One plan that uses four money skills

Money skills work together when you make a real choice. In this lesson, Jordan will sort needs from wants, calculate a savings goal, build a budget, and adjust the plan when a price changes.

Jordan wants to buy a birthday gift that costs $40 in four weeks. Jordan already has $8 saved and expects to earn $12 each week by completing agreed chores.

Jordan's starting numbers

Gift price: $40. Money already saved: $8. Time: 4 weeks. Expected chore income: $12 × 4 = $48.

Step 1: Sort needs and wants

A need is something required for health, safety, school, or another basic responsibility. A want is something enjoyable that a person can delay or skip.

Jordan needs a $6 notebook for school during these four weeks. Jordan also wants to buy game credits and treats. The birthday gift is a want too, but it is a want Jordan has chosen as a goal.

Calling the gift a goal does not turn it into a need. It means Jordan has decided to plan for that want instead of buying other wants first.

Step 2: Calculate the weekly savings goal

First find the amount still needed:

$40 gift − $8 already saved = $32 still needed

Then divide by the four weeks:

$32 ÷ 4 weeks = $8 to save each week

If Jordan saves $8 after each of four chore payments, the gift fund will contain:

$8 starting money + ($8 × 4 weeks) = $40

Savings-goal formula

Amount still needed = goal price − money already saved. Weekly savings = amount still needed ÷ number of weeks.

Step 3: Build the four-week budget

A budget is a plan for money coming in and money going out. Jordan expects $48 of new income.

| Job for the $48 | Amount | |---|---:| | Save toward the gift | $32 | | Buy the needed notebook | $6 | | Available for game credits or treats | $10 | | Total planned | $48 |

The budget balances because $32 + $6 + $10 = $48. Jordan can spend up to $10 on other wants and still follow the original plan.

Step 4: Adjust when the price changes

After two weeks, Jordan has added $16 to the gift fund:

$8 starting money + ($8 × 2 weeks) = $24

Then the gift price rises from $40 to $44. Jordan now needs:

$44 − $24 = $20 more

With two weeks left:

$20 ÷ 2 weeks = $10 to save each week

Jordan expects $24 of income during those two weeks. Saving $20 leaves:

$24 − $20 = $4 for other wants

The goal is still possible, but the amount for game credits or treats falls from the original plan. Jordan could also compare another gift, ask whether the store has a lower current price, or change the deadline.

Scenario

Jordan has $24 in the gift fund, two weeks left, and a new $44 price.

Which plan reaches the goal if both $12 chore payments arrive?

Check the whole plan

Before buying, Jordan should check four things:

Is the school need covered?
Is the gift price still current?
Did the expected income actually arrive?
Does the gift fund contain the full price without borrowing?

If one answer is no, Jordan updates the budget. Changing a plan when facts change is part of budgeting.

Which item in Jordan's plan is a need?

Jordan's gift costs $40 and Jordan already has $8. How much is still needed?

How much must Jordan save each week to add $32 in four weeks?

Jordan expects $48 of income, plans $32 for the gift, and needs $6 for a notebook. How much remains for other wants?

After two weeks, how much is in the gift fund?

The gift now costs $44 and the fund has $24. How much more is needed?

Why does Jordan reduce spending on game credits and treats after the gift price rises?

What should Jordan do if one of the two remaining chore payments does not arrive?

Jordan used four connected skills: sort needs and wants, subtract current savings from the goal, divide the amount needed by the weeks left, and make the whole budget balance. When the price changed, Jordan recalculated instead of guessing.

Review Your Money Skills