Topic 3: Money – keeping track

Making Cents » Budgeting: Where does our money come from?
» Budgeting: Where our money goes
» Budgeting: Balancing act
» Budget pressure points and priorities
» Setting priorities
» Let's talk about money at home
» Where your money comes from
» Needs not wants
» Value for money
» Budgeting and spending
» Budget pressure points and priorities

This section explores ways to gain better control over your money and different options for budgeting. It is also useful to identify your budget pressure points and to look at ways to talk about money with your children. This section will help you to explore that by looking at:

Budgeting: Where our money comes from
Budgeting: Where our money goes
Budgeting: The balancing act
Budget pressure points and priorities
Talking about money at home.

For more information see useful websites plus:
Me and my Money booklet, Child Support Agency: www.csa.gov.au
Electricity and Water Ombudsmen: www.ewon.com.au
Lay-bys/Shopping and Refunds: www.fairtrading.nsw.gov.au

Budgeting: where does our money come from?

If you want to be more in control of your money, the first thing you need is information. One such piece of information is about money coming in each fortnight or month. Where does it come from? How do you receive it - is it cash or is it paid direct into an account? What are all your possible sources of income?

Look at the [where our money comes from] sheet. Fill in the sections that are relevant to you and see if there are any major categories that have been left out.

» Use a calculator. Write things down and add them up or you can use the budget calculator on the MakingCents website.
Now look at what is a budget? if you need more information or ideas.

Budgeting: where our money goes?
Another piece of information you need to know is where your money goes. So what are the main things you spend your money on?

Use where our money goes and fill in the blank spaces on the sheet that are relevant to you. Is there any major category that has been left out?

» Write things down and add them up or you can use the budget calculator on the MakingCents website.

What the forms do is help us to find out what happens with our money- what comes in and, what goes out - this is what budgeting is about. The idea is to begin working these things out and doing them on a regular basis.

It may be weekly, each fortnight or once a month. Whatever you do, try it out, do a budget, track your income and spending and then look at how you did.

Remember it is important to work out and review your budget regularly. It becomes much easier once you have worked it out a few times.

Budgeting: balancing act
What are some of things we can do to make sure we have some money leftover at the end of a fortnight - some money for going out and having fun with the children, some money for a special occasion like a holiday or birthday?

» Find yourself a note pad and write down under two headings Rainy Day Money / Money for Going Out. Write down some of the things you could do to save for these things from the budget. Use the rainy day money prompt sheet to help you.

Work with your family/partner to do your own budget and to review it regularly.

Budget pressure points and priorities
We can all blow a budget in one transaction and we have certain buying habits that might take a while to break. You most likely have beliefs and sayings about money that still challenge you and will continue to challenge you when you are trying to save or work to a budget. You may not have reviewed or thought about what you really value which is covered in topic 2. Another way to help us better manage our money, is to think about our budget pressure points. Where do you think your budget pressure points are and what about other people in your family? What are the things that are most likely to blow your family budget?

» Write these down somewhere or discuss these with someone who is also part of your budgeting review.

Use budget pressure points and priorities it lists: bills, credit card, Christmas/birthdays, school, family/friends/partner debt, fines, car rego and insurance, car breakdowns and loans.

» You may be able to discuss or highlight the ones you can identify. Add some of your own if there are any gaps.

Setting priorities
Thinking about your own budget and your budget pressure points, what are your main priorities? What are the main things you try to look after with your money?

» Work out your own priority list - what are the most important things to look after first? Try to make sure you stick to your priorities.

Think about your budget pressure points and once you know what they are, try to put money aside to cover them.

What did you learn or find out about your own priorities from this exercise?

Let's talk about money at home
Do you think it is important to talk to your children about money at home? What are some of the good ways to start helping our children to deal with money and develop a better control in their dealings with money? Is talking about money at home something you usually do?

Do you think people have some familiar spending patterns? Can we name some of them?
How do these patterns develop?
How would having a budget help deal with this?
Is your dominant spending pattern a positive one for you? (Collect some possible examples of different spending patterns).
If not, what would help you to think about changing it?
Why is budgeting seen as a boring chore rather than a way to gain more control over your finances?
What are the benefits that can be gained from having a budget?
Whose interests are being served by encouraging particular spending patterns? What role does advertising play?

