GM Lesson 010 Adjusting a Personal Budget

Learning Intentions

By the end of this lesson, students will be able to:

• Revise a budget when income or expenses change.
• Compare alternative spending choices.
• Make financially reasonable decisions using budget calculations.

Prerequisites

Students should already be able to:

• Distinguish between fixed spending and discretionary spending.
• Prepare a simple personal budget for a given income.
• Calculate total income and total expenses.
• Determine whether a budget has a surplus or deficit using:

Key Idea Summary

A personal budget is not fixed forever. Budgets need to be adjusted when income changes, expenses increase, or financial goals change.

A budget has a surplus when:

A budget has a deficit when:

To adjust a budget, we can:

• Increase income.
• Reduce fixed expenses where possible.
• Reduce discretionary spending.
• Compare different spending choices.
• Check that the revised budget is financially reasonable.

A financially reasonable budget should allow a person to pay necessary expenses first, avoid unnecessary deficits, and leave some money available for savings or unexpected costs where possible.

Direct Instruction and Worked Examples

Time Allocation

Time Allocation

Time Allocation

• Introduction, warmup and vocabulary: 5 minutes
• Direct instruction: 15 minutes
• Understanding checks: 5 minutes
• Exercises: 20 minutes
• Homework: 20 to 30 minutes outside the lesson it was taught in.

Link to original

Direct Instruction

When adjusting a budget, use the following process:

1. Identify the original income and expenses.
2. Calculate the original surplus or deficit.
3. Identify the change in income or expenses.
4. Revise the budget.
5. Recalculate the surplus or deficit.
6. Decide whether the revised budget is reasonable.
7. Compare alternative changes if more than one option is possible.

Worked Example 1: Adjusting for an Increase in Rent

Amelia earns $620 per week.

Her weekly budget is shown below.

Category	Amount
Rent	$250
Groceries	$110
Transport	$55
Phone	$25
Entertainment	$80
Savings	$50

Amelia’s rent increases by $30 per week.

Question: Adjust Amelia’s budget and determine her new surplus or deficit.

Original total expenses:

Original surplus:

New rent:

New total expenses:

New surplus:

Amelia still has a surplus of $20 per week, but her available money has decreased.

Worked Example 2: Adjusting for Reduced Income

Ben usually earns $740 per week. His weekly expenses are shown below.

Category	Amount
Rent	$310
Groceries	$130
Transport	$70
Phone and internet	$45
Sport	$60
Eating out	$85

Ben’s work hours are reduced, so his weekly income decreases by $90.

Question: Determine whether Ben needs to adjust his budget.

Original expenses:

Original surplus:

New income:

New surplus or deficit:

Ben now has a deficit of $50 per week. He needs to reduce expenses by at least $50 per week or increase income by at least $50 per week.

One possible adjustment is:

Category	Original Amount	Revised Amount
Sport	$60	$45
Eating out	$85	$50

Total reduction:

Revised expenses:

Revised surplus or deficit:

Ben’s revised budget balances, but it does not leave money for savings or unexpected costs.

Worked Example 3: Comparing Alternative Spending Choices

Chloe earns $880 per week and wants to save at least $100 per week.

Her current expenses are:

Category	Amount
Rent	$360
Groceries	$150
Transport	$80
Phone	$30
Gym	$25
Streaming services	$35
Eating out	$120

Question: Chloe is considering two options.

Option A: Cancel $25 gym membership and reduce eating out by $40.

Option B: Keep the gym, cancel $35 streaming services and reduce eating out by $50.

Which option better helps Chloe reach her savings goal?

Current total expenses:

Current surplus:

Chloe currently saves $80 per week, which is $20 less than her goal.

Option A reduction:

Option A new surplus:

Option B reduction:

Option B new surplus:

Both options meet the goal of saving at least $100 per week. Option B gives Chloe the larger surplus, so it is financially stronger. However, Option A may still be reasonable if Chloe values the streaming services less than the gym.

Understanding Checks

Check 1

A student earns $500 per week and spends $470 per week.

1. Does the student have a surplus or deficit?
2. How much is the surplus or deficit?
3. If expenses increase by $40, what is the new surplus or deficit?

Check 2

A weekly budget has a deficit of $35.

Which of the following changes would fix the deficit?

A. Reduce discretionary spending by $20

B. Increase income by $25

C. Reduce expenses by $35

D. Increase fixed expenses by $10

Check 3

Mia wants to save at least $60 per week. Her income is $690 and her expenses are $650.

