Goal (Why?)
Since children don’t have the burden of paying bills they might not even know the basics of the family budget.  Once they understand where the money comes from and where it goes maybe they can think of ways that they can earn an income and/or can take steps to help curb household expenses.

Objective (What?)
        1.  Learn about types of income. (Where does the money come from?)
        2.  Learn about family expenses. (Where does the money go?)
        3.  Calculate how many hours it “cost” to pay for expenses and taxes.
            (What does each expense cost in hours?)
        4.  Think about ways that your family can spend less money.
            (How can we decrease the outflow of money?)

Strategies (How?)
Income - Talk to your child about the various ways individuals earn money. Explain that it’s usually inappropriate to discuss income amounts with other people.  Point out the deposit entries on your account statements.  Which methods provide income to your family?

    TYPES OF INCOME:
        �  Salary
        �  Commissions
        �  Hourly earnings
        �  Bonuses
        �  Interest Payments
        �  Rental Income
        �  Profits
        �  Capital Gains
        �  Gambling Winnings
        �  Alimony & Child Support
        �  Pension / Social Security
        �  Welfare Benefits
        �  Unemployment
        �  Other Income

Expenses - Talk about the many expenses that the typical family has.  Can the child guess what the monthly expenses of each might be?  As you pay each of your bills show the child the actual amount of the expense.  Explain the difference between a fixed expense (same each period) and variable expense (depending on the amount used).  How did child’s estimate compare with the actual expense?

    TYPICAL EXPENSES:

1)        Federal Income Tax
2)        State Income Tax
3)        Local Income Tax
4)        Property Tax
5)        Mortgage / Rent
6)        Food / Groceries
7)        Electric
8)        Water
9)        Natural Gas
10)        Phone Service
11)        Cable & Internet Service
12)        Garbage Collection
13)        Car Payments
14)        Gasoline / Diesel
15)        Car Insurance
16)        Home / Renter’s Insurance
17)        Life Insurance
18)        School Taxes
19)        Education Expenses
20)        Clothing
21)        Repairs
22)        Child Care Expenses
23)        Health Care
24)        Pet Expenses
25)        Membership Fees
26)        Retirement Savings
27)        Other Savings
28)        Vacations
29)        Gifts / Donations
30)        Other Expenses
31)        Credit Cards

Hours - Help your child look at expenses in terms of hours rather than dollars.  How many hours do you have to work to pay for things?  When calculating the number of hours needed to work to pay for each after-tax expense, use your net earned income since it is your spendable income.  When calculating the number of hours needed to pay your income tax, use your gross rate per hour rather than net.  How many hours do you have to work just to pay your income taxes?

FORMULA FOR CALCULATING HOURLY SPENDIBLE INCOME RATE:

  Total Net Pay for Period /  Total Hours Worked During the Period =  Spendable Income Rate per Hour

Reductions - Discuss ways that you can reduce the outflow of money from the family budget.  Talk with your child about the difference between wants and needs.  Can they think of other ways to decrease expenses?

  EXAMPLES OF WAYS TO REDUCE EXPENSES:
1)        Pay off credit cards and other bills whenever possible to avoid paying interest charges and late fees.
2)        Preparing meals at home usually cost less then eating out.
3)        Turn off the lights, televisions, etc. when they are not being used to save electricity.
4)        Keep window and doors shut when the heating or air conditioning is on.
5)        Perform preventive maintenance on homes, cars & other items to avoid costly repairs.
6)        Combine trips out to save time and gasoline.