Section 4: Create a Budget

Learning Outcome

2.13 apply financial literacy skills in the preparation and evaluation of a budget for independent living

Linking Learning Outcomes


In this section students will gain an understanding of budgeting for individuals and how to prepare and evaluate a budget for independent living.

Prior Learning

Students should have an understanding of the difference between needs and wants (see Section 1), the different forms of resources available to them as individuals and to a household (see Section 2) and how individuals and households spend their income (see Section 3).

Key Learning

  • What is a budget?
  • Identify ways of budgeting
  • Understand why budgeting is important
  • Explore the value of budgeting for independent living
  • Prepare a budget including format and layout
  • Evaluate a budget

What is a budget?

Discuss with the class their understanding of the term ‘budget’.

A budget is simply a plan of expected future income and expenditure and making a budget can help us to get what we need and want in life.

You could begin by asking students if they have ever heard this word before and if so in what context (e.g. government budget, household budget etc.).

Budgeting can be done on a weekly or monthly basis and sometimes may be an activity that people carry out ahead of a special event e.g. a holiday, a family event etc. Ask if anyone in the class ever sat down and came up with a plan about how to save or spend their money, e.g. to buy Christmas presents or for a holiday?

Activity 1: What is a budget?

In this activity students will use a visual verbal square to explore their knowledge of what is a budget.



  1. Explain to the class that they are going to do an activity where they will think about and discuss their understanding of the word ‘budget’.
  2. Distribute one of the worksheets below to each student and invite them to complete it individually. Depending on the class you may decide to do the first part of the worksheet (What does the word ‘budget’ mean?) as a whole class activity.  You can encourage students to use free digital learning technology and apps here to gather and display information.
  3. Ask students to form pairs, compare their work and decide which answers are the best for each of the boxes on their completed worksheets.
  4. Invite feedback from a sample of pairs, recording student responses on the white/blackboard.

Student Worksheet: What is a budget?

When this activity is completed provide feedback by facilitating a classroom discussion to identify the student’s answers and assess the factors that influenced their decision-making.

Why is budgeting important?

Explain all budgets (inclusive of personal budgets, household budgets, business budgets or government department budgets) are a way of:

  • keeping track of everything that is coming in and going out
  • planning how money is spent
  • helping to develop an awareness of money and where it goes to make planning for the future easier
  • keeping spending under control and can prevent impulse buying
  • developing financial literacy skills for independent living

What do I need to complete a budget?

A budget may take many forms but contains the same information: income (regular and irregular) and expenditure (fixed, irregular and discretionary).

It is important to decide whether you are going to prepare a budget on a weekly or monthly basis. For example, in the budgeting planner, you can enter your income and expenses on a weekly, fortnightly or monthly basis as different people are paid and pay their bills at different times.

Activity 2: Budgeting in action

Watch this clip from episode 1 of the CCPC sponsored TV show How to be Good with Money and get the students to work in groups and offer responses to the below.

From watching the video clip answer the following questions:

  1. Identify how planning a weekly grocery/food shop could help with household budgeting?
  2. In your opinion, can planning your weekly meals and writing a shopping list help consumers budget?
  3. Give one piece of financial advice to the consumers in the video clip on how they could be better with money

Possible Assessment: Create a budget, Alex Weldon

Case Study: Alex Weldon

This exercise will help students create a budget and understand how to plan their spending so they can achieve a future financial goal.

When this activity is completed provide feedback by facilitating a classroom discussion to identify the student’s answers and assess the factors that influenced their decisions.

Exploring budget layout and formats

Below are two examples of the different approaches that can be used when budgeting.

Student Worksheet: Spreadsheet budget example


Student Worksheet: Envelope budget example

How to evaluate a budget

Evaluating a budget involves reviewing it at the end of each month or week and assessing whether you

  • Stayed on budget i.e. did not overspend or under spend
  • Have a budget deficit i.e. expenditure was greater than income and you spent more than you have planned to. This may require that you take action to reduce your expenditure in the next budget where possible
  • Have a budget surplus i.e. expenditure was less than income and you spent less than you had planned to. This may provide the opportunity to increase savings where possible.

It is important to remember when budgeting that some months may require more expenditure than others e.g. car insurance renewal etc., and considering these at the start of each month before creating a budget will ensure that you will be able to meet your needs.

Activity 3: Prepare and evaluate budget for independent living

Student Worksheet: Giant Steps Role Cards

Student Worksheet: Blank budget

This activity requires the use of the Giant Steps Game role cards. Students should have used these role cards in Section 2, Income and resources, and Section 3, Expenditure to itemise the income and expenditure of each person. By carrying out this research students are developing their understanding of income and expenses etc.

Students may prefer to use a role card which they are familiar with from previous sections for the purpose of this activity.



  1. Provide students with a blank budget worksheet or students could use the CCPC’s Budget Planner and enter figures into the various categories, (not all the categories listed will be relevant or familiar to students but it will give them a broader understanding of various expenditure types) calculate their totals and complete the budget.
  2. Evaluate their prepared budget by answering the following questions:
  • Is it on budget?
  • Is there a budget surplus? there money left over?
  • If there is money left over in the budget, what would you recommend be done with it?
  • Is there a budget deficit? i.e. is the expenditure greater than the income? What adjustments could be made to reduce spending?
  • Review the expenditure – is this largest spending on needs or wants?
  • Does the budget include savings?
  • What financial advice would you give to the person whose budget you have prepared and evaluated?

Possible extension activities:

  • Swap prepared budgets and evaluate different role card budget.
  • Use different formats of budgeting and compare the advantages and disadvantages of each type.

Discussion & Reflections

In the above we looked at budgeting for individuals and analysed information and presented it in various formats. What surprised you when it came to complete a budget? How does keeping a budget and planning your expenditure help to avoid impulse buying? How does budgeting help you develop the financial literacy skills needed for independent living?

We also completed a blank budget using the CCPC’s online resources. What did you find most difficult when it came to complete this budget? What is the value of budgeting? Describe a good budget.

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