decide how much you will set aside for savings each month.
7. Total your fixed and variable expenses, and the amount you will save each month. Subtract that total from your net income. That is the amount of money you have available each month for additional expenses or saving.

Activity 2: student budget plan

NAME: ______________________________________________________

Step 8.- Discuss some recommendations related to Activity 2 . Some of these are given as follows:

1. Create a budget you can live with. Be realistic. Review your budget every month. Adjust it as your income and expenses change.
2. After you have created a budget, plan your spending in order to make your monthly income last.
3. Consider your “needs” vs. your “wants.” Where can you save money?
4. Can you save by cutting back on eating out or buying the latest fad or fashion? Are you buying products or services you don’t really need?
5. Pay yourself! Set aside a certain amount of money for savings at the beginning of each month rather than waiting to see what’s left over at the end.
6. Set aside any “extra” money you weren’t expecting to receive. If you get a raise or bonus from your employer, put the extra amount into your savings. If you receive cash as a gift, save at least part of it. If you’ve paid off a loan, keep making the monthly payments – to yourself, in your own savings account!
7. Pay your bills – including credit cards – in full and on time. When you pay your bills in full and on time, you’ll avoid added expenses such as late fees, finance charges, and more.