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Here are a few recommended readings before getting started with this lesson.
Basic Money Concepts:
Needs vs Wants
Simple Arithmetic with Money:
Decision-Making Basics:
If I buy X, I might not afford Y)
Maya has a part-time babysitting job that pays $100 per week.
She has some regularly occurring expenses:
Maya also has savings goals:
When it comes to money and making choices about how to spend it, it is helpful to understand the difference between wants and needs.
Needs are essential things that we require to live and be healthy. They include:
These are things that we cannot do without. We need them to survive and to participate in daily activities. Wants, on the other hand, are things that we would like to have, but we can live without them. They include:
Sort the items into wants or needs. Remember: needs are essential, wants are nice to have!
Savings is money that is put aside instead of being spent right away so that you can use it later for emergencies or big goals. On the other hand, spending refers to using your money to buy things you need or want. In particular, planned spending is when you decide to spend money on wants, like a new game or concert tickets, and make sure to include it in your budget.
A budget is a plan for how to use your money wisely. It shows how much money you will get, how much you expect to spend on things you need and want, and how much you plan to save over a set time.
Emma gets $20 a week for her allowance. She needs to use $10 to pay for her school lunches. She also wants to spend $5 renting movies and $4 on snacks when she hangs out with her friends.
Emma wants a new backpack that costs $40. She plans to save $5 each week.
Emma wasn't going to be able to save enough money each week to buy all of the things she wanted for the new semester so she decided to help out her next door neighbor to earn the extra money. Now her weekly income includes:
Substitute values
Calculate quotient
Now that we've learned so much about what it means to make a budget, let's look back at Maya's situation. Remember that she has a part-time job that pays her $100 per week. She wants to make sure she uses her money wisely so that she can afford her regular expenses and meet her savings goals.
We need to know how much each of her expenses cost her on a weekly basis to help her make her budget. This is what she tells us.
Expense | Weekly Cost |
---|---|
School lunch | $25 |
Fun activities | $20 |
Miscellaneous things | $10 |
Now let's remember her savings goals!
If we want to decide how much money can be set aside for each of her goals, we need some more information about each one. Her goals need to be more specific. Let's see what she says when we ask her for some more details.