1. How much is she currently saving?
2. How much more does she need to save?
3. Suggest one reasonable adjustment to her discretionary spending.

Exercises

Simple Familiar Exercises

Exercise 1

Noah earns $560 per week.

Category	Amount
Rent	$230
Food	$100
Transport	$45
Phone	$25
Entertainment	$90

1. Calculate Noah’s total expenses.
2. Calculate Noah’s surplus or deficit.
3. If his rent increases by $20, calculate his new surplus or deficit.

Exercise 2

Ava earns $720 per week and has total expenses of $680.

1. Calculate Ava’s current surplus.
2. Ava’s income decreases by $50. Calculate her new surplus or deficit.
3. How much does Ava need to reduce expenses by to avoid a deficit?

Exercise 3

Liam has a weekly deficit of $45.

For each adjustment, state whether it fixes the deficit.

1. Reduce entertainment spending by $30.
2. Increase income by $45.
3. Reduce eating out by $25 and transport by $20.
4. Increase groceries spending by $10.

Exercise 4

Sophie earns $810 per week and wants to save $100 per week. Her current expenses are $760.

1. Calculate her current savings.
2. Calculate how much more she needs to save.
3. Suggest a reduction in expenses that would allow her to meet her savings goal.

Complex Familiar Exercises

Exercise 5

Oliver’s weekly budget is shown below.

Category	Amount
Income	$930
Rent	$390
Groceries	$165
Transport	$95
Phone and internet	$55
Gym	$30
Entertainment	$110
Savings	$60

Oliver’s transport cost increases by $25 per week.

1. Calculate Oliver’s original total expenses.
2. Calculate Oliver’s original surplus or deficit.
3. Calculate Oliver’s new total expenses.
4. Calculate Oliver’s new surplus or deficit.
5. Suggest one adjustment that would keep his savings at $60 per week.

Exercise 6

Grace earns $670 per week.

Her weekly expenses are:

Category	Amount
Rent	$285
Food	$135
Transport	$60
Phone	$30
Clothing	$55
Entertainment	$95

Grace wants to have a surplus of at least $40 per week.

1. Calculate her current surplus or deficit.
2. Determine whether she meets her goal.
3. Grace can reduce clothing by $20 or entertainment by $30. Which single change is enough to meet her goal?
4. If neither single change is enough, suggest a combined adjustment.

Exercise 7

Ethan’s income changes from $780 per week to $720 per week.

His original weekly expenses are:

Category	Amount
Rent	$320
Groceries	$145
Fuel	$90
Insurance	$40
Sport	$50
Eating out	$100

1. Calculate Ethan’s original surplus or deficit.
2. Calculate Ethan’s new surplus or deficit.
3. Ethan wants a surplus of at least $30 per week. By how much must he reduce expenses?
4. Suggest which expense categories should be reduced first and explain why.

Homework Problems

Problem 1

Charlotte earns $760 per week.

Category	Amount
Rent	$330
Groceries	$145
Transport	$70
Phone	$35
Entertainment	$95
Savings	$60

1. Calculate Charlotte’s total expenses.
2. Calculate her surplus or deficit.
3. Her groceries increase by $25 per week. Calculate her new surplus or deficit.
4. Suggest one adjustment that would keep her budget balanced.

Problem 2

Marcus earns $690 per week and currently spends $665 per week.

1. Calculate his current surplus.
2. His income decreases by $40. Calculate his new surplus or deficit.
3. Marcus wants a surplus of $20 per week. How much must he reduce expenses?
4. Name two discretionary spending categories that could reasonably be reduced.

Problem 3

A student wants to save at least $75 per week.

Their income is $580 per week and their expenses are shown below.

Category	Amount
Board	$180
Food	$95
Transport	$50
Phone	$25
Clothing	$60
Entertainment	$110

1. Calculate the student’s current surplus.
2. Determine whether the savings goal is met.
3. Calculate how much expenses must be reduced to meet the goal.
4. Create a revised budget that meets the savings goal.

Problem 4

A weekly budget has:

The person wants to compare two choices.

Choice A reduces expenses by $35.

Choice B increases income by $25 and reduces expenses by $20.

1. Calculate the current surplus.
2. Calculate the new surplus for Choice A.
3. Calculate the new surplus for Choice B.
4. State which choice gives the larger surplus.
5. Explain one non-mathematical reason why the person might still choose the other option.

Next: GM Lesson 011 The Unit Cost Method