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(8) Making a Budget for the Real World

Students will learn about how to make a budget and how to stay out of debt.

TV/VCR, copies of classified ads for apartments, grocery and clothing advertisements.

Video clip:
Start video after hearing: “How much do you guys figure we spend on our clothes? This is a very fine Italian tie here. How much are you going to spend on this tie?” Stop video after hearing: “I don’t want them to grow up and end up with a lot of debt like I’m trying to get out of right now.”

The average teen in the U.S. spends $3,200 per year. Eleven percent of teenagers own their own credit cards and 40 percent use their parents’ cards. A recent survey found 80% of Americans don’t understand basic financial principles. Arguments about money play a major role in 90% of all divorce cases.

Ask students:

1. Where does your money come from now?

2. What do you spend your money on, and how will it be different when you’re living on your own?

3. When do you disagree with your parents about money?

Split the class into two groups--half the students have budgets of $2,000 a month to live on, and the other half must live on $1,000 a month. Use the classified ads and newspaper advertisements as resources to determine the current costs of renting an apartment, buying groceries, etc. Ask students to work with a partner who makes the same amount of money to make a monthly budget using the following categories:

* Transportation (Bus or car? If a car, then account for the cost of the vehicle, gas, insurance and maintenance.)
* Food
* Clothing
* Miscellaneous (haircuts, cosmetics, soap)
* Electricity
* Rent
* Entertainment

Ask students to share their budgets with the class. Ask studetns with $1000/month budgets to present their budgets first.


(a) What is “reasonable” and what is not reasonable to pay for rent, transportation, clothing, entertainment, etc.

(b) What items did you budget too much for? What things did you under budget for?

(c) Did you feel like you had enough money to work with?

(d) What are some ways to save money?

(e) Do you want a credit card ? What are the benefits of credit ? What are the problems? For a budgeting activity centered around using credit cards, see

(f) What do you think is the single largest source of debt for teens?

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