HOW TO MANAGE A HOUSEHOLD BUDGET
Classroom activity for secondary schools
TEACHERS’ NOTES
FAMILIES
struggling to make ends meet face tough choices
Timing
Resources
50 minutes – 1 hour
For each pair or small group of students, copies of:
• Students’ activity sheet 1: Shopping list
• Students’ activity sheet 2: Budget allocations table
Overall learning objective
By the end of this activity, pupils will:
One copy of Students’ activity Sheet 3: Petition on poverty
• understand how to make spending choices given a
household budget
• understand how to access and repay credit
• be more aware of the difficulties of living on a low income
• have chosen whether to take action on this issue on
behalf of children living in poverty by signing a petition.
Optional: Red and green ‘TRUE’ and ‘FALSE’ cards for
each student
Preparation
Read the Teachers’ background information sheet
on the ‘poverty premium’ and on child poverty and
government policy.
HOW TO MANAGE A HOUSEHOLD BUDGET
1. Starter activity: Child poverty in the UK
(10–15 minutes)
The learning objectives for the starter
activity are:
• to understand that poverty is not a problem
restricted to developing countries
• to explore what poverty actually is.
Statement 1: ‘3.8 million children in the UK live in
poverty.’ TRUE
You may want to refer to the distinction between poverty and
severe poverty. Highlight that 3.8 million children means more
than one in every four children in the UK.
Statement 2: ‘Some parents in the UK only have £19 a day
Before you start
Remember, some children in your class may be experiencing
poverty in their homes and neighbourhoods. Keep this in mind
during the lesson.
1. Discuss the following question with pupils as they enter and
settle:‘1.3 million children are living in severe poverty – in
which country?’
Ask pupils to work in pairs to come to a decision about which
country this is and feed back to the class.Alternatively do this
as a whole class, with students calling out their thoughts.
Statement 3: ‘Most poor families own a car.’ FALSE
Most poor families do not own a car.You may want to discuss
other forms of transport, their cost and convenience.
Statement 4: ‘About 7,700 children in the UK can’t afford
a healthy diet.’ FALSE
In fact, 770,000 children in the UK can’t afford a healthy diet.
You may want to discuss what a healthy diet includes (which
leads into the final activity in this lesson).
Ask students to explain the reason for their answer.
Depending what they say, and on the ability of the class,
you may want to discuss issues like media representation,
stereotypes and prejudice. You may want to put the figure
in context:
Statement 5: ‘Despite our wealth, our country currently has
one of the worst rates of child poverty in the European Union
– ranked 21 out of 27.’ TRUE
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•
•
•
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Statement 6: ‘About 85% of mums and dads who are poor
World population: 6.7 billion
UK population: 60 million
England’s population: 50m
London’s population: 7.5m
The population of your local town or neighbourhood
You may want to explain the difference between poverty and
severe poverty. 3.8m children live in poverty in the UK and
1.3m children live in severe poverty.
The UK government defines poverty as living in a household
below 60% of median income or:
• £186 a week for a single parent with two children
• £268 for a couple with two children after housing costs.
Save the Children defines severe poverty as living
on less than 40% of median income or:
• £179 per week for two adults and two children
• £124 per week for one adult and two children, after
housing costs.
2. Read out the true/false statements below or project them
onto the interactive whiteboard.Ask students to indicate
whether they believe the statement to be true or false for
each statement.They can do this by holding up green or red
cards, using mini whiteboards, moving from one side of the
room to the other, or simply raising and lowering their hands.
2
to cover electricity, gas, phones, other bills, food, clothes,
washing, transport, health needs and activities.’ TRUE
Briefly discuss how rich the UK is compared to other countries in EU.Ask students why they think our child poverty rate
is so high.
find that paying for school uniform is the most expensive thing
related to bringing up a child.’ FALSE
Ask students what they think parents do find the most expensive thing (refer back to statement 2 for ideas). In fact, 85% of
parents living in poverty find that paying bills is the most expensive thing related to bringing up a child.
Statement 7: ‘About 650,000 UK kids live in homes that
aren’t heated properly.’ TRUE
Ask students what they think the consequences might be of
living in a home without proper heating.
