This is the first in a series of posts designed to help you help the teens in your life. We all need to have a foundational understanding of finances, but who more than those on the cusp of adulthood? This series will give them the financial groundwork they need to make wise decisions in the future. Lesson one will cover income and expenses.
***Coming Soon! This will be available as a full course with activities, printables, and a printable textbook/workbook. Sign up below to be notified the moment it is released.
Income and Expenses
This first lesson introduces the concept of income and expenses. Encourage your students to learn and use proper financial terminology as they go through each lesson. This will come in handy in the future.
Each lesson will be directed to the student, so you can have them read it, or read it together.
How much money do I have?
First things first, let’s see how much money you have. Gather all your money, and divide it into like piles; for example, $20 bills together, nickels together. Total each group up, and then add all your totals together. Write this amount on paper and save it for later in the lesson.
What are income and expense?
You will need to memorize the definitions given in each lesson. The first two words are income and expense.
Income: Money you have received
Expense: Money you have spent
Think about the various income and expenses you have. Do you have a paying job or allowance? These would be income. Do you buy your own lunch, or enjoy buying comic books? These would be expenses. The key to getting rich, or even improving your financial situation, is to pay attention to your income and expenses. To have more money, you need to either increase your income, or reduce your expenses. Even better if you do both!
Always spend less than you make
The number one money rule that you should always follow is to always spend less than you make. When you follow this rule, your wealth grows. When you break this rule, you will go into debt. We will talk about debt more in a later lesson. For right now, focus on following this rule. As you look at some of your expenses, are there some expenses that you could skip, to keep your expenses lower than your income? This is how we begin to show wisdom with our money, by making wise spending decisions.
To learn more about keeping your expenses less than your income, you can read:
How do I keep track of my money?
Learning to evaluate each purchase before you make it is an excellent way to get in control of your finances. The next step is to begin tracking your income and expenses. This is done with a transaction sheet. A simple transaction sheet is a table with 5 columns. It will look something like the table below.
Recording your income and expense on a chart like this enables you to see how much money you have at any given time. When you start recording, you begin with an “Opening balance.” You can see it at the top of the chart. You would put the amount of money you counted earlier in the lesson. After that, you would enter all purchases in the expenses column, and then subtract that amount from your previous balance. Then you enter your new balance in the balance column. Income is entered in the income column and added to the previous balance.
Begin entering your income and expenses into a chart like this. You can easily create one in a notebook with a ruler. Next time you want to purchase something, check your balance first. Even if you have enough, you will need to decide if you want to bring your balance down that low. Practice tracking your money, and we’ll see you in the next lesson!
Need help evaluating your purchases? Try reading this:
These lessons are being turned into a full personal finance course for teens! The course will have a full printable write-in textbook with hands-on activities, printables, quizzes, assignments, and Scripture. Sign up below to be notified as soon as it becomes available.