lesson three

the art of budgeting

overheads
 the budgeting process

phase 1: Assess your personal and financial situation

(needs, values, life situation).

phase 2: Set personal and financial goals.

phase 3: Create a budget for fixed and variable expenses based on

projected income.

phase 4: Monitor current spending (saving, investing) patterns.

phase 5: Compare your budget to what you have actually spent.

phase 6: Review financial progress and revise budgeted amounts.

choices & decisions the art of budgeting overhead 3-A

goal setting guidelines

well-written personal and financial goals SHOULD:

■ be realistic
A student working part-time is not likely to be able to afford a
new car every couple of years.

■ be stated in specific, (I plan/want to…)

measurable terms
“To save $5,000 for a down payment to buy a house.”

■ have a time frame

“To pay off my credit card within the next 18 months.”

■ state the action to be taken

“To start an automatic deposit savings account with monthly
withdrawals from my chequing account.”

overhead 3-B choices & decisions the art of budgeting

 setting up and maintaining a budget
income budget actual difference
Job #1 $ $ $
Job #2 $ $ $
Other $ $ $
total monthly income $ $ $

expenses budget actual difference

fixed expenses
Savings $ $ $
Rent/Board $ $ $
Car insurance $ $ $
Car payment $ $ $
Other $ $ $
flexible expenses
Food/ Eating out $ $ $
Utilities $ $ $
Transportation
Bus fare $ $ $
Gas and oil $ $ $
Parking and tolls $ $ $
Repairs $ $ $
Other $ $ $
Clothing $ $ $
Entertainment $ $ $
Personal items $ $ $
Medical (e.g., Rx) $ $ $
Household items $ $ $
Tuition $ $ $
School expenses $ $ $
Other $ $ $
total monthly expenses $ $ $

choices & decisions the art of budgeting overhead 3-C

lesson three
the art of budgeting

student activities
name:____________________________________________________________ date: ______________________

what are your goals?

directions
List some of your educational, social, financial, family, health/physical, and
recreational goals. In some categories you may have more than six goals; in
others you may have fewer.

my educational goals include:

1. ________________________________________________________________________________

2. ________________________________________________________________________________

3. ________________________________________________________________________________

4. ________________________________________________________________________________

5. ________________________________________________________________________________

6. ________________________________________________________________________________

my social goals include:

1. ________________________________________________________________________________

2. ________________________________________________________________________________

3. ________________________________________________________________________________

4. ________________________________________________________________________________

5. ________________________________________________________________________________

6. ________________________________________________________________________________

my financial goals include:

1. ________________________________________________________________________________

2. ________________________________________________________________________________

3. ________________________________________________________________________________

4. ________________________________________________________________________________

5. ________________________________________________________________________________

6. ________________________________________________________________________________

choices & decisions the art of budgeting activity 3-1a

what are your goals? (continued)

my family goals include:

1. ________________________________________________________________________________

2. ________________________________________________________________________________

3. ________________________________________________________________________________

4. ________________________________________________________________________________

5. ________________________________________________________________________________

6. ________________________________________________________________________________

my health/physical goals include:

1. ________________________________________________________________________________

2. ________________________________________________________________________________

3. ________________________________________________________________________________

4. ________________________________________________________________________________

5. ________________________________________________________________________________

6. ________________________________________________________________________________

my recreational goals include:

1. ________________________________________________________________________________

2. ________________________________________________________________________________

3. ________________________________________________________________________________

4. ________________________________________________________________________________

5. ________________________________________________________________________________

6. ________________________________________________________________________________

activity 3-1b choices & decisions the art of budgeting

name:____________________________________________________________ date: ______________________

working with your goals

what goals are the most important to you?

Choose the two goals from each category that are the most important to you. Identify each goal
as short-term (1–4 weeks), medium-term (2–12 months), or long-term (1 year or longer).