3.What does poverty mean? Ask each student to write down
one thing they think poverty means before sharing their ideas
in pairs or small groups and then as a class.
Encourage a discussion among the whole class by asking the
following questions:
• What do your parents or carers have to spend money on?
• What do we need to be happy and healthy? (If students say
things like MP3 players and crisps, ask them to circle the three
main items they think they need to survive.You can return
to them at the end of the lesson to see if they still agree.)
HOW TO MANAGE A HOUSEHOLD BUDGET
2. Main activity: Managing a household budget
(25–35 minutes)
The learning objectives for the main
activity are to:
• learn how to manage a household budget
• understand the difficulties that low-income
households face.
Before you start
The activity assumes a household made up of three people
(one adult and two children) and that they receive income
weekly (rather than monthly).
In order not to make the game too complicated, households
have no other bills to pay (eg, electricity, telephone).You could
mention this during the whole-class discussion in the final activity of this lesson.
1. Divide students into pairs or small groups. Give each group a
copy of Students’ Activity sheet 1 (shopping list) and Students’
Activity Sheet 2 (budget allocations). Groups with a budget
below the £200 threshold are eligible for free school meals.
2. Explain that each group is buying items to last a week for a
household consisting of one adult and two children.
Depending on the age group of your students, you may need
to tell students which items on the shopping list they need to
buy.Alternatively, they may be able to decide for themselves
what items they will need for a week. Get them to think about
what their lunchbox is made up of, and what they tend to eat
for breakfast and dinner at home. If they know the price of
items they would like that are not on the shopping list, they
can include these.Alternatively, you could ask the students to
write their own shopping list for a family of three and then
find out the prices in the local supermarket or online, as part
of a homework activity in preparation for this lesson. Remind
students that they may need to keep some money for other
activities.
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3. Students prepare for the new school term for the older
child in the family. In particular, they have to buy a school
uniform.
Some students may not have enough money left over to purchase an entire uniform.Tell them they can borrow money
from the bank by using a credit card. Remind them that they
will have to repay this money, with interest, at the end of the
week, when they are paid their salary. Depending on the age
group, you may wish to offer one fixed amount of credit or a
choice.The cost of credit depends on the group’s initial income (see Students’ Activity Sheet 2).
4. It’s a friend’s birthday party (a bowling party). Students need
to buy a present and pay the cost of travelling to and from the
bowling alley for both children.Again, some students may need
to borrow money from the bank.
5. It’s pay day! Ask groups that have a credit card bill to work
out how much it will cost to pay off their bill and how much
money they then have left for the following week.
HOW TO MANAGE A HOUSEHOLD BUDGET
3. Whole-class discussion (15 minutes)
1. Students now reflect on the activity.As a whole class discuss
the following questions:
- Did you enjoy doing the activity?
- Was it easy to plan shopping for the week?
- Were you surprised by the prices of some items?
If so, were they cheaper or more expensive than
you expected? Did you have to make any difficult choices?
- What happened when you had to buy the school uniform?
Attend the party?
- How much money did you have for the following week?
It’s likely that groups on a higher budget will have found the
task extremely easy, and even if they accessed credit, would
not have found it difficult to repay.Those on lower initial
incomes may have struggled to pay for everything without
accessing credit, and once they had repaid the bank at the
end of the week, will have little or no money left for the
following week.
2. Invite students to discuss how this makes them feel,
particularly those who started off with a low budget.
- Did free school meals help?
- Are you worried about what might happen next week?
- What kind of shocks might hit them (eg, the need to buy a
warm coat in winter, Christmas presents, a family holiday)?
- What might the consequences be of ending each week
with a lower and lower budget?
3. Ask students whether it’s a good thing to be able to access
credit. When might it be helpful (eg, spreading the cost of
large payments, like a mortgage on a house)? Where might it
be dangerous? Introduce the concept of a ‘poverty premium’
(see section on the ‘poverty premium’ on the Teachers’
Background Information Sheet).
4. Conclude the lesson by telling students that this was a
simplified activity that did not include bills like housing,
electricity, gas, water, heating, telephone and Internet.
