Case study 1

Draw up two monthly budgets for an 18-year-old who’s still at school but who has a part-
time job.
 Draw up the budgets for the months of December and January and identify
whether there’s a surplus of income over expenditure or an excess of expenditure
over income.
 Explain the differences between the two months.
 What should be done to manage these variances in monthly budgets?

December budget

Income from part-time work S240

Pocket money $60

Other income $100

Spending on phone $45

Spending on clothing $60

Spending on socialising $80

Spending on presents $120

January budget

Income from part-time work $68

Pocket money $60

Other income $0

Spending on phone $45

Spending on clothing $40

Spending on socialising $60

Spending on presents $10

Case STUDY 2
How Do I Budget?
All of Sharon’s friends know who to turn to if they have money questions. Sharon attributes
her financial savvy to the summer jobs she has held over the past four years. These jobs
helped her save a few thousand dollars for college to minimize her student loans. Her friend,
Alana, approaches her the summer before their Senior year of high school, confessing she has
a whopping $56.47 saved for college even after working part-time jobs for the past three
years! Alana asks Sharon what she could do to manage her money more effectively. Sharon’s
answer is one word - budget.

Sharon asks Alana to describe her goals and current spending habits. Alana responds in the
following way:

“College costs a lot more than I thought, and my parents expect me to pay for my
living expenses on campus. Those are going to be around $3,000 per year! I am used
to working a part-time job and going to school, but I'm not sure I can handle both
anymore. Budgeting seems like a great idea, but where do I start?”

Answer This:
1. Alana only has $56.47 saved for college. Brainstorm possible reasons why she has
only managed to save this amount.

 No budget or savings plan

 Overspending on non-essentials
 Underestimated college costs
 Unexpected expenses
 Low-paying or inconsistent job

2. What do you think Alana’s goals should be?

 Create a budget and savings plan

 Set a savings target for college expenses
 Find ways to earn more (extra work)
 Manage spending wisely in college

3. What are a few ways that Alana can get a better understanding of her spending
patterns?
 Track expenses for a month
 Categorize needs vs. wants
 Use a budgeting app or spreadsheet
 Compare income vs. spending
 Set spending limits
Sharon develops a basic plan for Alana to track every dollar she spends over the course of a
month. Alana collects all her receipts in a shoebox and reviews them with Sharon at the end
of the month:
 Coffee: 10 lattes @ $4 each
 Movies: 3 movies @ 10 each
 Food: 4 meals with friends @ $12 each; 20 snacks/energy drinks @$3 each
 Clothes: 3 trips to the mall with friends @ $30 per trip
 Car insurance: Parents make her pay $70/month toward policy in exchange for driving
family car
 Gas for car: 2 fill-ups @ $35 each
 Cell phone: Parents expect her to pay $36/month toward family plan
 Shoes: 1 pair @ $60

To help make sense of all of this information, Sharon asks Alana to organize the information
by using the budget template provided below. In the category column, she will list all of her
various expenses. She will then make a judgment call about whether each expense is a Want
or a Need. In the Monthly Cost column, she will total up the cost for each of the expenses. In
the last column, she will calculate how much that item is as a percentage of her total costs.
This should help her determine where she spent most of her money in the past month.

4. Complete this chart with the information provided above:

Category Want/Need Monthly Cost % of Total Costs

Coffee Want $40 8.1%

Movies Want $30 6.1%

Food Want $108 21.8%

Clothes Want $90 18.1%

Car Insurance Need $70 14.1%

Gas Need $70 14.1%

Cell phone bill Need $36 7.3%

Shoes Want $60 12.1%

TOTAL $502 100%

COSTS

Alana’s reaction after completing this process is the following:

“Wait a second, Sharon! I think my boss is ripping me off! I work 15 hours a week,
on average, at $11/hour. According to my receipts above, I’m spending much less per
month than I’m earning, but, as we’ve already established, I’ve only got $56 saved up
from 3 years of working. What gives? How do I file a complaint? How do I get my
money back? Wait until I report this boss of mine! I’m putting this on social media!”
Sharon can tell that Alana is angry, but she’s pretty sure her boss isn’t stealing money from
her.

Answer This:
5. Do some quick math to compare how much Alana should be making per month and to
compare it to how much she’s spending to determine why Alana’s concerned.

