F1.3 Identify different ways to maintain a balanced budget, and use appropriate tools to track all income and spending, for several different scenarios.
Skill: Maintaining a Balanced Budget
The concept of balancing a budget may seem simple enough, but as demonstrated in the previous section, it is possible to see how monthly expenses can easily exceed monthly income. This can set the stage for a conversation about the cost of living in different parts of the province, country or world.
Teachers could offer the students the chance to explore a budget that is not based on a fictional scenario, the goal being to balance the budget. There are a variety of strategies the students can take to achieve balance. The motivations, influences and values of the student will be the basis of the decisions made in the quest for balance. For example, a student who does not want to compromise on non-essential expenses may try to find another source of income. The student might choose to change their lifestyle a bit to reduce some monthly costs instead of slicing out an entire section of the budget. It is important, however, to emphasize the fact that some expenses are essential and more difficult to change than others. For example, someone who chooses to find a new, less expensive place to live should also think about the costs associated with moving.
Students could research salaries for specific jobs in their community, and use these as a starting point in planning a personal budget. This activity can also be done randomly, which will ensure that a variety of careers are explored and allow for a more beneficial exchange when students share their findings.
In order not to impose specific careers or jobs on students, educators may also allow the student to choose the career or job within a sector or in relation to a specific challenge. For example, instead of drawing a "lawyer" card, the card could be "career in which you work for social justice and equity," or instead of drawing a "construction worker" card, the card could be "career in which you work to meet housing needs." This approach to career exploration allows the student to explore a variety of careers without limiting themselves.
Extensions: In order to make the loop between planning and balancing a budget, types of expenses and financial goals, the educator could develop random situations that will change, for better or worse, the student's budget planning. For example, if we go back to the sample budget items in the previous section of the guide, we see several items that could be affected by random events.
| Fixed Monthly Income | |
| Variable Monthly Income (for example, tips, gifts, other sources of income) |
|
| Fixed Monthly Expenses | |
| Housing | |
| Internet and cell phone | |
| Electricity, water, heating | |
| Transportation | |
| Food | |
| Savings | |
| Variable Monthly Expenses | |
| Hobbies and leisure | |
| Social activities | |
| Other expenses | |
When planning their monthly budget, the student would have to randomly select an event from the following list:
|
It's the birthday of someone you know. You need to add the value of their gift to your budget (other expenses). |
The cost of housing increases by 5%. |
You receive a bonus payment from your employer! You must add $500 to the variable income. |
|
You have to pay an extra $50 on your cell phone bill for exceeding your data limit! |
2% salary increase! |
Necessary purchase of tools or equipment for the job. You must add $500 to other expenses. |
|
You have made an effort to be an eco-citizen by walking to school or work. Your transportation budget allowance is $0. |
There are sales at your local grocery store, and your food allowance is reduced by 25%. |
You worked overtime! Your monthly income increased by 10%. |
The student would then be asked to explain how the event changed his or her approach to planning. For example, the student who had a pay raise might have chosen to add the surplus to savings, or increase the budget allocation to social activities. The student who had an unexpected expense might have chosen not to save that month, or to allocate less money to non-essential expenses.
This list is not exhaustive, and events could also be created by students to make them even more accessible and relevant. To make it even more random, dice could be used to determine values or percents. Some of the situations will require support in interpretation, but this type of activity also allows the student to develop social-emotional skills - specifically identifying sources of stress, stress management, and resilience.
Knowledge: Balanced Budget
A balanced budget is budget in which income is equal to or greater than expenses.
Source: The Ontario Curriculum. Mathematics, Grades 1-8 Ontario Ministry of Education, 2020.
Knowledge: Fixed and Variable Expenses
Fixed expenses occur at regular intervals (for example, weekly, monthly, or annually) and are almost identical in amount from one period to the next. Variable expenses are expenses that vary in amount from month to month and are therefore more difficult to predict accurately. They do not necessarily occur every month.
Examples
Fixed Expenses
- rent or mortgage payment;
- public services;
- insurance (vehicle, home, life, health, dental);
- debt or loan repayments;
- tuition fees.
Variable Expenses
- food and dining out;
- maintenance and repairs of the house;
- maintenance and repairs of the car;
- gasoline;
- leisure activities;
- travel;
- clothing;
- investment and entrepreneurship;
- entertainment;
- fees for extracurricular activities;
- cell phone services.
Source: translated from En avant, les maths!, 8e année, CM, Littératie financière, p. 2