ARTICLE: What Is a Budget? Now that you've had a chance to see the challenges of balancing

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ARTICLE: What Is a Budget? Now that you've had a chance to see the challenges of balancing all of the things that you wanted to do for Enzo with the needs of day to day life, let's get back to basics and consider the reasons that you would want to make a budget. Why is budgeting so important to financial success? Read the short article about the purpose of a budget. Then, answer the questions. 1. In your own words, explain why budgeting is important. Be sure to reference at least one of the reasons from the article. 2. Have you ever tracked your expenses? What benefit do you think doing this might have in your personal life? VIDEO: Gross Pay vs. Net Pay: What's the Difference? A vital part of making a budget is understanding how much money you have available to budget. You might think that's as simple as multiplying your hourly wage by your total hours worked-but that's not the case. Watch this video about the difference between gross and net pay. Then, answer the questions. 1. When you are creating a budget, should you use your gross pay or net pay? Explain your reasoning. www.ngpf.org Last updated: 9/6/22 1

VIDEO: Needs vs. Wants The next thing you'll need to do when creating a budget is to look at your expenses and figure out which ones are needs and which ones are wants. Watch this video to learn about the difference between needs and wants. Then, answer the questions. 1. Carly makes the following statement: "Everyone should have the same list of needs." Do you agree with this statement? Why or why not? 2. Describe one example of something that might be a need for you but a want for someone else. DO IT ACTIVITY: COMPARE: Needs vs. Wants It's time to think critically about your own Needs vs Wants. Follow the directions on the worksheet to complete this activity. Although online resources and financial gurus will tell you that it's pretty clear cut for what qualifies as a need versus a want, in real life it's often not that clear. For example, if you decide to live in Cleveland while your family lives in Phoenix and visiting them is a priority for you, then you might consider 4 flights a year a necessity. On the other hand, your extreme love of scuba diving might make 4 flights a year to Hawaii or Florida seem like a need, when it's possibly more of a want. Part I: Assess Your Values Assuming that your fundamental needs of housing, clothing, and food have been met and you already have a savings plan in place, your budget may allow you to spend on a few extras. 1. Review the list below, putting a: 1 next to those that are needs for you, a 2 next to high priority wants, and a 3 next to low priority wants. You can leave some blank if they don't fit into your lifestyle at all Fill in the empty boxes with items you value that we haven't included www.ngpf.org Last updated: 9/6/22 2

# ITEM Trendy clothing Non-essential beauty/hygiene or grooming items/services Subscriptions (Netflix, Hulu, Spotify, etc) Ride-sharing or mobility apps (Uber, Lyft, Bird, Jump) Vacation/travel Electronics (video games, phones, etc.) Out-of-home entertainment (amusement parks, movies, bowling, etc) Contributing to family income / Giving money to family # ITEM Personal hobbies (membership fees, equipment, uniforms, clubs or teams, etc) Professional expenses (employment resources, online course subscriptions, membership fees, conference attendance, etc) Holiday and other gift giving Charitable or religious donations Transportation costs (maintenance, car payments, insurance, public transportation) Cell phone plan Dining out Gym membership Part II: Plan Your Discretionary Spending 2. Let's pretend you have roughly $900 per month to divide among the categories above. Reflect on the priorities you've set above, and create a budget for the needs and wants you'd like to be able to fulfill each month. ITEM AMOUNT YOU'LL SPEND TOTAL $900 www.ngpf.org Last updated: 9/6/22 3

Using your "wants" budget above, answer these questions: 3. Which of those items would be easiest to give up, if your life circumstances forced you to? 4. Which of those items would be hardest to give up? Why? 5. How do your values inform your spending decisions in this category? ACTIVITY: Money Magic Creating and maintaining a budget is a key step of being financially secure. It can be challenging to come up with a plan that balances your needs and wants while also saving for future life events. Money Magic gives you the opportunity to make some of these decisions. Play Money Magic and help Enzo budget his way to Vegas! Part I: Play Money Magic 1. Go to www.playmoneymagic.com. Part II: Reflection Questions 2. Describe your budgeting process and how you chose to split the money among the different categories. How did that process evolve as you became more experienced playing the game? 3. Would you consider your budgeting strategy in this game a success? Why or why not? 4. What are three takeaways you learned from playing Money Magic that will help you when you create your own budgets in the future? Be specific.