Launch: Managing a Tight Budget

The role-playing activity you’re setting up is a great way for students to learn about managing financial difficulties in a practical, hands-on way. Here's an expanded outline for the activity, followed by Socratic questions to guide reflection and discussion:

Activity: Managing a Tight Budget

Objective: Students will simulate managing a household budget, prioritizing essential expenses, and making decisions about financial trade-offs.

Instructions:

1. Divide Students into Small Groups: Create groups of 3-4 students to encourage collaboration.
2. Distribute Materials: Give each group a budget sheet with a fixed monthly income and a list of mandatory and unexpected expenses. Ensure some costs are flexible (like entertainment or dining out), while others are fixed (rent, utilities, groceries, etc.). Example of Fixed Monthly Expenses:
   • Rent: $1,000
   • Groceries: $300
   • Utilities (Electricity, Water, Internet): $150
   • Insurance: $100 Unexpected Expenses:
   • Car repair: $250
   • Medical bill: $150
3. Scenario Introduction: After each group has reviewed their budget, present a scenario where they must adjust their finances:
   • You just got a medical bill, or the car broke down unexpectedly.
   • There's a temporary increase in rent or utility bills.
   • Optional: Students may also receive a "windfall" of unexpected income (like a bonus or gift), and they need to decide how to allocate it.
4. Group Discussion: Each group will discuss how to prioritize these expenses. They can decide to cut back on certain areas (e.g., eating out) or find alternative solutions to balance the budget.
5. Share Decisions: After the discussion, ask each group to share their decisions and rationale.

Managing a Tight Budget - Materials

1. Budget Sheet for Each Group:

Monthly Income: $2,500 (Adjust as needed for your scenario)

Expense	Amount
Rent	$1,000
Groceries	$300
Utilities (Electricity, Water, Internet)	$150
Insurance	$100
Transportation (Gas/Bus)	$100
Cell Phone	$50
Entertainment (Movies, Dining Out, etc.)	$100
Total Fixed Expenses	$1,800
Remaining Income	$700

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Unexpected Expenses:

1. Car Repair: Your car broke down, and it needs urgent repairs. The cost is $250.
2. Medical Bill: You’ve received an unexpected medical bill for $150.
3. Additional Scenario (Optional): Your utility bill has gone up unexpectedly due to colder weather, and it’s now $50 more than usual.

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Instructions for the Activity:

1. Divide Students into Small Groups: Groups should consist of 3-4 students each.
2. Review Your Budget Sheet: Start by examining your fixed monthly income and necessary expenses (rent, utilities, groceries, etc.). You will be working with $2,500 per month.
3. Scenario Setup:
   • You will be presented with unexpected expenses: car repair ($250) and a medical bill ($150). Additionally, your utility bill may rise unexpectedly by $50.
4. Group Discussion:
   • As a group, decide how to adjust your budget to cover these unexpected expenses. You will need to prioritize and make trade-offs. Consider options like reducing entertainment, adjusting transportation costs, or finding cheaper grocery alternatives.
   • After discussing, each group will need to present their decisions and the rationale behind their choices.
5. Reflection Questions: After sharing, respond to the Socratic questions listed below to reflect on the decisions you made.

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Socratic Questions for Reflection:

1. What strategies did you use to decide which expenses were most important?
   • A: Did you focus on keeping the most essential expenses (like rent and utilities) and cut back on others?
   • B: Did you try to prioritize reducing variable costs (like groceries or entertainment) first, even if they seemed less urgent?
2. How does having limited resources affect your decision-making?
   • A: Did you feel that having a fixed income pushed you to be more disciplined and deliberate with your spending choices?
   • B: Did the lack of flexibility make you feel more stressed or frustrated about making trade-offs between competing needs?
3. What skills or habits could help you manage financial constraints more effectively?
   • A: Would building a habit of saving or creating an emergency fund have helped to manage unexpected expenses more easily?
   • B: Would learning how to track and categorize your spending regularly help you make better financial decisions when under pressure?
4. How would you approach managing this budget in real life?
   • A: Would you start by planning ahead for potential unexpected expenses, like car repairs or medical bills, and set aside a portion of your income for that?
   • B: Would you feel more comfortable adjusting your lifestyle or spending habits on a month-to-month basis, reacting to issues as they arise?