Managing my money for young adults
Managing my money for young adults

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Managing my money for young adults

10  Budget case studies

Before the end-of-session quiz check what you’ve learned about budgeting.

Activity 7  Two monthly budgets

Allow about 30 minutes

Draw up two monthly budgets for an 18-year-old who’s still at school but who has a part-time job.

  • Draw up the budgets for the months of December and January and identify whether there’s a surplus of income over expenditure or an excess of expenditure over income.
  • Explain the differences between the two months.
  • What should be done to manage these variances in monthly budgets?
December budget
Income from part-time work £240
Pocket money £60
Other income £100
Spending on phone £45
Spending on clothing £60
Spending on socialising £80
Spending on presents £120
January budget
Income from part-time work £68
Pocket money £60
Other income £0
Spending on phone £45
Spending on clothing £40
Spending on socialising £60
Spending on presents £10
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December budget

Monthly income £ Monthly expenditure £
Income from work 240 Phone 45
Pocket money 60 Clothing 60
Other income 100 Socialising 80
    Presents 120
Total 400 Total 305
Surplus income 95    

January budget

Monthly income £ Monthly expenditure £
Income from work 68 Phone 45
Pocket money 60 Clothing 40
Other income 0 Socialising 60
    Presents 10
Total 128 Total 155
    Excess spending over income 27

December is clearly a month that sees more income generated and more spending too than in November.

This is to be expected. Schools are closed for the Christmas and New Year holiday for part of the month, and there’s an extra demand for labour because of the season. There’s greater potential to earn income from part-time employment. Income might also come in if Christmas presents are given in the form of cash from relatives.

On the other hand spending is likely to be higher too. You might buy Christmas presents and then there’s the costs of socialising during the festive season.

But despite these additional costs there’s still a surplus of income over expenditure for the month – caused mainly by the high part-time earnings during the holiday period.

The different outcomes for December and January (an excess of income over spending in December and the reverse in January) makes it clear that finances should be managed with a longer time frame in mind than just a single month.

Clearly the excess of income in December can be put into a savings account and then these funds can be used to subsidise those months where there’s a shortfall of income relative to spending.

MMMYA_1

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