Lesson 27 — Activity 1:

The Budget


If you have $20, can you spend $25? If you can, then you will probably end up owing somebody money. Certain emergencies can arise to make this necessary, but it is not a good habit to start. Always borrowing from friends and relatives can create hard feelings, especially when they are not repaid promptly. One way to keep your friends is to plan ahead so that you have no need to borrow.

That is where a budget comes in.
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In this first activity, you will develop a budget for the week.

A budget allows you to plan how to use your money. We all need to spend money to live, and most of us have a limit to the amount of money we have available to spend. The money we bring in from our jobs is called income. The money that we need to spend to pay our bills and to live is called expenses. If we bring in more money from our income at the end of the month than we pay out in expenses, this extra money is called surplus income.

How we choose to spend the money we have is best done with the help of a budget. A budget can be for various time periods: days, weeks, months, or years. Governments and large companies sometimes have plans for years into the future. You can start with a plan for one week.


Budget Practice

Kyle has a job as a shipping clerk for a trucking firm in Edmonton. After deductions, he brings home $470 per week. Toni, his wife, just had a new baby and has not been able to go back to work yet. She receives $80 per week* for the Child Tax Credit.

Here is a list of their expenses:

  • rent and utilities = $200 per week*
  • baby food and diapers = $150 per week
  • food and household supplies = $110 per week
  • car payment = $75 per week*


*These items are received or paid for monthly. They were divided by four to determine the weekly rate.

Organize this information into a budget using a table. Your table might look like this:


Now answer the following questions based on the information you know from above as well as the table. Write your answers on a piece of paper. When you are done, click on the tab below to check your answers!


1. Which is larger, the income or the expenses?

2. Which is the largest expense?

3. There is a small surplus of income. What might they spend it on?

4. Classify these items as income or expenses:
   

  • taxes
  • car repairs
  • regular wages
  • overtime income
  • food
  • income tax


Self-check!

Try This!

Now it's your turn to organize information into a table to create a budget for the week.

Create a table with the following headings:


Complete the table by doing the following:

  1. Write the amount that you pay WEEKLY for each expense into your table (remember, if you pay an expense monthly (car payment, for example), you need to divide that amount by four to get the weekly amount). Note: If you do not pay for one of the expenses (rent, for example), you can enter the amount as zero.
  2. Total your expenses, and write that amount in the table under "Total weekly expenses."
  3. Write the amount that you earn (your wages) in the table under "Total weekly income."
  4. Is your weekly income higher than your total weekly expenses? If so, that's great! That means you have enough money to pay all of your bills. If not, you may need to look at your budget and see if you can lower some of your expenses (your weekly entertainment, for example.)


Digging Deeper!

Click on the Play button below to watch a video on budgeting for beginners.