Challenge: “Balancing the Budget”

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Challenge: “Balancing the Budget” []

Overview: Students take on the role of a household tasked with managing a fixed monthly income. They must allocate their funds to cover essential expenses while responding to unexpected costs. The activity emphasizes prioritization, decision-making, and the challenges of financial planning.

Materials Needed:

   A Monthly Income Sheet:
       Example: Each group starts with $3,500.
   An Expense List (fixed and variable):
       Fixed Expenses:
           Rent: $1,200
           Utilities: $150
           Transportation: $200
           Insurance: $300
           Minimum Debt Payment: $300
       Variable Expenses:
           Groceries: $400 (can adjust based on needs)
           Entertainment: $100
           Clothing: $100
   Unexpected Expenses Cards:
       Drawn randomly during the activity. Examples:
           Car repair: $500
           Medical bill: $800
           Home repair: $300
           School supplies: $150
   A Savings Goal:
       Each group must aim to save $200 per month.
   Calculators, pens, and budget worksheets for tracking.

Steps:

   Introduction (5–10 minutes):
       Explain the goal: Manage the household budget to cover expenses, save $200, and respond to surprises.
       Provide the income sheet, expense list, and an overview of how unexpected costs will arise.
   Budget Planning Phase (15 minutes):
       Groups work together to create a budget using their fixed income.
       They decide how much to allocate for groceries, entertainment, clothing, and savings after covering fixed expenses.
   Unexpected Costs Phase (10–15 minutes):
       Midway through the activity, draw 1–2 unexpected expense cards for each group.
       Groups must adjust their budgets to cover these new costs, potentially sacrificing savings or discretionary spending.
   Reflection and Discussion (10 minutes):
       After completing the budget, ask groups to share their strategies and challenges.
       Facilitate a discussion on prioritization, the importance of savings, and the emotional impact of financial decisions.

Socratic Questions:

   How did you decide which expenses were most important to prioritize?
   What strategies helped you manage unexpected costs?
   How might creating a budget in real life help prepare for financial challenges?

Why It Works:

   Engagement: Role-playing personalizes the experience, making financial concepts relatable.
   Critical Thinking: Students must evaluate trade-offs and consider the consequences of their decisions.
   Practical Skills: This activity introduces the fundamentals of budgeting and financial resilience.

Optional Add-Ons:

   Incorporate interest rates on debt to teach about compounding effects.
   Add incentives, such as bonus income for meeting the savings goal, to simulate rewards for financial discipline.