Alana’s Earnings vs. Spending

 Earnings:
o 15 hours/week × $11/hour = $165/week
o $165/week × 4 weeks = $660/month

 Spending (from budget chart):

o $504/month

 Difference:
o $660 (earnings) - $504 (expenses) = $156 left over per month

Since Alana should have extra money each month, but she has little savings, she might be
spending on things she didn’t track, withdrawing cash without noticing, or mismanaging funds
in other ways.

6. Explain to Alana why she might not want to blast her boss on social media just yet.

Alana should be reminded to check a few things before accusing her boss:

 Look at her pay slips to confirm her hours and deductions (taxes, Social Security, etc.).
 Track where her extra money is going—untracked spending, ATM withdrawals, or
impulse purchases could be the issue.
 Double-check bank statements for any unnoticed expenses.

Jumping to conclusions and posting online could harm her reputation and relationships. Instead,
she should calmly gather facts before acting!

Once Sharon lends some clarity on Alana’s pay, she feels slightly better, but she’s still really
worried about her initial problem:

“This is going to be extremely difficult for me to cut anything. I mean, I’m working
hard, and think I deserve to enjoy the money that I earn. To save that $3,000 for
 college, I basically need to work an extra 25 hours per month. It’s my senior year of
high school! I need to focus on my grades and apply to college. I am so confused!”

Sharon thinks back to where their conversation started last month and how lost Alana
seemed. She hoped that having Alana prioritize her goals and review her spending would
help her gain some necessary perspective, but Sharon realizes Alana is at a dead-end, so her
next idea is to outline a few options for Alana so she can choose a solution that will work best
for her.

Answer This:
7. What 2-3 options would you outline for Alana to help her achieve her goals? Be
ready to discuss with her the pros/cons of working more versus finding other ways to
adjust her budget. Be specific with your recommendations, highlighting specific costs
or income sources.

Options for Alana to Achieve Her Goals

1. Cut Back on Non-Essential Spending

 Adjustments: Reduce coffee, movies, clothes, and snacks by half. This could save
about $100–$150/month without eliminating fun completely.
 Pros: Less stress from overworking, keeps focus on school.
 Cons: Requires discipline and cutting back on social activities.

2. Find Additional Income Without Overworking

 Options: Look for a higher-paying job, babysitting, tutoring, or freelancing (e.g.,

selling crafts, online gigs). Even earning $50–$100 extra per month would help.
 Pros: More flexibility than taking on extra work hours.
 Cons: May take time to find reliable side income.

3. Apply for Scholarships and Financial Aid

 Action Plan: Research local scholarships, grants, and work-study programs. Even
small awards of $500–$1,000add up.
 Pros: Free money with no extra work hours.
 Cons: Requires effort in applying and may not be guaranteed.

Discussion:
Sharon should help Alana weigh these options based on her priorities—whether she prefers to
cut spending, find smarter income opportunities, or maximize financial aid. A combination of
all three might be the best path forward!
 Case study 3
Case Study
Budgeting

Case Study Summary National Standards for Personal Finance

Education
Description: In this case study, students
will take on the role of a trusted friend Spending
helping to create a budget and make an  1b: Develop a budget to allocate current
important financial decision. Students will income to necessary and desired spending,
analyze current spending, assist in creating including estimates for both fixed and
a budget, and offer suggestions for how to variable expenses
manage a variety of financial stressors.  1d: Evaluate the advantages of using
budgeting tools, such as spreadsheets or
Internet Usage: Required apps
 9a: Explain how having a system for
Spreadsheet Skills: Minimal financial record-keeping can make it easier
to make financial decisions
Saving
 8b: Discuss how personal financial
decisions can affect other people
Earning Income
 7c: Differentiate between gross, net, and
taxable income
Managing Credit
 Describe how credit card grace periods,
methods of interest calculation, and fees
affect borrowing costs

Budget or Bust?

Carrie is a recent college grad with her first full-time job and is learning about how to
manage her money. She tries to save money each month, but at times ignores her finances
because she gets easily frustrated and overwhelmed with them. She has just had a curveball
thrown her way with an increase in rent, so she decides to call her trusted cousin, Bryce, who
has a strong understanding of money management.

Carrie: Hi Bryce! Do you have time to help me with a money issue?

Bryce: Yeah! What’s going on?

Carrie: My landlord just called to let me know my rent is going to increase from $900.00 to
$1200.00 in the next two months! He said something about an increase in HOA fees
and taxes, so he has to increase the rent. But I love this apartment! It is close to work,
close to my boyfriend, and has so many great amenities. With my student loans and
other bills, I can’t afford to continue living here!

