New Economy Adaptation - CREATE: A Salary-Based Budget
Last week we shared the month to month income swing reality for more than 1 in 3 American households with a few ideas for appropriately modifying our companion handout to Spent. This week we are going to share how you can help students understand this new reality with a few simple changes to CREATE: A Salary-Based Budget. What we’ve suggested can be done in person or in a remote teaching and learning environment.
There are a number of ways you can illustrate to the students how significant income volatility is, here is one way to do it in three easy steps:
- After students are finished building their own budget, display the interactive Wheel Decide from below.
- Explain to the students that you are going to spin the wheel to determine the income change they will experience for that month. The wheel includes income change from -35% to +35%. You can do this as a group, or for individual students. And if at all possible, do it for multiple rounds.
- Have students record how each income change will impact their budget. After you are finished, facilitate a conversation using a Nearpod collaborative board or discuss as a class. Here are some prompts to consider:
- What are the pitfalls of managing wild income swings and high fixed monthly expenses, such as significant monthly rent or auto loan payments?
- Why could wild swings in your income make it harder to handle significant expense shocks?
- What are examples of saving choices you can make to manage significant income swings?
- What are examples of spending choices you can make to manage significant income swings?
BONUS: Do you teach Math? If so, check out our lesson MATH: Percent Change in US Household Debt.
Resources to learn more about income volatility:
- Aspen Institute INCOME VOLATILITY: Why It Destabilizes Working Families and How Philanthropy Can Make a Difference
- PEW: How Income Volatility Interacts With American Families’ Financial Security
- Tax Policy Center Income Volatility: New Research Results with Implications for Income Tax Filing and Liabilities
- NGPF Podcast: Tim Talks to Financial Diaries Co-Author Rachel Schneider
About the Author
Making a difference in the lives of students through financial capability is Brian’s greatest passion. He comes to NGPF after fifteen years of public school teaching where he was the ‘11 Ohio Department of Education recipient of a Milken National Educator Award, the CEE Forbes Award winner, and a Money Magazine/CNN "Money Hero". He served on the working group for President Obama's Advisory Council on Financial Capability. He has private school experience as a Trustee for the Cincinnati Country Day School and was a past Ohio Jump$tart President. Brian holds a BBA and M.Ed. When Brian isn’t working alongside his NGPF teammates he is likely spending time with his wife, three children, and dog; hiking, or watching Ohio State football.
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