Jahnome McEwan, a 21-year-old university student, has set out to reform his spending habits. He plans to restrict his spending to the necessities and an occasional dinner in a restaurant with his girlfriend.

Getting Started

Appropriate subject area(s):

Personal finance

Key Questions to explore:

  • What is discretionary spending?
  • What obstacles prevent individuals from saving?
  • What are the benefits of saving and investing?
  • Why is it important to pay your credit card balance on time?

New Terminology:

Discretionary income, consumer culture

  • Discretionary Income: This is the amount of a person’s income that is left for spending, investing or saving after paying taxes and paying for personal necessities, such as food, shelter and clothing.
  • Consumer culture: This is a culture in which consumers derive happiness from buying and spending on goods and services which are not essential to their day-to-day lives.

Materials Needed:

A copy of the article.

Study and Discussion Activity

Introduction to lesson and task:

Mr. McEwan plans to go through 2016 without spending on anything frivolous.

He plans to save 70% of the money he currently earns and he hopes to put $5,000 into his investment account annually over the next several years. He wants to have assets of $1 million by the age of 35.

He is aware of the fact that the best way to improve your finances is by cutting spending. To meet this goal, he plans to spend only on necessities like food, transportation and school supplies. However, one thing he struggles with in his quest to reach his lofty savings goals is peer pressure.

A key takeaway for students will be the importance of giving up instant gratification for future rewards. In addition, students should be mindful of racking up huge student loan debt, as this could adversely affect their credit scores and financial flexibility. Mr. McEwan is a good role model for students to emulate when it comes to financial literacy and spending habits.

Action (lesson plan and task):

  • Hand students the article.
  • Ask students, through a show of hands, if they have a good grasp on their spending habits and their personal finances.
  • Engage in a conversation with your students about how they can improve their spending habits.
  • Ask students if they know how to prepare a weekly, monthly or yearly budget.
  • Ask students to state some benefits of budgeting and setting savings goals.

Consolidation of Learning:

  • Ask students to prepare and present a sample budget for 11th grade students.
  • Ask the class what they learned from this practice.
Success and Additional Learning

Success Criteria:

  • By the end of this process each student should be able to explain the importance of budgeting and they should be able to prepare a detailed and practical budget.

Confirming Activity:

  • Ask students if they have any financial resolutions in mind for this school semester.