[updated 1/5/24]

• Practice budgeting with time before money

• Use the Spent Documentary and Game to bring attention to the problem

• Think about future careers for salaries to budget with

• Share what you do

• Use my recorded guest speaker

After talking about Needs vs Wants and Tracking Cash Flow, it’s time to dive into Budgeting. Budgeting is not an isolated unit where you get to do it and then never revisit it again. For me, it’s a topic that we introduce towards the beginning of a personal finance class and then revisit on a regular basis as we learn more about the different areas that impact our finances.

Budgeting or ‘making a budget’ is not something that most of our students look forward to. The word budget has a lot of emotion and baggage tied to it in many cases from hearing the phrase “that’s not in our budget” as a way to say “no” (which is great by the way, because that means there is a budget in place!) or there’s an experience of being on a budget, which can often be treated like an extreme diet, where multiple things are eliminated at once and there’s an attempt to reduce spending drastically. No one wants to cut things out. It’s not fun and it feels like we are depriving ourselves. We’re saying “no” to ourselves.

The big mindset shift that I look to instill is that budgeting is not a list of things you can’t have or do, but rather the plan you are making for your money to allow you to say “yes” to the things that are truly important to you and make you happy.

It’s TIME to budget

Since we have already tracked our cash flow in previous lessons using Monopoly and a cashflow tracker, the next step is evaluating our current spending and then making a plan for future spending that aligns with our goals… Easier said than done. What many of us realize in our classes is that most students aren’t handling large sums of money each month. They may or may not have a part time job, they might be covering some of their own expenses such as cell phones, gas for the car, or auto insurance, but most of their income is disposable and can be spent on wants. That’s if they handle money at all! There will always be a handful who have no income and no expenses, with everything being taken care of by parents (see my thoughts on giving kids an allowance and opportunity to practice handling money here), and they come back with a blank Cash Flow Tracker.

Helping all kids to learn the skills of budgeting and internalize its importance is challenging when the audience don’t see a need for it yet, and don’t really have an opportunity to practice. This is when I introduce the first activity sequence in our budgeting unit… Budgeting Time. Time is a limited resource, like money, in which all of us make choices each day about how it is spent. Some spending is mandatory (needs) and some is a choice (wants), but all of us can budget the 24 hours given to us in a day to try and reach our goals. Most of us never think of it this way, so the following 3 activities help get us there:

OK… So, How Do We Calculate Income Tax?

The Spent Documentary is one of several options that I could show for hooking students into the idea that we need to be intentional with our money.

Money isn’t easy. Life can, and probably will, be hard at some point. Your finances can get out of control if not monitored. Lower incomes mean needing to be extra intentional with every dollar we spend.

I like Spent, because it’s a 40 minute documentary which fits easily into a class period, and leaves time for discussion afterwards. Next Gen Personal Finance have also developed a viewing guide for students that makes it a super turnkey resource to break out with your students.

Other documentaries and series that I like for meeting this goal are: Playing with FIRE, How to Get Rich, ESPN Broke, and Get Smart with Money.

There is also a Spent game which is another awesome follow up to the documentary as students have to try and get by for a month on a shoestring budget, whilst making several hard life decisions and seeing their repercussions throughout.

What do you want to be when your grow up?

It’s time to take a break from the seriousness of budgeting with a limited amount of money. Let’s instead talk about all the money they are going to make (or think they are going to make) in the future as part of their desired careers.

Since picking one thing that you want to do after high school is a challenge, I ask students to list 5 possible careers for themselves. They then write a short description of what the career is and the steps needed to get qualified for that career (if any). Finally they research a starting and median salary for each career based in a location where they think they might like to live in the future (you can always default to your home area if students don’t have an answer for this). This gives us some great data and numbers for creating our own budgets later on!

How do my wife and I do it?

If we want to help build an environment and culture of openly talking about money, then we as teachers need to be willing to put aside our discomfort and share too (at an appropriate level of course). Giving students a role model, not of financial perfection but of being willing to communicate about money and share the good with the challenge, is a huge thing for students. Many have never had a open and honest conversation about money with an adult before, and the more you can share about your own journey and life, whilst acknowledging the mistakes and human nature of your decisions, the better we will all do with our money moving forward.

To that end, its time to whip out my budget and share how my family does it. Now I am very open with my finances and how my family does things, and you don’t have to share actual numbers if you don’t want to. Since my salary is public information anyway and a Google away, I don’t really mind sharing that and my wife is ok with me sharing our household income (Marriage advice: always check with your spouse before sharing personal information about your family!).

