Chapter 5: Household Budgets
Having completed the previous chapters on household income and expenditure I decided to move straight to the section on household budgeting. It just seemed more logical to tackle the chapters in this order…or maybe it was just force of habit.
Learning Outcome 1.12 appears the most relevant here: “prepare and analyse a budget, determine the financial position, recommend appropriate action and present the analysis in tabular and graphic formats." (See the separate blog on LO. 1.12 for further discussion of this topic)
For those who’ve been teaching the previous, pre-2016 Business Studies syllabus, there is plenty of familiar material here, but the new specification has a distinct change of emphasis when it comes to the topic of household budgeting. While the ability to prepare a budget is an important skill, there seems to be a much greater focus on analysis and interpretation of the financial plan. A capacity to critically analyse and ‘make sense of’ the figures is much more in keeping with the spirit of the new specification. The references to ‘determining the financial position’ and ‘recommending appropriate action” provide strong and obvious clues to the shift in emphasis. There is also a requirement to use appropriate tables and/or charts to illustrate key patterns and findings and this is certainly a new departure from the more numerate approach of old.
I began by sticking to the ‘old stuff’ and consolidating the material from previous income and expenditure chapters. Students again seemed to enjoy the ‘doing’ and ‘calculating’ part of this topic and most were soon able to complete the question templates with both speed and accuracy. The Student Activity Book (SAB) provided plenty of questions for students to practise and develop their skills. As ever, the final three lines of the ‘traditional’ household budget cause a few problems... both with understanding and with application, but a step-by step walk-through of one question resolved most issues. Further practice and a handful of one-to-one explanations helped clear up the rest.
I made a point of focusing on the ‘budget outcomes’ for each activity. After a few unsuccessful and ‘experimental ad lib’ attempts in class (that’s code for winging it!), I retrospectively generated a worksheet to guide student thinking for budget analysis. In hindsight it might have been helpful to include this in the SAB or Teacher Resource Book (TRB), but the need wasn’t as obvious at time of writing and really only became more apparent as students began to engage with the material. I suppose that reflects a major benefit of being both an author and a practicing teacher and having learned from the experience I am at least in a position to pass on my insight.
When analysing the household budgets I used the worksheet to focus student thinking on the key issues and insisted that they provide evidence to support all of their answers. A copy of this worksheet is available to download at the end of this post.
We next tackled some revised budget questions. We made a decision to include these in the book because they reflect the dynamic nature of household financial planning. They enable students to clearly see the need to adapt household planning in order to produce a budget which is appropriate to the changing financial circumstances of a household. Similar thinking can be applied to the inclusion of budget comparison statements which again reflects the link between planning and the financial reality facing a household. In the context of the learning outcome, having analysed the financial position and found the budget to be unrealistic the recommended course of action must surely be to prepare a revised budget which is more in keeping with the households financial circumstances.
Introducing a digital element…
In the past I would never have used ICT to teach this topic; let’s face it, there was never any need or encouragement to… but this new specification sometimes requires, and often promotes the use of digital elements. So, I took the class to the computer room for two forty minute periods. I prepared for the class by pre-saving a blank budget template in the dropbox on the school server. I used the Morgan budget on page 36 of the SAB. All students were able to access this file and I showed them how to enter data and to create formulas in order to calculate totals, net cash, opening cash and closing cash etc. Most students were excellent at this and I really was pleasantly surprised as how quickly they mastered the technology (only two had used Microsoft Excel previously). Many students were able to work ahead of my explanations, which I delivered via digital projector, and this allowed me to engage in small group work with the remainder. By the end of the classes all students were capable of correctly completing a digital version of the Morgan and El Masri budgets. Had time (and computer room access) allowed I would certainly have availed of this technology to help with the section on revised budgets. The fact that the digital version updates all the calculations whenever a number is changed makes it ideal for revised budgets, but at least students were able to engage with the technology and appreciate its benefits. I will definitely make more use of this approach when teaching this topic next time round.
* I am aware that there is a digital resource which can be used to generate pie charts from a given set of figures. It was developed for use with an Edco maths book. I had an opportunity to try it out while writing the textbook. I will enquire again about having it added to our digital resources. There may also be some free resources available online.
Learning outcome 1.6:
Identify appropriate types of insurance for particular personal needs and consider the costs, benefits and risks.
In our view, the following are the key ideas and messages for this topic:
Business Studies Blog
Chapter 3: Household Expenditure
By happy coincidence the following article, was published just before I began my lessons on household expenditure.
As a result I was able to provide students with a very short introduction to the topic, before using the article as a scaffolding exercise. We read the article together in class and teased out the new vocabulary. We created a list of key words. I also asked students to make a list of the major categories of household spending. For homework the students created bar charts to represent the information.
All in all this proved to be a relatively straightforward chapter to teach, again because of the familiarity of the material to both teacher and students. The students seemed to grasp the key concepts pretty quickly and displayed good understanding when completing activities in class and for homework.
There is quite a lot of numeracy involved in this chapter and for the most part students were happy to engage with it. There are certainly plenty of opportunities for students to practice numeracy activities and most seemed to enjoy the challenge.
I felt that the section dealing with analysis of household spending patterns was very important and I made a special effort to connect the news article (used at the outset) to the material on pages 26 -28 of the textbook. This textbook material uses charts to illustrate and analyse household expenditure by category and also deals with solutions to overspending. It’s very much a personal view, but I perceive this material to be very relevant from an exam perspective. It also helps build understanding for the household budgeting chapters which follow.
Leaving aside the exam perspective for the moment, it’s important to bear in mind that an over-arching aim here is the promotion and development of ‘positive’ spending habits in our students. By this I mean providing them with the capacity to develop sustainable patterns of expenditure which are closely aligned to both their needs and their resources. Many financial difficulties experienced by households are the result of poor and unsustainable patterns of spending rather than once-off financial mishaps. Households are more likely to live beyond their means when they focus on wants over needs; prioritise discretionary expenditure over more important fixed expenditure or continuously make high value purchases on impulse. Changing or preventing these types of spending patterns is where the life-long learning occurs. This chapter is really about starting that discussion and raising awareness. Don’t forget that L.O. 1.2 makes clear reference to “best managing financial resources” and “making informed and responsible judgements”.
I focused a little on students own spending, but was reluctant to analyse it too much mainly because I was conscious of the different financial circumstances within the class. While the students did some homework on this, it was never openly discussed in class in order to avoid any potential embarrassment for students. Students personal spending was however useful for revisiting the issue of discretionary income and highlighting examples of discretionary expenditure.
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