Bryce: That’s tough! But you can definitely make it work. I’ve got some errands to do near
your neighborhood later, so I can come over beforehand and we can create a budget to
see where you can come up with the extra money! Go ahead and gather all of your
financial documents together and I’ll be over soon.

Carrie: Budget? I’ve never created a budget before, so it intimidates me. I appreciate your help
so much!

Bryce arrived within 30 minutes and was ready to help Carrie get started on organizing her
budget. “In order to figure out if you can afford this increase in rent, you have to create a
budget.” Bryce instructed.

Answer This:

1. What response should Bryce say to Carrie’s last question? What is the importance of
creating a budget?

Bryce should reassure Carrie that a budget is simply a tool to help her take control of her
money, not something to stress over. He can say:

"I know budgeting sounds intimidating, but it’s just a way to see where your money is
going so you can make smart choices. It helps you plan for expenses, avoid overspending,
and save for the future. Once we break it down, you’ll see it’s not as scary as it sounds!"

Creating a budget is important because it allows Carrie to:

 Track income and expenses

 Identify areas to cut back
 Ensure she can afford necessary costs
 Plan for unexpected expenses and savings

2. What documents and information will Bryce need to see to help Carrie create a personal
budget?

To create a budget, Bryce will need Carrie to gather:

 Income Information (pay slips, tax returns, side job earnings)

 Fixed Expenses (rent, student loans, insurance, car payments, subscriptions)
 Variable Expenses (groceries, utilities, entertainment, shopping, dining out)
 Debt Details (credit card balances, interest rates, minimum payments)
 Savings & Investments (emergency fund, retirement contributions)
  Bank Statements (to track spending habits)

“Okay, that makes sense!” Carrie says as she sits up straight and rolls up her sleeves.

Bryce explains that the first step in creating a personal budget is to calculate income. Carrie is
on salary and paid bi-weekly, so her paychecks are the same each pay period. She logs online
and pulls up her most recent pay stub for Bryce to view.

Exhibit 1: Carrie’s Paystub

Answer This:
3. What information from Carrie’s paystub is important to know and use when creating her
budget?

When creating Carrie’s budget, the most important details from her pay stub are:

Income Details:

 Gross Wages (Before Taxes): $2,123.84 per paycheck

 Net Pay (Take-Home Pay): $1,779.25 per paycheck
 Pay Frequency: Bi-weekly (26 pay checks per year)
 Monthly Net Income:
 o Since Carrie is paid bi-weekly, her estimated monthly net income
is:1,779.25×2=3,558.501,779.25×2=3,558.50

Deductions (Taxes & Withholdings):

 FICA (Social Security & Medicare): $162.48 per paycheck

 Federal Tax: $55.75 per paycheck
 State Tax: $126.37 per paycheck
 Total Deductions Per Paycheck: $344.59

Why This Matters:

 Carrie should use net income ($3,558.50/month) when budgeting, since that’s what she
takes home.
 Understanding tax deductions helps her know where her money is going.
 Knowing her pay schedule helps her plan for bills and expenses based on when she gets
paid.

Now, Bryce can help Carrie list out her expenses and see if she can afford the rent increase!

Now that they both know how much money they’re working with, Bryce says that the next
step in creating an effective budget is to track expenses. He says that in order to create a
budget and see where Carrie can find the extra money for her rent, they have to see where she
spends her money each month.

Carrie uses her debit card for most purchases, so she can somewhat easily track her monthly
spending by looking at her bank account transactions. She prints her last bank statement,
credit card statement, and pulls out her most recent receipts to give to Bryce.

She loves to shop, so her clothing expenses are a bit high. She charges an average of $300.00
per month on a credit card to her favorite store - Clothes, Clothes, Clothes. Her minimum
monthly payment on this account is approximately $20.00 (she must pay at least this amount
each month, but strives to always pay it off in full).
Exhibit 2: Carrie’s Bank Statement & Store Credit Card Statement
Answer This:
4. Analyze Carrie’s credit card statement and bank statement. How would you describe her spending habits?

Analysis of Carrie’s Spending Habits:

 Carrie spends a significant amount on non-essential purchases, particularly shopping ($300/month on

clothes).
 She has a mix of necessary expenses (rent, car loan, insurance, utilities) and discretionary spending
(dining out, entertainment).
 She does make payments on her credit card but is accumulating new charges at a similar rate.
 There are multiple small purchases that add up over time, such as dining out and entertainment.
 Overdraft fees indicate occasional financial mismanagement or a lack of a buffer in her account.