My wife and I use YNAB (You Need a Budget) to manage our finances and I take the students through the website and what the app looks like. I discuss the challenges of maintaining a budget with two people spending out of the same accounts and how important communication and apps like YNAB are for us. They usually have tons of questions about how we agree on spending, how much we spend in each category, and why we’re not rich even though I’m teaching them about money!

Time to bring in the expert

Athena Valentine is the person behind the moniker Money Smart Latina and the author of Budgeting for Dummies (affiliate link). She is the perfect person to bring into your classroom to share her story of digging out of a big debt hole and being homeless for a period, with budgeting and intentional money management one of the keys to gaining control of her finances. In our classroom interview, she and I talk about different ways to budget and how one can get started. I know the students like hearing the different options as well as the reinforcement about zero-based budgeting being a great place to start.

Budget with beans

It’s not the most accurate way to practice budgeting, but NGPF’s Bean Game is a wonderful introduction to budgeting money and it’s a big hit with the kids typically. In the same way that we budgeted our time with beans representing blocks of time, the Bean Game uses beans to represent 1/20 of a person’s budget and the students are given pre-made work mats with budget categories and options for students to allocate their beans. The students typically like the activity a lot, it brings up great conversations, and I find it a nice change up from the previous few days of activities that we have been doing. Putting students into pairs and asking them to budget together also puts a fun twist on the activity, but is totally optional. I do use the reflection sheet provided by NGPF during and after the activity as something that I can give a participation grade for too which is a bonus!

I’ve got some additional scenarios here using Wheel of Names (which I love!) that you are welcome to use with your students.

Who actually has to pay taxes and what happens if I don’t?

The final (not really final because this continues all semester) step in our budgeting journey is to actually create a budget for ourselves. As I mentioned before, this is not something I like doing for their current spending, since many don’t spend any money of their own or they don’t have any fixed needs to cover. Instead I ask the students to go back to the Career Salaries exercise we did and pick out one of the careers and the starting salary for that career. We then build a budget based off that salary since they represents the best approximation of what we think they might be working with in the future.

Before we get into Google Sheets to build the budget, we need to try to answer the question of “how much should I spend in each budget category… and what are the categories anyway?”. The interview with Athena Valentine addresses some of the major budget categories and gives guidance for what percentage of our income to allocate to those areas, but I needed something more comprehensive for my students. I couldn’t find anything exactly like what I was looking for online, so I created my own graphic based on the average consensus across several finance websites and expert recommendations. As a class, we take a look at the recommendations and discuss some different scenarios and observations as a group before I have the students tackle some reflection questions on their own that will help them later when we make our budgets. This is the Monthly Budget Percentages activity linked below.

The final step is to bring it all into Google Sheets. I walk students through the process of creating a beginner budget using the salary they researched, an approximation of taxes owed (we will update this later once we reach our taxes unit), monthly net income to budget, and the range of money that can be allocated to each category. I then have them create a first budget where they allocate how much they think they would spend in each category until there is $0 left to allocate.

As the semester progresses, we will come back to this budget spreadsheet several times (so have them bookmark it) to use the numbers in our current conversations, such as buying a home or calculating income tax. They can then update the budget numbers as they learn more, making sure to adjust the allocation to the categories to keep it balanced at $0 remaining and no debt.

I created a step-by-step walkthrough video of how I do this with my students which you can show directly to them or use to teach yourself before teaching the students.

Ideas for Extensions and Assessment

Depending on how long you’ve been a reader of this blog or follower of my work, you might know that I’m not really a formal sit-down test kinda teacher. At least, not when it’s within my control to determine how assessment happens. I way prefer practical activities, games, and projects where students get to apply and demonstrate their knowledge/ decision making to me.

For budgeting, we will do different projects like a Meal Planning Project, Planning an Event, or Planning a Vacation. We’ve also planned and run a Community Money Event in the past with budgeting a grant as a major part of what we did. My students will start their own businesses during our entrepreneurship unit and effectively managing their budgets, particularly revenue, is a big focus point for their grading rubric. I once had a guest speaker come in who volunteered to share about her tough financial situation with the class and listen to their advice for how she could create and improve her budget to improve her finances. There are lots of great ways to bring budgeting into conversations and projects, or clubs, societies, your finance secretary, department chairs, etc. There are plenty of people who create and manage budgets within your reach that might be willing to share more about what they do and how they do it!

*The information in this article is for education and entertainment purposes only and is not intended as tax advice. Please ask a licenses tax professional for help with your own tax situation if you have questions.