NGPF Case Study

Budgeting
Spanish version
Virtual Adaptation Ideas

Case Study Summary Jump$tart Standards

Spending & Saving
Description: In this Case Study,
● 1a: Use a plan to manage spending and achieve financial goals
students learn the basics of budgeting,
● 1d: Investigate changes in personal spending behavior that contribute to
from setting priorities, creating a
wealth building
savings goal, tracking spending and
learning about tradeoffs required to
Employment & Income
achieve financial goals. They take on
● 3c: Differentiate between gross, net and taxable income
the role of a friend providing financial
advice to a friend and learn to develop
Financial Decision Making
various options and strategies to
● 8b: Create a cash flow statement to illustrate cash inflows and outflows
achieve a budgeting goal.
for a specific period
Internet Usage: None

Spreadsheet Skills: None

How Do I Budget?
All of Sharon’s friends know who to turn to if they have money questions. Sharon attributes her financial savvy to the
summer jobs she has held over the past four years. These jobs helped her save a few thousand dollars for college to
minimize her student loans. Her friend, Alana, approaches her the summer before their Senior year of high school,
confessing she has a whopping $56.47 saved for college even after working part-time jobs for the past three years! Alana
asks Sharon what she could do to manage her money more effectively. Sharon’s answer is one word - budget.

Sharon asks Alana to describe her goals and current spending habits. Alana responds in the following way:

“College costs a lot more than I thought, and my parents expect me to pay for my living expenses on campus.
Those are going to be around $3,000 per year! I am used to working a part-time job and going to school, but I'm
not sure I can handle both anymore. Budgeting seems like a great idea, but where do I start?”

Answer This:
1. Alana only has $56.47 saved for college. Brainstorm possible reasons why she has only managed to save this
amount.

Because she spent her money on things that were not needed but things that she wanted.

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 2. What do you think Alana’s goals should be?

Her should be to 20% of her saving so she can make enough money for college

3. What are a few ways that Alana can get a better understanding of her spending patterns?

50-20-30 is a good way to think about things when it comes to spending.

Sharon develops a basic plan for Alana to track every dollar she spends over the course of a month. Alana collects all her
receipts in a shoebox and reviews them with Sharon at the end of the month:
● Coffee: 10 lattes @ $4 each
● Movies: 3 movies @ 10 each
● Food: 4 meals with friends @ $12 each; 20 snacks/energy drinks @$3 each
● Clothes: 3 trips to the mall with friends @ $30 per trip
● Car insurance: Parents make her pay $70/month toward policy in exchange for driving family car
● Gas for car: 2 fill-ups @ $35 each
● Cell phone: Parents expect her to pay $36/month toward family plan
● Shoes: 1 pair @ $60

To help make sense of all of this information, Sharon asks Alana to organize the information by using the budget
template provided below. In the category column, she will list all of her various expenses. She will then make a
judgment call about whether each expense is a Want or a Need. In the Monthly Cost column, she will total up the cost
for each of the expenses. In the last column, she will calculate how much that item is as a percentage of her total costs.
This should help her determine where she spent most of her money in the past month.

4. Complete this chart with the information provided above:

Category Want/Need Monthly Cost %age of Total
Costs

Coffee want 40 8.43

Movies want 30 6.32

Food need 108 22.78

Clothes want 60 12.65

Car Insurance need 70 14.76

Gas need 70 14.76

Cell phone bill need 36 7.59

Shoes need 60 12.65

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 TOTAL COSTS 474

Alana’s reaction after completing this process is the following:

“Wait a second, Sharon! I think my boss is ripping me off! I work 15 hours a week, on average, at $11/hour.
According to my receipts above, I’m spending much less per month than I’m earning, but, as we’ve already
established, I’ve only got $56 saved up from 3 years of working. What gives? How do I file a complaint? How do I
get my money back? Wait until I report this boss of mine! I’m putting this on social media!”

Sharon can tell that Alana is angry, but she’s pretty sure her boss isn’t stealing money from her.

Answer This:
5. Do some quick math to compare how much Alana should be making per month and to compare it to how
much she’s spending to determine why Alana’s concerned.

6. Explain to Alana why she might not want to blast her boss on social media just yet.

She need to take into consideration that maybe she is spending too much.

Once Sharon lends some clarity on Alana’s pay, she feels slightly better, but she’s still really worried about her initial
problem:

“This is going to be extremely difficult for me to cut anything. I mean, I’m working hard, and think I deserve to
enjoy the money that I earn. To save that $3,000 for college, I basically need to work an extra 25 hours per
month. It’s my senior year of high school! I need to focus on my grades and apply to college. I am so confused!”

Sharon thinks back to where their conversation started last month and how lost Alana seemed. She hoped that having
Alana prioritize her goals and review her spending would help her gain some necessary perspective, but Sharon realizes
Alana is at a dead-end, so her next idea is to outline a few options for Alana so she can choose a solution that will work
best for her.

Answer This:
7. What 2-3 options would you outline for Alana to help her achieve her goals? Be ready to discuss with her the
pros/cons of working more versus finding other ways to adjust her budget. Be specific with your
recommendations, highlighting specific costs or income sources.
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She need to set a time frame, choose a weekly, monthly goal or annual saving target that put Alana on track for her
goals. She could also use the 50-20-30 method, that mean the she uses 50% of her money on essentials, 20% on
saving, and 30% on things that she wants. Or another method is zero based budgeting, this where you save everything
of money that she earns.

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