Topic Overview Topic Strategies and Management E4 Resources Management: Presentation of your consumption patterns by using a personal financial budget Level S3 Duration 3 lessons (40 minutes per lesson) Learning Objectives:

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Resources for the TEKLA curriculum at Junior Secondary Topic 3 Personal financial budget Strategies and Management – Extension Learning Element

Module E4 Resources Management

Topic Overview

Topic Strategies and Management

E4 Resources Management: Presentation of your consumption patterns by using a personal financial budget

Level S3

Duration 3 lessons (40 minutes per lesson)

Learning Objectives:

1. To understand the differences between needs and wants, 2. To explain the concept of personal financial budget,

3. To understand the importance of personal financial budget in considering personal consumption pattern,

4. To apply the basic principles and techniques in preparing personal budget, and 5. To develop a proper attitude towards personal finance.

Overview of Contents:

Lesson 1 Needs and Wants

Lesson 2 What is a budget?

Lesson 3 How to prepare a personal budget?

Resources:

 Topic Overview and Teaching Plan

 PowerPoint Presentation

Suggested Activities:

 Class Discussion

 Group Discussion

 In-class exercise

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Lesson 1

Theme Needs and Wants

Duration 40 minutes

Expected Learning Outcomes:

Upon completion of this lesson, students will be able to:

1. differentiate needs and wants, and

2. differentiate long-term and short-term spending.

Teaching Sequence and Time Allocation:

Activities Reference Time

Allocation Part I: Introduction

 Teacher asks students to state 10 items they want to buy/do and then write these items on the blackboard.

 Teacher asks whether they have sufficient money to make their dreams come true.

PPT #2

PPT #3 – 4

3 minutes

7 minutes

Part II: Content

 Teacher explains the concept of needs and wants. PPT #5 – 6 8 minutes

 Activity 1: Class discussion

 Students are required to classify various items into wants and needs.

 Teacher discusses the answers with students and makes conclusion.

 Teacher explains to students those “wants” items are not necessary and can be cut down when we do not have sufficient money.

PPT #7

PPT #8

5 minutes

 Teacher explains to students the meaning of long-term spending (e.g. buying of non-current assets) and short-term spending (expenses).

PPT #9 – 10 5 minutes

 Teacher asks students to identify the short-term expenses from the list of expenditure provided.

 Teacher goes through the answers with students and makes conclusion.

PPT #11

PPT #12

5 minutes

Part III: Conclusion

 Teacher concludes the lesson by reviewing the key points covered.

2 minutes

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Lesson 2

Theme What is a budget?

1. describe different types of expenses (fixed, variable and discretionary), 2. how different types of expenses affect consumption pattern, and 3. describe what is a personal financial budget.

 Teacher introduces the major types of expenses. PPT #2 2 minutes Part II: Content

 Teacher explains the definition and characteristics of different types of expenses.

 Activity 1: Group discussion

 Students are required to form into group of 3 and each group is required to give 5 examples for the assigned type of expense.

 Students are invited to present their answers.

 Teacher explains the answers to students and makes conclusion.

PPT #6

PPT #7

8 minutes

7 minutes

 Teacher explains the concept of personal financial budget and its purposes.

2 minutes

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Lesson 3

Theme How to prepare a personal budget?

1. prepare a personal financial budget,

2. perform a forecast of incomes and expenses, and 3. demonstrate a good consumption pattern.

 Teacher starts the lesson by revising the concepts of budget.

2 minutes

Part II: Content

 Teacher explains the methods to prepare a personal financial budget and difference between forecast and actual data.

 Teacher explains the methods to make a forecast of incomes and expenses.

 Teacher explains the format of a personal budget.

PPT #2 – 4

PPT #5

PPT #6 – 7

8 minutes

3 minutes

4 minutes

 Activity 1: In-class exercise

 Students are required to prepare their own personal budget and compare it with their classmates.

 Teacher wraps up by highlighting the importance of maintaining a balanced budget with inclusion of a certain amount of saving.

PPT #8 8 minutes

4 minutes

 Teacher explains a good consumption pattern. PPT #9 3 minutes

 Recall the discussion on first lesson and ask students if there are any changes for their wish.

 Ask them how they can make it. Teacher then wraps up.

PPT #10 3 minutes

2 minutes

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1

Ask students to think and list 10 items they want to buy/do.

They are free to discuss and may have different answers. Write these on the blackboard.

2

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Discuss with students and ask whether they have sufficient money to make their dreams come true.

3

Ask students how they can get sufficient cash to do so.

They may answer like by means of saving, borrowing from parents etc. This is the topic of sources of financing which will be discussed later.

Then start to ask them to think from another angle: will they buy less?

4

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Go though those items listed on a board before and see how many items will be eliminated because of not necessary!

5

Discuss with students the difference between wants and needs.