5. Create a list of Carrie’s fixed and flexible expenses.

 Fixed Flexible

Rent $900 Clothing $300

Dining out (a lot)
Car loan $251.68 Entertainment (movies, gym, bowling)
Gas $40
Auto Insurance $75 Household and Miscellaneous Purchase
Gifts and shopping
Renter’s Insurance $15

Student Loan $262.50

Verizon (phone) $81.37

6. Carrie questions whether she should be paying her credit card in full each month.
That $300.00 payment would help cover her rent increase. She questions whether she
should start making minimum payments on her credit card and use the remaining
money toward her rent. If you were Bryce, how would you respond? What advice would
you give Carrie?

If I were Bryce, I’d tell Carrie that paying only the minimum on her credit card is not a good idea because it will cost
her more in the long run. Her card has a 19.8% interest rate, meaning if she only pays the minimum, she’ll be paying a
lot in interest and staying in debt much longer. Instead of using credit to cover her rent increase, she should adjust her
spending—cut back on clothing purchases, dining out, or entertainment. Paying her card in full each month
helps avoid debt, maintain a good credit score, and build smart financial habits. It’s better to adjust her budget now
than to risk long-term financial stress.

7. Carrie and Bryce have a mutual friend who is moving back to the area for a job.
Carrie mentions the idea of taking on a roommate to help save money and compensate
for the rent increase. Bryce explains that this will help with the cost, but there are several factors to consider
before taking on a roommate. They read this article on the pros and
cons of having a roommate. Help Carrie generate a list of positive and negative reasons for having a
roommate.

Before Carrie can make a decision on whether to take on a roommate, or where she can get
the extra money for her rent, she has to create a monthly budget. Bryce and Carrie work hard
at going over Carrie’s fixed and flexible expenses and generate the budget below.
 Exhibit 3: Carrie’s Budget

Answer This:

8. How much money does Carrie have left over after creating her budget?
Where can she make adjustments so that her budget is balanced, and income is equal to
expenses?

Carrie has $52.32 left over after her budget. To balance her budget, she could:

 Reduce savings or debt payoff by $50-$100.

 Cut entertainment by $50 (e.g., dining or travel).
 Lower food expenses by $30 and personal care by $20.
 Cut miscellaneous spending by $30-$40.
 Trim clothing/personal care by $20.

9. If Carrie decides to continue living on her own, how can she alter her monthly
budget to pay for the $300.00 rent increase? Give specific suggestions.
To cover the $300 rent increase, Carrie can adjust her monthly budget in the following ways:

1. Reduce savings or debt payoff:

Temporarily lower her savings or investment contributions. For example, reducing savings from $200 to
$100 and investments from $350 to $250 could free up $200.
2. Cut entertainment:
Reduce restaurant meals, events, or travel expenses. A $100 reduction in entertainment could help cover
part of the rent increase.
3. Lower food/sundries:
Cut food expenses by $50 and personal care by $20. This would save $70.
4. Trim miscellaneous expenses:
Reduce miscellaneous spending by $30, which adds more to the budget.
5. Postpone personal care:
Delay haircuts or manicures, saving $20.

10. If Carrie decides to have a roommate, how would this alter her current budget?
Approximately how much money would that save Carrie per month?

If Carrie has a roommate, she could save approximately:

 450 on rent (half of 900)

 150 on shared utilities and expenses

This would result in total savings of about 600 per month.

11. What are other solutions Carrie and Bryce did not think of?

Other solutions Carrie and Bryce could consider:

1. Find a more affordable apartment.

2. Increase income through part-time work or freelancing.
3. Refinance loans to lower payments.
4. Cut unnecessary subscriptions or memberships.
5. Use public transportation instead of driving.
6. Sell unused items for extra cash.
7. Negotiate rent or lease terms with the landlord.

12. What final pieces of advice can Bryce offer Carrie in order to best handle the rent increase

and stay in her apartment? Explain your answer.

Bryce can advise Carrie to:

1. Reevaluate expenses by cutting non-essentials like entertainment or subscriptions.
2. Explore extra income through side gigs or freelance work.
3. Negotiate with her landlord for a smaller rent increase or a fixed-rate lease.
4. Consider temporary solutions like renting out parking or storage space.
5. Build an emergency fund for future unexpected costs.