AY Honors/Household Budgeting/Answer Key/en

Household Budgeting

Skill Level

2

Year

2023

Version

14.11.2024

Approval authority

North American Division

1

What is a household budget and what is the importance of having one?

A household budget is (hopefully) a written guide to how you plan to spend your household income. It also shows how much you plan to earn or otherwise receive as a family. Income may include employment, business, investment income and government payments to the family. Expenses will include housing (including rent or mortgage, utilities and property taxes), transportation, food, entertainment, clothing, education and other costs. You should also budget for savings and donations - ideally off the top before you spend the rest of your income.

2

Define the following:

2a

Income

2b

Expenses

2c

Cash flow

2d

Loan

2e

Usury loan

2f

Interest

2g

Principal

2h

Credit

2i

Credit score

2j

Investments

2k

Tithe/offerings

2l

Taxes

2m

Inflation

3

Explain the difference between needs and wants. Make a list of your family's expenses and classify them as needs or wants.

4

What can you and your family do to save on utilities? How do any of these expenses vary during different seasons of the year in your home?

5

How can inflation affect a family budget?

6

What are the methods your family uses to pay bills? What other methods could be used?

7

What types of taxes exist in your area (city, state/provincial, federal, income, property, sales, payroll, etc.)? What are taxes typically used for in your region?

8

Explain the difference between good and bad debt.

9

What is interest? How is it calculated? Calculate how much it would truly cost to finance a $5000 loan with a 7% interest rate over 5 years.

10

Investigate what is the interest rate and what are the financial responsibilities in the lines of credit for the following:

10a

Credit card

10b

Overdraft

10c

Student loan

10d

Usury loan

11

What measures can be taken when the family is in debt?

12

Consider Proverbs 6:6-8 and discuss the value of having an emergency fund. How many months worth of income should generally be saved for emergencies?

13

Read Matthew 25:14-30 and discuss the value of investing money. Identify at least two methods of investing money. What are the advantages and disadvantages of each?

14

What are some advantages and disadvantages of using automatic payments (autopay)?

15

Simulate the following (or equivalents):

15a

Identify an account and routing number

15b

Write and endorse a check

15c

Reconcile a bank statement

16

Interview a financial professional or equivalent about personal budgeting.

17

Develop a family budget (this can be done together with parents). Keep a personal budget and record income and expenses for two months.

18

Read Malachi 3:8-12 and discuss what role tithes and offerings could play in a personal/family budget.

References