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Creating a budget can be daunting, but it is well worth it.
Benefits of Budgeting – Age 14-16
The closer children get to leaving school, the more important it is that they know how to handle money. This is a topic looked at often in KS4 PSHE lessons. In this quiz, written for students in years 10 and 11, we look at how to budget effectively, and the manifold benefits of saving.
Money is an important aspect of our lives. We need it to support ourselves, to save, and to spend. So, being able to manage our money is vital. We need to know how much we have coming in, how much going out, and what is left over for us to spend or save. This is called “budgeting”.
In this quiz we look at how to make a budget. We also show you how important it is to save and avoid getting into debt.
1.
Which of the following expenses is not an essential one?
Rental payments or mortgage for your home
Gym membership payments
Utility bills (gas / water / electricity etc.)
Maintenance for your car (petrol / tax / repairs)
The first priority when you make a budget is to cover the cost of essential payments. Paying our rent or mortgage is the most important, followed by utility bills. If you need a car to get to work then that is an essential payment too. Gym membership is a luxury and not essential
2.
Which of the following is not a source of income?
Wages
Interest on loan
Benefits
Interest on savings
If you have savings in a savings account of some kind then the bank will pay you interest on the money you have essentially loaned to them. Yet another reason why saving is a much better option than borrowing
3.
If we need a loan then we have to pay back more than we borrow. A loan of £10,000 over five years would typically cost us how much extra money?
About £500
About £1,000
About £2,000
About £5,000
The amount of interest varies from company to company but a loan of £10,000 over five years will cost roughly £12,000 to pay off. You can see why saving money is better than borrowing it!
4.
After you have made a budget, how often should you revisit and if necessary update it?
It depends
Every week
Every month
Every year
The cost of things changes quite often due to inflation and other factors. It is a good idea to check your budget every three or four times you get paid. If you are paid weekly then once per month should do. If you are paid monthly then once every three or four months
5.
Which of these is a benefit of saving some of your income regularly?
You will have money to cover the cost of any emergencies
It helps to prepare for your retirement
It helps you to get a mortgage
All of the above
The benefits of having savings are many. We all face sudden emergencies, like car repairs for example. If we have no savings then that usually means we have to get a loan – something you want to avoid.
Mortgages also require a deposit so the more money you can save before you apply for one, the better.
In addition, having money set aside will be a great help when you come to retire. Yes, I know it is a long way off, but it’s never too early to start saving
Mortgages also require a deposit so the more money you can save before you apply for one, the better.
In addition, having money set aside will be a great help when you come to retire. Yes, I know it is a long way off, but it’s never too early to start saving
6.
To work out a budget, you need to add up all your income and then remove what?
Your savings
Your tax
Your bills
Your expenses
All the money we take from our income is called our expenses. The money you have left over after you have taken your expenses from your income is called “disposable income”. This is what we use to either save or treat ourselves
7.
Before calculating a budget for yourself, you should gather bank statements, wage slips and bills from the last…
Few days
Few weeks
Few months
Few years
Expenses can vary from month to month so a record of your expenses and income for a period of at least three months is recommended. A few days or weeks is not enough, while records from a few years ago will be out of date
8.
Janine has £300 income per week. Her rent is £150, her bills £50, her food costs £70 and her weekly night out costs £50. Which of these needs to be cut back?
Her night out
Her food
Her rent
Her bills
Food, rent and bills are all essential payments. The only luxury on this list is Janine’s night out. It is a shame, but when we need to save money it is the luxuries we have to cut back on, not the essential payments
9.
If your essential monthly expenditure is £800, what will your disposable income be if your monthly hours, paid at £10.50 an hour, drop from 120 to 80?
£40
£120
£240
£460
A drop in hours can have a huge effect on your finances. In this case disposable income has gone down from £460 to a mere £40. If this happens to you it is essential that you revisit your budget
10.
Debt is bad and saving is good. If you owe money which of these is the best option?
Take out a loan so that you can pay off your debt
Pay off the debt first then start saving
Start saving so that you can pay off the debt
All of the above
Taking out a loan to pay off another is just getting into more debt. And, good as savings are, they are of little use if you owe money.
Aim to pay off all your debts before you start saving. That way you avoid having to pay interest
Aim to pay off all your debts before you start saving. That way you avoid having to pay interest
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