1. ________________________________________________________________________________

2. ________________________________________________________________________________

3. ________________________________________________________________________________

4. ________________________________________________________________________________

5. ________________________________________________________________________________

6. ________________________________________________________________________________

7. ________________________________________________________________________________

8. ________________________________________________________________________________

9. ________________________________________________________________________________

10. ________________________________________________________________________________

11. ________________________________________________________________________________

12. ________________________________________________________________________________

prioritize your goals

List and prioritize six of your most important goals. After each goal, identify what you could be
doing now to work toward the goal, and what resources (if any) you need to achieve each goal.

goal #1 ______________________________________________________________
What I can be doing now to work toward this goal:
________________________________________________________________
________________________________________________________________
________________________________________________________________
The resources I need to achieve this goal are:
________________________________________________________________
________________________________________________________________
________________________________________________________________

choices & decisions the art of budgeting activity 3-1c

working with your goals (continued)

goal #2 ______________________________________________________________
What I can be doing now to work toward this goal:
________________________________________________________________
________________________________________________________________
________________________________________________________________
The resources I need to achieve this goal are:
________________________________________________________________
________________________________________________________________
________________________________________________________________

goal #3 ______________________________________________________________
What I can be doing now to work toward this goal:
________________________________________________________________
________________________________________________________________
________________________________________________________________
The resources I need to achieve this goal are:
________________________________________________________________
________________________________________________________________
________________________________________________________________

goal #4 ______________________________________________________________
What I can be doing now to work toward this goal:
________________________________________________________________
________________________________________________________________
________________________________________________________________
The resources I need to achieve this goal are:
________________________________________________________________
________________________________________________________________
________________________________________________________________

activity 3-1d choices & decisions the art of budgeting

 working with your goals (continued)

goal #5 ______________________________________________________________
What I can be doing now to work toward this goal:
________________________________________________________________
________________________________________________________________
________________________________________________________________
The resources I need to achieve this goal are:
________________________________________________________________
________________________________________________________________
________________________________________________________________

goal #6 ______________________________________________________________
What I can be doing now to work toward this goal:
________________________________________________________________
________________________________________________________________
________________________________________________________________
The resources I need to achieve this goal are:
________________________________________________________________
________________________________________________________________
________________________________________________________________

choices & decisions the art of budgeting activity 3-1e

name:____________________________________________________________ date: ______________________

where does your money come from?

directions
Answer these questions. Be prepared to discuss your answers in class.

1. List your current source(s) of income.

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

2. What do you expect to be your source(s) of income in the near future?

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

3. What are your feelings about being financially dependent vs. financially independent?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

activity 3-2 choices & decisions the art of budgeting

name:____________________________________________________________ date: ______________________

where does your money go?

directions
Keep a record of everything you spend during a specific period. Then, answer
the questions below.

1. What patterns can you see in your spending habits?

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

2. How do you decide what to purchase?

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

3. What factors do you think influence your purchasing decisions?

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

choices & decisions the art of budgeting activity 3-3

name:____________________________________________________________ date: ______________________

setting up a personal budget

directions
Use this form to set up a personal budget. After you’ve completed your planning, try
to stick to your budget for one month. At the end of the month, record your actual
income and your actual expenses. Calculate the difference between what you thought
you would earn and what you actually earned, and what you thought you would
spend and what you actually spent.

income budget actual difference

Job #1 $ $ $
Job #2 $ $ $
Other $ $ $

total monthly income $ $ $

expenses budget actual difference

fixed expenses

Savings $ $ $
Rent $ $ $
Car insurance $ $ $
Car payment $ $ $
Other $ $ $
Other $ $ $
flexible expenses

Food/Eating out $ $ $
Utilities $ $ $
Transportation
Bus fare $ $ $
Gas and oil $ $ $
Parking and tolls $ $ $
Repairs $ $ $
Other (e.g., tickets) $ $ $

activity 3- 4a choices & decisions the art of budgeting

 setting up a personal budget (continued)

flexible expenses (continued)

Clothing $ $ $
Entertainment $ $ $
Personal Items $ $ $
Medical (e.g., Rx) $ $ $
Household items $ $ $
Tuition $ $ $
School expenses $ $ $
Other $ $ $
Other $ $ $
Other $ $ $

total monthly expenses $ $ $

choices & decisions the art of budgeting activity 3-4b

name:____________________________________________________________ date: ______________________

rework a budget

directions
Use one of the attached budget sheets to set up and maintain Gabrielle’s budget. Then,
use the other sheet to rework Gabrielle’s budget into one that fits your personal lifestyle.

