Money Comes and Goes

Students read two online stories that introduce them to the elements of a budget and show that a successful budget balances money coming in (income) with money going out (expenses and savings). Follow-up activities point out the value of a budget. Students learn that a budget can help us make sure we buy the things we really need and want. A budget can also help us save for things that we can’t afford to buy right now. In a culminating activity, students create a budget they could use to achieve a savings goal.

Write the word “budget” on the board. Ask students to tell you what they think a budget is. Perhaps they have heard their parents or the principal say that something is not in the budget. If they have no idea, suggest that they look the word up in the dictionary. (budget, n.: a plan adjusting expenses to income). Summarize by saying a budget is a plan that shows how much money comes in (income) and how much money goes out (expenses and savings). Tell students they are going to participate in a set of activities that will show them how to make a budget and why making a budget is important.

• Identify the components of a budget.
• Design a budget for achieving a savings goal.
• Understand that saving for the future requires giving up something today.

• Tim’s Turn to Learn: A story about a boy who has difficulty saving for the future. This activity is credited to the Center for Entrepreneur & Economic Education from the University of Missouri-St. Louis.
  Clubhouse/library/TimsTurnToLearn/01.htm
• Tim’s Turn to Learn Worksheet: This worksheet goes along with the Tim’s Turn to Learn story.
  www.econedlink.org/lessons/docs_lessons/483_timlearns1.pdf
• Tim’s Budget: This shows the items Tim bought and how much Tim paid for each item. Tim’s budget is available online as well.
  www.econedlink.org/lessons/docs_lessons/483_transparency1.pdf
  Tim’s Budget
• Heather Learns About Earning: A story about a girl who needs money for a birthday party. This activity is credited to the Center for Entrepreneur & Economic Education .
  www.umsl.edu/~wpockets/Clubhouse/library/HeatherLearnsAboutEarning/01.htm
• Budget Activity: To help students understand more about budgets, have them complete this worksheet.
  www.econedlink.org/lessons/docs_lessons/483_budget2.pdf
• Create a Budget: Assess what students have learned about budgets and have them create their own budget with this interactive activity.
  Create a Budget Activity
• Amazon.com: Here you can receive a review and order a copy of “Alexander, Who Used to Be Rich Last Sunday” by Judith Viorst.
  https://www.amazon.com/exec/obidos/tg/detail/-/0689711999/qid=1071613651/sr=1-1/ref=sr_1_1/104-3203474-1375935?v=glance&s=books

Activity 1:

Have students read the story Tim’s Turn to Learn and answer the questions on the worksheet. If you plan to do the extension activity that calls for students to track their spending, you may also want the students to print out a copy of the “My Spending Tale” at the end of the story for future use. If you don’t want your students to print documents print the worksheet and spending records for them in advance.

Conduct a class discussion of students’ answers to the worksheet questions:

1. What is Tim’s problem? [He spends too much and can’t to save.]
2. What is the first thing Money Mouse advises Tim to do? [Make a list of everything he buys so he knows where his money goes.]
3. How does spending money today affect what Tim spends tomorrow? [He has less money to spend tomorrow.]
4. What did Money Mouse do to save money for the new Monster Mouse video game? [He spent less on cheese popcorn and movies.]
5. What were Tim’s biggest expenses? [$7.50 for school lunches.]
6. What is the total amount Tim spent on movies and video games? Show your math. [$3.00 playing video games + $3.00 renting video games + 3.00 movie rental + $5.00 movie and popcorn at theater = $14.00.]
7. What other things did Tim have on his list? Name the items and tell how much he spent. [$2.50 for snacks and $2.00 for baseball cards.]
8. What three things did Money Mouse do to spend less and save more? [He took cheese sandwiches for lunch, rented only one Monster Mouse movie each week, and made his own cheese popcorn.]
9. What did Tim do to spend less and save more? [He started taking his lunch to school and took turns playing video games at the homes of friends.]
10. How much do you think Tim was able to save by doing these things? Show your math. [All answers should include the $7.50 for lunch and $3.00 for playing video games. An additional savings item that may be identified is the $3.00 for renting video games. The total will be either $10.50 or 13.50.]

Examine as a class some of the spending plans that students came up with to help Tim save $12.00 each week. To help the students see the changes, and to emphasize there is more than one way for Tim to achieve his goal, project Tim’s original spending, using a transparency on an overhead projector and show them Tim’s Budget. Show some of the students’ budgets on the transparency.

