Exercises: Managing money: income, expenditure, and budgeting

Classify each item in Nora's piggy bank money as income or expenditure, and within expenditure, as fixed (the same every month) or variable (changes): (a) weekly allowance; (b) monthly bus pass; (c) a comic book; (d) birthday money from her grandparents; (e) chess club membership fee; (f) popcorn at the movie theater.

A lemonade stand has the following expenses: lemons, sugar, cups, ice, and the vendor permit (a one-time fixed cost). Classify them into fixed and variable costs, and explain what happens to each one if it rains one day and only $3$ cups are sold.

The figure shows Emma's income and expenditure over the four weeks of a month: each green bar shows her income for that week and each amber bar shows her expenditure.

1. a) Read the total income and total expenditure for the month from the graph, and calculate how much Emma saved.
2. b) In week $3$, she earned more than usual (she was paid for babysitting her cousin). Explain what would happen to her savings if Emma spent that extra income as soon as she received it.

Explain the difference between income and expenses, and between a necessary expense and a non-essential one. Classify these expenses from one week: the bus fare to school, a movie ticket, the daily afternoon snack, a $\$3$ phone game and the materials for a required school field trip.

Explain what saving is and the rule "pay yourself first" (setting the savings aside when you receive your allowance, not at the end of the month). With an allowance of $\$25$ a week and a saving goal of $20\ \%$, calculate how much you set aside each week and how much you will have in $10$ weeks.

Define what a budget is and name its three basic parts (expected income, expected expenses, the difference). Explain why a budget is made BEFORE the month and not after, and what is done with it at the end of the month.

A crêpe stand has these transactions on the day of the fair: buying ingredients $\$45$, selling crêpes $\$130$, stand permit $\$15$, starting cash drawer money put in and taken back $\$20$. Calculate the day's result (income minus expenses) and explain why the starting cash drawer money counts neither as an expense nor as income.

Explain what a "latte factor" expense is (a small, repeated purchase that is easy to overlook) and find three in your own routine (or in a fictional character's): small, repeated and almost invisible. Estimate how much each one adds up to in a month and why a budget catches them better than memory.

Ethan receives $\$40$ per month in allowance. He wants to save up for headphones costing $\$80$. His expenses last month were: transportation $\$12$, entertainment $\$18$, snacks $\$8$, and gifts $\$5$.

1. a) Calculate how much he saved (or lost) last month and, at that rate, when he could buy the headphones.
2. b) Create a budget for next month that will allow him to buy them in four months: specify how much he allocates to each item and how much to savings.

A simple budgeting rule splits income as follows: $50\ \%$ for needs, $30\ \%$ for wants, and $20\ \%$ for savings. Apply it to an allowance of $\$60$ per month and calculate each portion. Then classify these real monthly expenses into the three categories and state whether the month aligns with the rule: bus pass $\$20$, movies and going out $\$15$, school supplies $\$8$, headphones (want) $\$10$, savings in the piggy bank $\$7$.

Mateo receives $\$50$ a month. Set up his March budget with these items: transportation $\$15$, eating out $\$12$, entertainment $\$10$, saving for a scooter $\$8$ and unexpected expenses $\$5$.

1. a) Check that the budget balances and explain what a "zero-sum budget" means (every dollars has an assigned mission).
2. b) The scooter costs $\$120$ and he already has $\$40$ saved. Calculate how many months he has left at the current pace and propose two tweaks to the budget to get it two months earlier, stating what each one sacrifices.

The school market team made its budget, and the actual results turned out like this:

1. a) Calculate the variance of each item and the expected profit versus the actual profit.
2. b) Analyze the two main causes of the variance and write two decisions for the next budget (estimating prices using a real invoice, a pessimistic sales cushion).

The robotics club charges a fee of $\$5$ a month to its $12$ members. Monthly expenses: materials $\$35$ and the room fee $\$10$. They want to buy a new $\$90$ kit.