If you are reading about this topic you may need to either do this more often, or have a go at doing this for the first time. You may want to talk to your children, partner or with the whole family at the same time. If you find it hard to raise the topic of money you could use [Let's talk about money at home] to help you. The other way to do it is to take a story from the newspaper, or a story you might have heard recently from friends.

Talk to other parents at school and discuss what they say to their children about money, and how they help them save money.
Talk about where your money comes from and try and make money more visible by letting them handle small cash amounts.
Needs not wants: Talk about what the children want and then what they think they really need. Challenge what they say they want - discuss the advertising they see, and discuss the claims that advertisers make, question what they are really being sold.
Talk about ways to save for what your children really need by:
» Planning ahead,
» Putting money aside each week/ each payday and starting their own savings account,
» Lay-by things that children want,
» Matching what they save, for something they really want.

If they buy something from the canteen at school, ask them to keep the change - even if its 50cents. Show them how 50cents each week can add up to quite a lot over a year (about $25.00).
Helping others: Talk about helping others with money or support (could be relatives or friends or a fundraiser at school). Sometimes we make sacrifices to help others, tell them about a situation where you have done this for someone, someone has done it for you, or you have seen or heard about other people's experiences.
Use the celebration planner as a guide to work with your child (usually older than 7yrs) on planning a birthday party. This will help them to think about the costs of the party and is a helpful numeracy activity.

This birthday party planner has a set number of guests and budget limit. You can simply adapt the content and amounts in line with your own budget and food choices.

Where your money comes from
MakingCents in school encourages children to identify and discuss different types of income. It explores with children the concepts of how money comes into a home and its limitations. This helps children to appreciate that money needs to be saved in a bank account or ‘borrowed' on a credit card. Either way, the family must have money to pay for things they need or want.

When families decide what their income has to pay for, the family's needs have to come before what people in that family want.

Talk about where your money comes from and, whenever you can try and make money more visible.

Needs not wants
Children have a great deal of difficulty determining the difference between needs and wants, particularly as they are influenced by advertising.

Parents should discuss with their children what is meant by needs and wants for their family. In MakingCents students are asked to rank, in order of importance, different needs and wants.

What is a need? (something we must have to survive)
What is a want? (what we would like to make life more comfortable)

What needs do we pay for? (e.g. electricity, food, clothing)
What needs and wants do not need to be paid for? (e.g. love, friendship)
How do families make decisions about what they need and want?
What are some examples of wants

You will be aware as a parent of the difference between a need and a want but you may still be tempted too often to go into the ‘want' mode. Perhaps when you can't really afford it, or when you would rather save for a special holiday, or when you want to bury your head in the sand, when the item you need seems dull and the want item appears to be more exciting - if you are at least aware of these times, you may be able to ‘catch yourself' and be more conscious of the decisions you are making.

Value for Money
In Using Money for Year 2, students are asked to decide what to buy in an imagined situation with $20 pocket money that has been saved over time. It has taken 5 to 10 weeks to save $20 and students usually have difficulty deciding what to purchase as their saved money has greater value to them than if they were just given the same amount. Once children understand that they are going to spend their own money, which they have saved or earned, they become more careful and face the decision more reluctantly. This is how they begin to understand ‘value' for money and parents can try to equate this with how they have to make similar choices with the money they earn or receive.
Budgeting and Spending
Years 3 and 4, students aged 9 and 10 are asked to evaluate the ‘value for money' of some expensive joggers purchased as a birthday gift on credit, where the cost of using credit is calculated in the purchase price. Students decide that using credit is not value for money unless the item has been significantly reduced in price. Students consider that the joggers will be worn out/grown out of before they have actually been paid for. Students discuss the consequences of credit and realise that people should not spend money they don't have or can't afford, even if it is for a birthday present.
Budget Pressure Points and Priorities
This is an activity you might want to do with your child. The celebration planner lessons in school introduce students to the concept of planning how to use a set amount of money. You could set an amount of money and plan for something like a birthday party, or a visit out, or something bigger like a holiday.

The MakingCents lesson on saving pocket money explores the ways of saving just a small amount of money each week, and how a small amount of money can be put aside for future needs and some saved for a larger purchase. Students are given $6 as weekly pocket money to distribute between saving for a rainy day, some to spend and some to save towards an item worth $20. You could use talking about money at home: saving or saving for a rainy day to help you with some ideas .

Planning, budgeting and sticking to a plan is difficult - for most of us these days it is a balancing act. How can we keep a balance between how much comes in and how much we spend?