Building a personal budget
A budget is not a punishment. It is a plan that tells your money where to go before it disappears. Written down, it turns 'I don't know where it went' into a set of decisions you actually made.
Lesson overview
What you'll learn in this lesson
Understand the concept of a personal budget, opportunity cost, and the balance between managing money day-to-day and planning for the future
Key learning points
- • Four lines on a page
- • A worked budget
- • Opportunity cost
- • Now versus later
This lesson at a glance
- 30 minutes
- 19 parts to scroll through
- 4 quick checks
- Marked quiz at the end
- Gentle pace: short sittings with pauses
Words to know
Scroll down — the lesson carries on below
Watch & discover
Part 1 of 19
Watch first
Building a personal budget
An English teaching video on this topic from Two Cents. Watch it, then scroll down for the lesson.
In a nutshell
Understand the concept of a personal budget, opportunity cost, and the balance between managing money day-to-day and planning for the future
What you already know
Part 2 of 19
Before we start
What you already know
You know what money is for and that some spending is essential and some is not.
Key words
Part 3 of 19
Key words
Words you'll need today
- Income
- Money coming in: wages, allowance, benefits, gifts, interest.
- Fixed cost
- A cost that stays the same each month, such as rent or a phone contract.
- Variable cost
- A cost that changes each month, such as food, travel or going out.
- Discretionary spending
- Spending you choose, which can be cut if you need to.
- Opportunity cost
- What you give up when you choose one option: the next-best thing you did not buy.
- Surplus
- Income left after all spending — the amount available to save.
Learning cycle
Part 4 of 19
Learning cycle 1 of 2
Building the budget
A short piece of teaching, then a check to make sure it has landed.
Explore the idea
Part 5 of 19
Learn
Four lines on a page
Every budget has the same skeleton: income, fixed costs, variable costs, and what is left. Write income at the top. List fixed costs — rent, contract, insurance, subscriptions — because you cannot change them this month. Then estimate variable costs from what you actually spent last month, not what you hope to spend. Whatever remains is your surplus. If it is negative, the budget is telling you something before your bank does.
Explore the idea
Part 6 of 19
Learn
A worked budget
Amara earns £1,400 a month after tax. Fixed: rent £650, phone £15, travel pass £85, insurance £20 — that is £770. Variable: food £220, going out £120, clothes £60, other £80 — that is £480. Total spending £1,250, so her surplus is £150. She sets up a standing order that moves £100 into savings the day after payday, leaving £50 as slack. Paying savings first is called 'paying yourself first' and it works because the money is gone before she can drift into spending it.
Quick check
Part 7 of 19
Quick check
Which is a fixed cost?
Quick check
Part 8 of 19
Quick check
Income £900, fixed £520, variable £310. What is the surplus?
Reset break
Part 9 of 19
Pause
That's sitting 1 of 2 done
Stretch, get a drink, look out of the window. There is no timer and nothing is counting down — your place is saved, so you can come back in five minutes or tomorrow.
Learning cycle
Part 10 of 19
Learning cycle 2 of 2
Opportunity cost and choices
A short piece of teaching, then a check to make sure it has landed.
Explore the idea
Part 11 of 19
Learn
Opportunity cost
Amara's £120 of going out could instead be £120 toward a £600 laptop. The opportunity cost of the nights out is five months of laptop fund. Opportunity cost is not an argument for never spending; it is a way of comparing what you get. Naming the alternative makes the choice honest.
Explore the idea
Part 12 of 19
Learn
Now versus later
Day-to-day money keeps you afloat this month. Future money — savings, a deposit, a pension — buys options later. Get the balance wrong in one direction and life is joyless; wrong in the other and you have nothing when the boiler dies. Most people aim for a rule of thumb such as putting aside 10% of income, then adjust it to reality.
Quick check
Part 13 of 19
Quick check
You spend £45 on a game instead of putting it toward £180 headphones. The opportunity cost is
Quick check
Part 14 of 19
Quick check
'Paying yourself first' means
Common mix-ups
Part 15 of 19
Common mix-ups
Things people often get wrong
- Treating a budget as a guess. Budgets built from real past spending work; budgets built from optimism fail in week two.
- Calling subscriptions a fixed cost you cannot touch. They are fixed monthly but you can cancel them, unlike rent.
- Thinking opportunity cost means everything you could have bought. It is the single next-best alternative.
- Saving whatever is left at month end. There is rarely anything left — move savings out first.
Challenge round
Part 16 of 19
Game · Sort it
Which of these are true?
Drag each card into the right column. Tap a card first if dragging is fiddly.
True
Not true
Challenge round
Part 17 of 19
Game · Fill the gaps
Finish the sentences
Choose the word that belongs in each gap.
Every ____ has the same skeleton: income, fixed costs, variable costs, and what is left.
The ____ cost of the nights out is five months of laptop fund.
Get the ____ wrong in one direction and life is joyless; wrong in the other and you have nothing when the boiler dies.
Mastery quiz
Part 18 of 19
Marked quiz
End of lesson quiz: Building a personal budget
6 questions, marked with the reasoning shown. No timer.
1. A budget's first line should be
2. Variable costs are best estimated from
3. A negative surplus means
4. Which is discretionary spending?
5. Balancing day-to-day and future money matters because
6. Amara's surplus is £150 and she saves £100. The remaining £50 is best described as
Lesson round-up
Part 19 of 19
Lesson round-up
Ready when you are
Quiz score
Not sat
Games
Not played
Points this lesson
0
Best run
0 in a row
Luna: 0 out of 4 on the practice checks. Only if you feel up to it — one more?
Ask LunaDo the work
Your written work for this lesson
This is the part you'd do in your book at school. Pick the pieces below, write here or on paper, and photograph anything you draw or work out.
Should the town centre have a curfew for under-16s?
After a rise in reported vandalism, Harbrook council proposed that under-16s should not be in the town centre after 9 pm without an adult. Police recorded 62 incidents last year, most between 9 pm and midnight. Shopkeepers signed a petition supporting the plan.
A youth council objected. They pointed out that most young people in town at night were going home from sports clubs or work, that the plan punishes a whole group for the acts of a few, and that the library and the bus interchange are in the town centre. They asked instead for a late bus and a youth space.
The council voted to trial the curfew for six months and to publish the crime figures at the end.
Written for Good Learning Co.
Reading questions
- Give the strongest point on each side of the argument, using a fact from the case.
- Whose rights and whose responsibilities are involved here? Explain both.
- Write your own view on the curfew with reasons and one example.
Reading and response
ReadingRead the case in the lesson again and write what you think should happen, and why it is fair. Use one fact from the case as evidence.
2 paragraphs (PEE)
Extended writing
WritingWrite your answer to the lesson's big question in full: the strongest point on each side, then your own view with reasons and an example.
250–350 words
Reading log
ReadingFind one news story this week that links to this lesson. Note the headline, where you read it, and how it connects.
1 story, 4–5 sentences
Two sides of the argument
WritingWrite the strongest point for, the strongest point against, and then your own view with a reason.
3 paragraphs
Poster or leaflet plan
DiagramPlan a leaflet that explains this right or responsibility to someone your age, then photograph it.
1 planned page
Saved as you type.
Part 1 of 19 · Watch & discover