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8.4
Budgeting
P
urpose
The role this topic plays in quantitative reasoning
Budgeting includes creating both plans for the short-term (annual budgets ) and for long-term (financial
planning). In order to live within your means, increase assets, decrease debt, and have money for the
things that are important to you and your family, budgeting is an important step. The ability to put
together a budget, stick to it, balance a checking account, and make wise decisions about saving and
spending are crucial life skills. It doesn’t matter if you are struggling to make ends meet or earning a
6-figure salary. You need to know and plan where your money is going if you want to be in control of
your financial situation.
(Note that for this activity you will need a calculator, recent bills, paystubs, checkbook, credit card
statements. The bills, paystubs, checkbook, and statements may be hypothetical ones.)
L
earning Goals
What you should learn while completing this activity
1. Know what goes into a budget.
2. Determine appropriate categories and subcategories to include in a budget.
3. Determine percents of income for each category in a budget.
4. Understand the similarities and differences between a family budget and one for an organization.
D
iscovery
Finding out for yourself
As you look at the websites available on the companion website, be aware of the important things to
include in a family budget. Will they be the same for every family? What categories would be the same
in every budget? What items might vary? Would it be better to start with a list of average spending
nationally or track your own spending to create the percentages for each budget item from what you
already spend?
W
hat Do You Already Know?
Tapping into your existing knowledge
1. Why is it important to balance your checkbook every month? (If you don’t know how to balance a
checkbook, check the companion website.)
2. Why is it important for families and organizations to create a budget?
3. What might an emergency fund be used for?
4. What items should be included in a budget?