[NOTE: Tim’s budget is available online ]

Below are further questions that can be used for review:

1. Sometimes we can reduce spending without giving up something entirely. How did Money Mouse reduce the money he spent on cheese popcorn? [He made it at home instead of buying it at the movie theater]. 
2. How did Tim reduce his spending without giving up playing video games? [He played video games at the homes of friends]. 
3. What else might Tim do to cut expenses without giving up something entirely? [Potential answers include swapping video games instead of buying them, carrying a packed lunch, renting a video instead of going to the theater.] [NOTE: Students may already have come up with some of these ideas in creating Tim’s budget on the worksheet.]
4. What is the cost of swapping video games instead of buying them? [Tim may not always have a specific video game when he wants to play it. The friends have to depend on each other to buy the videos they want to play most.] 
5. What is the cost of renting a video versus going to the movie theater? [Tim has to wait until the movie is available on video.] 
6. What might be the cost of Tim carrying his lunch versus buying it? [He might get bored with the things in a packed lunch and he would give up his favorite school lunch foods.] 
7. Both Money Mouse and Tim had the option to carry their lunch to school versus buying it at school. Some people try to save money by skipping lunch. Why isn’t skipping lunch a good idea? [People need to eat in order to do their best when working and studying. Reducing spending should start with reducing spending on wants versus needs].

[NOTE: If your students are not familiar with the concepts of economic needs and wants, explain that economic needs are things we must have to survive such as food, water and shelter. Wants are things that are nice to have–but not necessary for survival. Movie tickets, bubble gum, and jewelry are examples of wants.]

Conclude the activity by pointing out that people can reduce their spending in many ways. Their spending plans will be influenced by their needs, wants, and personal preferences.

Activity2:

Have the students read the story Heather Learns About Earning to find out how Heather increased the money coming in (income). Then discuss the THINK ABOUT IT questions:

1. What was Heather’s problem? [She needed more money for a party.]
2. How did she earn the money she needed? [She baked and sold a cake.]
3. What else might Heather have done to earn the money she needed? [Potential answers include providing a service such as raking leaves for a neighbor, or selling something that she has made for friends, or doing extra chores at home.]

[NOTE: In this story, only money that is earned is labeled “income”. For budget purposes, an allowance is also considered income. While some students earn their allowances, others receive an allowance as a gift. Explain to students that an allowance is an amount they can count on and as such, can be included as income. It is difficult to include other gifts in a budget because the size and timing of gifts cannot be counted on. One way to deal with sporadic gifts is to determine in advance how gift money will be divided between saving and spending. For example, a child may decide to save half of any gift money and spend the rest. Some parents and guardians insist that their children follow such a plan.]

Activity 3:

Have students use the sample budget to answer the questions in the budget activity. If computer time is limited, you can print out this activity and have students complete it using paper and pencil. Here are the worksheet questions and answers:

1. How much did Ernie earn each week? [$18] 
2. How much did he spend? [$13 per week]
3. How much did he save? [$5 per week]
4. How many weeks will it take Ernie to reach his $50 savings goal? Show your work. [$50 divided by $5 equals 10 weeks]
5. Assuming you get your allowance on Saturday, on what date will you have your $50? [Answers will depend on the date on which this activity is completed]
6. How many weeks will it take Ernie to save $150? Show your work. [$150 divided by $5 equals 30 weeks]
7. Assuming you get your allowance on Saturday, on what date will you have your $150? [Answers will depend on the date on which this activity is completed]
   

[NOTE: Students may need to be shown how to calculate the number of weeks in question.]

Point out to students that the money in (income) equals the money out (spending and saving) in the worksheet budget. Discuss the following:

• What would you have to do if the money out was greater than the money in? [Increase income, reduce spending or reduce savings]
• What is the consequence for Ernie of reducing his savings? [He delays reaching his savings goal]

Ask the students to list the reasons why keeping a budget is important. Write their responses on the board. [Potential answers include keeping track of spending, making sure money is spent on what we want the most, helping us to save for big future purchases, and avoiding impulse purchases.]

1. Read the story, “Alexander Who Used to Be Rich Last Sunday” (a link to a review of the book as well as purchasing information can be found on https://www.amazon.com/exec/obidos/tg/detail/-/0689711999/qid=1071613651/sr=1-1/ref=sr_1_1/104-3203474-1375935?v=glance&s=books ). What happened to Alexander’s money? [Alexander bought bubble gum, lost bets, rented a snake, paid fines for kicking and for saying certain words, flushed money down the toilet, lost a nickel through a crack, and paid Anthony for his candy bar. Some pennies vanished thanks to a magic trick. Alexander also bought a melted candle, a bear with one eye, and an incomplete deck of cards at a garage sale] Explain that many of Alexander’s purchases are impulse purchases—things he bought without taking time to think about what he might be giving up in the future. Conduct a discussion to help the students identify ways in which Alexander might have avoided making impulse purchases. Ask the students to consider whether they also could avoid impulse purchases by following these guidelines. [Potential answers include putting money in bank so it is more difficult to access for spending, using a picture of a savings goal as a reminder not to spend.]
2. Have students think of something special they would like to save money for – perhaps a gift for someone or something for themselves. Direct them to use the “Spending Tale” to keep a personal spending diary; then they should create a budget that will help them reach their savings goals.

Assessment is based on the student activities and completion of an activity in which students https://www.econedlink.org/wp-content/uploads/2021/01/Money-Comes-and-Goes_-Create-a-Budget.docx to help them achieve a savings goal.