Family Sanitation - Managing Family Finances

You will learn the importance of properly managing money within the family and how to budget properly.

 

Objective:

Families will use their money wisely to reach their financial goals.

Lesson Preparation

Before the lesson find:

1. Find family financial management materials that may be available and produced locally by the government or universities.

2. Check with a local bank or loan company to find out local interest rates. This may be important in the budgeting plan.

3. Pretend money could be used to show the budgeting process, if available.

Concepts to be Taught:

Click on the magnifying glass of any image for enlargement.

1. Family financial goals can help a family obtain what is important to them.

2. Families should determine that they can pay for the things that are necessities and important for their well-being before they buy luxury items.

3. Budgeting how much to spend on each time helps families to meet their financial goals.

Introduction:

We all need to use our money wisely to be sure we are able to provide for the things that we need to live. Tell story: In the Ramirez family were five children, three boys and two girls. The parents tried to teach the children good budgeting and spending habits when they were children, such as not wasting money on candy and toys when they had more important things to spend their money on such as school books. All the children did well except the third boy, Roberto, who bought whatever he felt like and then missed out on important activities he could not afford. All the children grew up and got married. The families all tried hard to manage what little money they had well, except for Roberto and his wife who were always in financial difficulty and debt. They were continually trying to borrow from the other family members. Ask: How does this situation affect Roberto's family? How does it affect the rest of the family? There are some important principles that can help families to reach their financial goals.

Concept #1:

to them.

Figure #1

Figure #2

Figure #3

Figure #4

We all have things we need or want to spend our money for (figure #1). (There are three categories of expenses for family budgeting. They are expenses which are: Necessary, Important, and Luxury. The following discussion should help the family identify which falls into each category for them.) Ask: What are some of the things that your family wants to spend money for? Make a list of the items. Some of the items that we spend money for are necessities in our lives. In other words, we need these things to sustain our lives such as food, clothing, and shelter (figure #2). Make a list of the necessities.

Some things we want to spend our money on would be nice to have but are luxuries (figure #3). Ask: Which of the things on the list fall into the category of luxuries? Make a list of the luxuries.

There are some items that are left on the list. They may not be considered necessities, but are nevertheless important to the family such as education, transportation, and health care (figure #4). Ask: Which of the items on the list would fall into a category of "important" expenses? Make a list. The three categories of budgeting them are: Necessary, Important, and Luxury items. Every family needs to decide which of their desires falls into which category. The Necessary items need to be taken care of first, followed by the important ones, and then the luxury items if there is money left.

Learning Activity #1:

Family will complete the list they have made for themselves of the necessary, important, and luxury categories for their money.

Concept #2:

Families should determine that they can pay for the things that are necessities and important for their well-being before they buy luxury items.

Figure #5

Once the categories of expenses are determined by a family, they are ready to start on a plan on how to spend the money available (figure #5). A spending plan is called a budget. Every family will have a different budget depending upon their needs and resources. There are five basic steps to planning a budget:

1. List expenses the family has regularly such as rent, utilities, food, transportation, education, and savings.

2. Determine the family's total income from all sources. Add together the amounts earned by different family members to get the total number.

3. Decide how much to spend for each of the expenses listed. Some expenses are set costs (they stay the same) and others may change from month to month. Start with the most important expenses first. Some families budget by putting the money for each major expense into an envelope as they plan for additional expenses. It may not be wise to take money out of the house in envelopes. (Always carry money is a safe spot.) This may take time as families change their spending plan to fit their earnings.

4. Spend according to the plan.

5. Evaluate after the month is over on how well the plan worked and make any necessary adjustments.

Learning Activity #2:

Family will use the budget plan and prepare a budget for themselves. They will go through the first three steps.

Concept #3:

Budgeting how much to spend on each expense helps families to meet their financial goals.

Figure #6

Staying on a budget is often a difficult thing to do for both individuals and families. Often we will have to change old habits of spending in order to meet all the financial goals we have. Tell Story: Pedro complained that he never had enough money to buy what he needed. Pedro had the habit of buying a soda pop every day on his way home from work (figure #6). This cost him 50 cents. He bought 6 a week, which equaled $3.00 a week and multiplies over a month was $12.00. Over a year this equaled $144.00. What could Pedro do to save this money and use it for something he really needed? (Make the decision to save instead of spend the money, carry water with him so he didn't get thirsty coming home from work, etc.) Sometimes we buy luxury items first because they make us feel better or we feel like we are rewarding ourselves for hard work. At these times we may need to use self-control to keep to our budget.

Some ways to save money and budget wisely are:

Figure #7

Figure #8

Figure #9

1. Have each person in the family keep a record of that they are now spending money for. This will help with future budgeting.

2. Use good judgement in buying (figure #7). In some cases we can buy the same product less expensively by comparing prices and shopping around. Sometimes buying the cheapest item is not wise because it is poor quality and will fall apart quickly. For example, an inexpensive, thin though pretty piece of fabric may make a dress that wears out quickly. A slightly more expensive fabric may last a much longer time.

3. Families can save money by growing their own food in home gardens, learning to sew and knit family clothes, and learning skills to do other home maintenance projects (figure #8).

4. Families should talk over money matters together (figure #9). Each family member should have a chance to say what they think is important for them to have. For example, the husband may need new tools, the wife may need a sewing machine, and the children may need supplies for school. This kind of planning will help families stick to their goals.

Family Activity:

Family will start holding regular family meetings to discuss the budgeting plans. Families can choose a time, frequency, and agenda that fits their needs.

List of figures for lesson 6.6

(Click on the numbered links below to view and print full-sized figures)

1. There are many things in this world we may want to spend our money for.

2. Some things we spend money for in our lives are necessities.

3. There are many things we might want to have which are luxuries.

4. There are some expenses that are not necessities but are very important to us.

5. In order to budget, a family needs to list their expenses. To keep the budget clear, a family can write down their expenses or use envelopes to deposit money for each major expense category.

6. If we buy just one luxury item each day, the cost can add up to a large amount over a year.

7. We need to shop wisely and buy items that will be of sufficient quality to be serviceable.

8. Families can save money growing their own food, sewing, and learning other skills.

9. Families should talk over money matters together.