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