her planned income and expenses

Gabrielle works part-time at a greeting card company and part-time at a record store. The net
monthly income from her first job is $600. The net monthly income from her second job is $800.
Her planned fixed monthly expenses include:
■ $200 for rent (she shares an apartment with two friends)
■ $175 for car payment
■ $220 for car insurance
Her planned flexible expenses include:
■ $100 (to save for post-secondary education)
■ $150 for food
■ $40 for gas and oil
■ $50 for clothes
■ $60 for entertainment
■ $30 for personal and household items

how her month actually went

1. What she made:
■ Gabrielle made $45 in overtime pay this month
2. What her fixed expenses actually were:
■ Rent went up to $225, starting this month
■ Her monthly car payment was $175
■ Her monthly car insurance premium, as of this month, went up to $295
3. What her flexible expenses actually were:
■ $190 for food (she had a dinner party for which she hadn’t budgeted)
■ $60 for gas and oil (her car needed an oil change)
■ $34 for parking and bridge tolls
■ $220 for car repairs
■ $80 for a new pair of running shoes
■ $70 for entertainment
■ $60 for personal items
■ $36 for a birthday present for her mother
4. Unforeseen events:
■ Gabrielle got two speeding tickets in one week.
The total cost of both tickets is $230.

activity 3-5a choices & decisions the art of budgeting

 rework a budget (continued)

how does her budget look now?

1. What is the difference between Gabrielle’s planned expenses and her actual expenses?

2. In what areas did she overspend?

3. In what areas did she spend less than she planned?

4. How much did she spend for the use of her car this month?

5. How much money did she have at the end of the month to put into savings?

if it were your budget…

1. Using the attached budget sheet, set up a budget for yourself. Use Gabrielle’s income as a
starting point. Keep in mind your personal financial goals.

2. What did you change about the budget?

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

3. How much would you save each month to put toward your personal and financial goals?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

choices & decisions the art of budgeting activity 3-5b

rework a budget (continued)
gabrielle’s budget

income budget actual difference

Job #1 $ $ $
Job #2 $ $ $
Other $ $ $

total monthly income $ $ $

expenses budget actual difference

fixed expenses

Savings $ $ $
Rent $ $ $
Car insurance $ $ $
Car payment $ $ $
Other $ $ $
flexible expenses

Food/Eating out $ $ $
Utilities $ $ $
Transportation

Bus fare $ $ $
Gas and oil $ $ $
Parking and tolls $ $ $
Repairs $ $ $
Other $ $ $
other

Clothing $ $ $
Entertainment $ $ $
Personal items $ $ $
Medical (e.g., Rx) $ $ 4
Household items $ $ $
Tuition/School expenses $ $ $
Other $ $ $
total monthly expenses $ $ $

activity 3-5c choices & decisions the art of budgeting

 rework a budget (continued)

if it were your budget

income budget actual difference

Job #1 $ $ $
Job #2 $ $ $
Other $ $ $

total monthly income $ $ $

expenses budget actual difference

fixed expenses

Savings $ $ $
Rent $ $ $
Car insurance $ $ $
Car payment $ $ $
Other $ $ $
flexible expenses

Food/Eating out $ $ $
Utilities $ $ $
Transportation

Bus fare $ $ $
Gas and oil $ $ $
Parking and tolls $ $ $
Repairs $ $ $
Other $ $ $
other

Clothing $ $ $
Entertainment $ $ $
Personal items $ $ $
Medical (e.g., Rx) $ $ 4
Household items $ $ $
Tuition/School expenses $ $ $
Other $ $ $
total monthly expenses $ $ $

choices & decisions the art of budgeting activity 3-5d

rework a budget answer key

how does her budget look now?

1. What is the difference between Gabrielle’s planned expenses and her actual expenses?
Actual was $1675, planned was $1025. Difference is $650.

2. In what areas did she overspend?

Food, transportation, clothing, entertainment, personal, other (tickets, birthday present)

3. In what areas did she spend less than she planned?

Savings

4. How much did she spend for the use of her car this month?
$784 not including tickets

5. How much money did she have at the end of the month to put into savings?
None

if it were your budget…

1. Using the attached budget sheet, set up a budget for yourself. Use Gabrielle’s income
as a starting point. Keep in mind your personal financial goals.