6

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Ask students to classify which items listed in the question are wants and which are needs.

7

Teacher explains to students those “wants” items are not necessary and can be cut down when we do not have sufficient cash to buy.

8

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Explain to students the meaning of long‐term spending (e.g. buying of non‐current assets) and short‐term spending (expenses).

9 10

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Ask students to classify the expenditures into short‐term and long‐term spending.

11

Students may ask how about if he bought something which will use for more than 1 year.

Teachers may require to discuss the concept of materiality. i.e. if the amount spent is relatively small, then it can be treated as an expense.

For example, a calculator may be treated as an expense for a company but probably an asset for a student!

12

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15

Explain ‘fixed expenses’ and their characteristics.

For example, the monthly rent expense is not varied to the units of goods sold.

16

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Explain ‘variable expenses’ and their characteristics.

For example, cost of goods sold are varied as according to the units of goods sold.

17

Explain ‘discretionary expenses’ and their characteristics.

For example, overseas travelling for enjoyment purpose depends on the surplus cash.

18

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Students are required to form into group of 3 and each group is required to give 5 examples for the type of expense being assigned.

19

Discuss with students whether the answers they provided can meet the characteristics of the category being classified.

20

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Explain the differences between capital budget (for capital expenditure which will last for more than 1 year in future) and operating budget (for daily expense in the next year).

21

Explain what personal budget is and how to make it a useful tool.

22

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Teacher explains the difference between forecast and actual data.

Forecast: predicted future events based on best estimate.

Actual: the result of past events.

29 30

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Teacher can recall the classification of expenses in previous lesson.

Some expenses are fixed in nature such as rent and management fee. i.e. such expenses are not affected by the income received.

However, some expenses are variable or discretionary in nature which may depend on the income received. One may plan a vacation to Europe instead of East Asia when he/she earns more income. Teacher may ask students to classify the expenses listed on the slide as:

Fixed expenses: housing related, family support, insurance Variable expenses: utilities, food, transportation, clothing, tax Discretionary expenses: entertainment

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Teacher may encourage students to think about what kind of incomes they will receive (e.g. allowance from parent, red pocket money etc.) and what kind of expenses will be incurred (e.g. text books, stationery, clothing, lunch etc.)

35 36

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Recall the discussion on first lesson and ask students if there are any changes for their wish.

Ask them how they can make it.

Conclusion: it is necessary to have a good consumption pattern so that we can have sufficient money to make necessary consumption and surplus cash to buy something we want.

37 38

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Classwork/Home Assignment P.1

Section A: Multiple Choice Questions (@1, total 10 marks)

1. The spending on buying a diamond watch is to satisfy a person’s:

A. need.

B. want.

C. habit.

D. All of the above.

Level of difficulty: *

2. Which of the following items is a need to a student?

A. Comics.

B. Jewelry.

C. Stationery.

D. Car.

3. Which of the following spending is a capital expenditure?

A. Electricity.

B. Motor car.

C. Internet service.

D. Goods for resale.

4. Which of the following is a fixed expense?

A. Insurance.

B. Eating out.

C. Medical fee.

D. Travelling.

Level of difficulty: **

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5. Which of the following is a variable expense?

A. Rent B. Stationery.

C. Transportation by school bus.

D. Overseas travel.

6. Which of the following is not the purpose of preparing a personal budget?

A. To serve as a guide.

B. To allocate resources.

C. To plan current consumptions.

D. To set a standard to control the spending.

7. Which of the following is a regular income?

A. Interest income.

B. Special bonus.

C. Dividend income.

D. Rental income.

8. Rate expense is a kind of _________ expense.

A. housing related B. utilities

C. food

D. transportation

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9. Car maintenance cost is a kind of _________ expense.

A. housing related B. utilities

C. food

D. transportation

10. Which of the following is not included in the calculation of personal budget income statement?

A. Salary.

B. Child care.

C. Vacation.

D. Investment.

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Section B: Short Questions (20 marks)

** 1. List five short-term spending for a secondary school student may incur. (5 marks)

** 2. How can a personal budget help people to plan future consumptions? (6 marks)

** 3. Mr. Wong is planning his personal budget for the next year, he has the following forecasted incomes and expenses. Help him to prepare the personal budget.

Salary: $500,000

Interest income: $8,000 Borrowing: $100,000 Insurance: $12,000 Transportation: $40,000 Rent: $144,000

Tax: $6,000 Food: $75,000 Utilities: $25,000 Computer: $12,000

(9 marks)

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Topic Overview Topic Strategies and Management E4 Resources Management: Presentation of your consumption patterns by using a personal financial budget Level S3 Duration 3 lessons (40 minutes per lesson) Learning Objectives:

Topic Overview

Lesson 1

Lesson 2

Lesson 3

Suggested Solutions