Lesson Seven-D
Spending A Paycheck (continued)


To help participants develop a spending plan (budget) that will enable them to live within their means and move towards prosperity.

 1. Review the homework from the previous session. Ask participants to share what is important to them in terms of compensation.
 2. Begin this session by reflecting that each participant has a destination in mind, but right now, is not there. Rather, participants will have to live through a time of searching for a job until they find it or preparing for a job until they are ready for it. In the meantime, each will have to have a plan for survival. Reflect on the fact that we get money from only one of three sources: someone gives it to us, we steal it, or we earn it. State the advantages of earning it. It's yours, you control the getting of it, and you're not likely to be arrested or shot doing it. To earn a living, you have three renewable resources: your effort, your know-how, and your character. In addition, you have some useful properties. Let's suppose for a moment you had money coming in from a job. What would you spend it on? Make a list of items on which you would spend money. After a few minutes of listing, ask participants to rank order their list from high to low by assigning numbers beginning with "1" for most important.
 3. As a large group, make a general list of items on which participants would spend money. Ask each person to share the most important item on his/her list. Go around working down through lists until all items are shared. Write the items down and the rankings they were given. After the list has been generated, ask for participant comments about the list.
 4. Point out that not everything on the list is a "necessity." Define necessity - a requirement of survival which, if neglected for too long, will create harm, injury, or death to a person. Ask participants to identify necessities and explain why they are necessities. Put a check by each necessity. Make a separate list of necessities, grouping them under headings such as "Food," "Shelter," "Clothing," "Transportation," "Health," "Education," etc.
 5. After listing the identified necessities in groups, add two additional groups: "Emergencies" and "Savings." Ask the group to discuss why these are necessities.
 6. Suggest to participants that in order to achieve prosperity, they must learn how to construct and carry out a spending plan (budget) that will enable them to achieve prosperity. Explain that a budget balanaces two things: Income and Expenses. Draw a seesaw with expenses on the left side and income on the right. Talk about various forms of income: wages, bonuses, interest, gifts, subsidies, charity, etc. Include credit as a source of income. Discuss what happens when expenses (spending) exceed income. Point out that inevitably excess spending leads to three outcomes: loss of goods, loss of capacity to spend, and loss of credit. Indicate that expenses include necessities and luxuries. A luxury is something you would like to have but you would not endure any real harm by not having it. Conclude by making the point that lasting prosperity can only be achieved and maintained by learning "to live within your means." Regardless of the amount of money a person gets, he/she must use it properly or lose it.
 7. Reexamine the list of necessities. Explain that there are some expenses that occur regularly and in the same amounts - rent, for example. These regular and predictable expenses are fixed expenses. Some expenses depend on use and come due on an unpredictable schedule - medicines and utilities, for example. Using the letter "F," identify those expenses on the necessities chart that are fixed. Have participants explain how they are fixed. Then, repeat this process for variable expenses. Use a "V" to indicate them.
 8. Ask participants to estimate what their current expenses are for necessities. It does not matter whether or not the participant is paying for the necessities he/she is consuming. Make sure each person estimates. Ask participants to state how much they are contributing to their own survival and what the source of that money is. Ask what is/are the source(s) of the remainder. Then, compare participants' estimates for each category. Generate "best estimates" for each category from participant estimates.
 9. Using these estimates, ask participants to imagine that they have a regular full time job right now, and it pays minimum wage. Compute their after taxes and withholding income. Write the word "INCOME = " then the take home amount on the chalkboard or newsprint.
 10. Have participants work in teams of four to decide how to spend their money. Their goal is to make sure that they can make ends meet. They are to continue working until they can meet their necessities realistically and explain how they would do so.
11. Get the teams to present their spending plan. Ask everyone to assess them in terms of how workable the plan is, whether it covers all the necessities, and whether it could be sustained for up to a year. Then make one of three determinations: Excellent, Passing, or Failing.


Based on the experience working in groups, ask each participant to construct a personal budget for a minimum wage job.



Distribute the Self-Worth Checklist. Ask participants to reflect on their behavior during this session and to honestly rate themselves. Ask them to place their evaluations in their portfolios and return them to the file cabinet.