Budgeting Basics Name: Subject: Semester: Todd McLauchlin Personal Finance 30 Winter 2014 Date: Grade: Lesson Length:

TBD 12 60 min

Content Identification: In today's class, we will cover some basics of budgeting, which can be found at the end of this document and include, budget, income, expense, fixed expense, flexible expense, discretionary expense, gross income, income tax, deductions, taxable income and net income. While there are a number of terms to cover in this class, these concepts are critical to understanding budgets and need to be introduced early. These topics will be ones that will be returned to regularly and as such are available to the students at: http://goo.gl/4U7PAu Once the students have been introduced to these concepts, they will take this knowledge, coupled with the prior knowledge and any additional research they want to conduct, to create a concept map on budgeting. This concept map will be created using Mindomo and the students will work in pairs, albeit at separate computers, to create the map. The pairs allow the students to share and build on each other's ideas, but still contribute individually to the work. I will stress that I want each person to contribute ideas to the concept map. I created a video, which is linked on the student page, on how to use Mindomo, for those that are not clear after the in-class explanation. This map will take the remainder of the class time. Indicators (Assessment): Outcomes (Objectives): a. Identify and describe the key terminology associated with budgeting such as assets, PF(L) 5-Demonstrate understanding of personal budgets and liabilities. budgets and their importance for financial b. Explore the different types of expenses such as planning. fixed, flexible and discretionary. The students will be required to incorporate the new terms into their mind maps, as such; the mind map will serve as a formative assessment of the students' ability to explain these terms. The mind map will also further inform my lessons as it will illustrate what the students view as relevant to include (and exclude) from the budget. Common Essential Learnings: Technological Literacy Critical and Creative Thinking Cross-Curricular Competencies: Developing Literacies Developing Thinking Prerequisite Learning: No prerequisite learning Equipment/Materials: The budget terms to be discussed an explained in class, computer/internet access and Mindomo. Set: (10 min) 1) I will briefly refer to the exit slips from the previous class, discussing themes and topics that arose from the exit slips. I will indicate how the most commonly reoccurring topics will be discussed this semester. I may also need to respond to some students directly, depending on the nature of the exit slips.

Development: (50 min) 1) We will spend time covering the basic terminology of budgeting. These terms will be available to the students on the webpage; however, they will need to make use of the terms immediately in the concept map. I will need to stop and invite the students to explain the concepts to me as we cover them. (20-25 min) 2) The students will be making a mind map of the concepts surrounding budgeting, as well as, what is included on a budget. The students will be directed to the class website after the explanation is done, where the instructions will be available to re-read and the terms that we covered are available for reference. 3) Before the students create a mind map, I will need to show them how to use Mindomo. I will show them the basics of creating a mind map and sharing it with a peer for collaboration. There will also be a video on the course website for reference. (10 min) 4) Finally, the students will be provided time to create their concept map. This map will need to include all the terms we discussed in today's class, as well as, everything they already know about budgets. They are free to access additional content online. (15-20 min) Closure: (2 min) 1) To close, I will inform the students that we will be building upon this knowledge in the next class, and I will show them the steps to budgeting and how I define a budget. Basics of Budgeting Terms: Budget: An estimate of expected income and expenses for a future period of time. Income: Money received during a period of time from wages, interest, and other sources. Expenses: Money spent during a period of time to pay for goods or services. Types of Expenses: Fixed Expenses: These expenses occur regularly and dont change from month to month. Examples of fixed expenses are rent and car payments. Flexible Expenses: Like fixed expenses, flexible expenses occur on a regular basis. The difference is that with flexible expenses, you have some control over how much you spend. Examples of flexible expenses include food and gasoline. Discretionary Expenses: This is money that you choose to spend like money for movies or having pizza with friends. It also includes the money that you save. Income: Gross Income: Your total personal income before taking taxes or deductions into account. This can be salary or total of your hourly wage. Income Tax: A tax is imposed on your income generated through employment, by the government. Under the law, both businesses and individuals must file an income tax return each year to determine whether they owe any taxes or are eligible for a tax refund. Income tax will be covered in greater detail in the coming units. Taxable income is used to calculate your income tax and calculated after deductions and credits. Deductions: These are expenses that arise in the period and are incurred by a taxpayer during the performance of the job. Tax deductions are removed from gross income and as such lower your taxexpense liability. Taxable Income: Your taxable income can be thought of as your gross income less any deductions, exemptions or other adjustments that are allowable in that tax year. Net Income: Your income after deductions, credits and taxes are factored into gross income. Deductions and credits are subtracted from gross income to arrive at taxable income, which is used to calculate income tax. Net income is income tax subtracted from taxable income.