2. What did you change about the budget?

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

3. How much would you save each month to put toward your personal and financial goals?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

activity answer key 3-5b choices & decisions the art of budgeting
 rework a budget answer key

gabrielle’s budget

income budget actual difference

Job #1 $ 600 $ 600 $ 0

Job #2 $ 800 $ 800 $ 0
Other $ 0 $ 45 $ +45
total monthly income $ 1400 $ 1445 $ +45

expenses budget actual difference

fixed expenses

Savings $ 100 $ 0 $ -100

Rent $ 200 $ 225 $ +25
Car insurance $ 220 $ 295 $ +75
Car payment $ 175 $ 175 $ 0
Other $ 0 $ 0 $ 0
flexible expenses

Food/Eating out $ 150 $ 190 $ +40

Utilities $ 0 $ 0 $ 0
Transportation

Bus fare $ 0 $ 0 $ 0
Gas and oil $ 40 $ 60 $ +20
Parking and tolls $ 0 $ 34 $ +34
Repairs $ 0 $ 220 $ +220
Other (ticket) $ 0 $ 230 $ +230
other

Clothing $ 50 $ 80 $ +30
Entertainment $ 60 $ 70 $ +10
Personal items $ 15 $ 60 $ +45
Medical (e.g., Rx) $ 0 $ 0 $ 0
Household items $ 15 $ 0 $ -15
Tuition/School expenses $ 0 $ 0 $ 0
Other (birthday gift) $0 36$ +36 $
total monthly expenses $ 1025 $ 1675 $ +650

choices & decisions the art of budgeting activity answer key 3-5c
name:____________________________________________________________ date: ______________________

lesson three quiz: the art of budgeting

true-false
1. The budgeting process starts with monitoring current spending.
2. Most short-term goals are based on activities over the next two or three years.
3. A common long-term goal may involve saving for college for parents of a
new-born child.
4. Rent is considered a fixed expense.
5. Flexible expenses stay about the same each month.

multiple choice
6. The final phase of the budgeting 8. A clearly written financial goal
process is to: would be:
A. “To save money for college
A. set personal and financial
goals. for the next five years”
B. “To pay off credit card bills
B. compare your budget to what
you have actually spent. by 2001”
C. “To invest in an international
C. review financial progress.
mutual fund for retirement”
D. monitor current spending
D. “To establish an emergency
patterns.
fund of $4,000 in 18 months”
7. An example of a long-term goal
would be: 9. An example of a fixed expense is:
A. clothing.
A. an annual vacation.
B. car insurance.
B. saving for retirement.
C. an electric bill.
C. buying a used car.
D. educational expenses.
D. completing college within
the next six months. 10. ___________ is commonly
considered a flexible expense.
A. Rent
B. A mortgage payment
C. Home insurance
D. Entertainment

case application
Each month Niko and Albert Cheung have lengthy discussions about their household spending.
They do not understand why they are continually short of money even though they both have
good salaries. What actions might be taken to avoid personal and financial difficulties?

quiz 3-6 choices & decisions the art of budgeting

 lesson three quiz: the art of budgeting answer key

true-false
1. f The budgeting process starts with monitoring current spending.
2. f Most short-term goals are based on activities over the next two or three years.
3. t A common long-term goal may involve saving for college for parents of a
new-born child.
4. t Rent is considered a fixed expense.
5. f Flexible expenses stay about the same each month.

multiple choice
C 8. D A clearly written financial goal
6. The final phase of the budgeting
process is to: would be:
A. “To save money for college
A. set personal and financial
goals. for the next five years”
B. “To pay off credit card bills
B. compare your budget to what
you have actually spent. by 2001”
C. “To invest in an international
C. review financial progress.
mutual fund for retirement”
D. monitor current spending
D. “To establish an emergency
patterns.
fund of $4,000 in 18 months”
7. B An example of a long-term goal
9. B An example of a fixed expense is:
would be:
A. clothing.
A. an annual vacation.
B. car insurance.
B. saving for retirement.
C. an electric bill.
C. buying a used car.
D. educational expenses.
D. completing college within
the next six months. 10. D ___________ is commonly
considered a flexible expense.
A. Rent
B. A mortgage payment
C. Home insurance
D. Entertainment

case application
Each month Niko and Albert Cheung have lengthy discussions about their household spending.
They do not understand why they are continually short of money even though they both have
good salaries. What actions might be taken to avoid personal and financial difficulties?
The Cheungs should create a specific spending plan based on their income, needs, and wants. They should
decide on various financial goals for their current and future needs. They should regularly revise their
budget based on changing situations in their lives.

choices & decisions the art of budgeting quiz answers 3-6 key