1. a) Set up the club's monthly budget and calculate how much it saves each month.
2. b) Calculate in how many months they will be able to buy the kit without touching the current budget and propose one way of buying it in half the time (a one-time extra fee, PTA sponsorship), explaining what each one involves.

Your family puts you in charge of the budget for your grandfather's birthday party: $\$200$ for $20$ people. Split the money among food, drinks, decorations and the present, justifying the percentages chosen. Then Aunt Karen announces that $5$ more people are coming: adjust the budget without going over the $\$200$ and explain which item it cuts into and why that one and not another.

Checking her card statement, Emma discovers her "phantom spends" (small, regular expenses): coffee with milk on the way to school ($\$1.50$ almost daily), vending machine snacks ($\$1$ about $3$ days a week), and subscriptions she no longer uses ($\$6$ a month).

1. a) Calculate the total of these phantom spends over a school year of $40$ weeks.
2. b) Propose a plan to reduce them by half without giving everything up (what she cuts, what she replaces, and how much she would save per year).

The end-of-year school trip has a budget of $\$150$ per person. The proposed costs are: bus $\$40$, hostel $\$60$, activities $\$45$, and trip T-shirt $\$20$.

1. a) Calculate how much they go over budget and what percentage this excess represents.
2. b) Prioritize the costs (essential, important, non-essential) and propose two specific cuts to keep the trip at $\$150$, justifying what is lost with each cut.

The market team budgeted $\$80$ in expenses and ended up spending $\$95$: the price of fruit went up ($+\$10$) and they had to reprint posters with the corrected date ($+\$5$).

1. a) Calculate the total budget variance in dollars and as a percentage, and break it down by cause.
2. b) Explain what two decisions you would make for the next market: one regarding how to estimate prices and another regarding a financial buffer for contingencies (how much and why).

Mia is tracking her money for the first time: she notes everything down for a month and discovers she spends $\$22$ on eating out, $\$9$ on subscriptions (two apps she barely opens), $\$14$ on transportation and $\$10$ on entertainment, out of $\$60$ of allowance.

1. a) Set up her actual monthly statement, calculate the savings achieved and the percentage of her allowance each expense represents.
2. b) Design her budget for the following month with the $50/30/20$ rule adapted to her real life, stating which expense you tackle first and why the subscriptions are the obvious candidate.

The end-of-year trip budgeted $\$45$ per student for $35$ students. When closing the accounts: the bus went up $\$80$ because of fuel, $3$ students pulled out (no longer refundable: $\$135$ of their places lost) and the hostel discounted $\$50$ for being a large group.

1. a) Calculate the initial total budget and the total actual spending, and the deviation in dollars and percentage.
2. b) Decide how to share out the deviation (absorbing it with the class fund, charging a supplement, cutting a $\$60$ activity) and defend your option both to those who pulled out and to those going.

'Making budgets is living obsessed with money; better to spend sensibly and leave it at that.'

1. a) Summarize what the statement defends and what truth it has (an obsessive budget also spoils life).
2. b) Rebut it with a case: a family with $\$1,400$ a month that 'spends sensibly' without noting anything down and discovers in December there is nothing left for the heating. Explain what would have changed with a simple three-item budget and propose a reasonable middle ground (a light $15$-minute monthly budget).

The school's charity market handles $\$800$ in cash in a single day. Design the cash register control system: how much initial float and who signs for it, how each sale is recorded (or each withdrawal of excess cash), who looks after the money in shifts, how the register is closed out by two people, and what is done if the count doesn't match the sales recorded. Explain why these controls also protect whoever handles the money.

Your co-op had a first quarter with these figures: September, losses of $\$35$ (initial purchase); October, profit of $\$60$; November, profit of $\$85$.

1. a) Calculate the accumulated result for the quarter and the average monthly profit of the two good months.
2. b) The team is debating what to do with the money: sharing it among the $8$ members, reinvesting it in more inventory or creating a fund. Calculate how much each member would get if everything is shared out and defend one of the three options with the project in mind a year ahead.