Remind them that planning household expenditure is what
all of their parents and carer guardians do every week and
month. Some households may find it more difficult than others.
Suggest that students help their parents or carers, for example,
by working out the weekly shopping budget.
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5.Take action to end child poverty in the UK. Download a
copy of Students’ Activity Sheet 3: Petition on poverty for
students to sign and send back to Save the Children. Or e-mail
[email protected] to get a hard copy of
the petition for your class and other classes and add your
voice to end child poverty in the UK.
Send posters back to Save the Children so they can be handed
in to the Chancellor of the Exchequer. The petition shows
where the Chancellor lives at No.11 Downing Street and
where he will deliver the budget from.
For more information on the budget go to: www.redbox.gov.uk
HOW TO MANAGE A HOUSEHOLD BUDGET
Teacher background information: child poverty in the UK
1 The ‘poverty premium’
• A cooker bought outright from Argos would cost £159.99
whereas the same cooker bought from Brighthouse (a ‘subprime’ credit shop) paid over 125 weeks would cost £405 –
a percentage difference of 153%.
• The cost of a £500 loan from a typical credit card (15%
annual percentage rate (APR), paid over 52 weeks) would
be £539.A £500 loan from Provident Personal Credit (177%
APR, paid over 55 weeks) would cost £825 – a percentage
difference of 53%.
• The annual gas bill for a monthly direct debit customer
(using 20,500kWh gas in a year) would be £609.70.
A pre-payment meter customer (using the same amount of
gas) would pay £673.70 – a percentage difference of 10%.
• The average total annual mobile phone costs of a pay
monthly customer (including monthly charge) would be
£315.96.A pay-as-you-go customer would pay £395.43 – a
percentage difference of 22%.
• Home contents insurance (for 12 months) for a 4-bedroom
house in a deprived area would be £618.80 compared to
£465.85 for a 4-bedroom house in an affluent area.
Low-income families face a £1000 ‘poverty premium’ created
by unfair financial opportunities, according to by Save the
Children (The Poverty Premium, 2007).The poorest families are
more likely to have low credit ratings. As a result, they may
have to rely on ‘sub-prime’ credit shops and doorstep lenders.
APRs on goods and loans are often in excess of 100%.
Low-income consumers tend to pay more for their energy
and phone service because they are more likely to opt for
pre-payment plans. Insurance also comes at a higher cost.
Low-income families are more likely to live in areas with high
levels of property crime and car crime.As a result they have
higher insurance premiums than people in more affluent areas.
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2 Government policy
On 18 March 1999, the then Prime Minister,Tony Blair,
announced an aim to eradicate child poverty by 2020 (and
halve it by 2010). In order to do this, the government must
reallocate expenditure in the UK Budget towards a range of
policy areas, such as education and welfare.
Background
Did you know that 3.8 million children in the UK live in
poverty? Children who grow up in poverty are more likely
both to experience a poorer quality of life in childhood and
to have poorer outcomes as adults.A child is said to be living
in poverty if they are living in a household with income less
than 60% of median national household income. Between
1998/99 and 2005/06, 600,000 children were taken out of
poverty (equivalently, a 6% fall). But halving child poverty will
require taking 2.2mn children out of poverty by 2010.
At the present rate of progress, estimates suggest that the
government will fall of this target by more than 1 million.And
the target of halving child poverty will not be met until 2024.
Notice that child poverty is a relative target, that is, we
measure incomes compared to a national average. But we
know incomes in the UK are rising, so if median income
increases, and the poorest households cannot keep up, then
more households, and therefore more children, end up falling
into poverty.And that’s what happened in 2007, where child
poverty actually rose. If the income growth rates seen last year
continue, then over the next five years, the most affluent
households will see income increases of over £8,000 whilst
the poorest would see falls of nearly £750.
The End Child Poverty campaign
Because incomes of those at the bottom need to rise at a
faster rate than average incomes, eradicating child poverty
requires a significant resource allocation towards a range of
policy areas, such as the tax and benefit system, employment,
education, health and housing.We estimate that in order to
meet its 2010 target, the government must allocate £4bn a
year to the above policy areas. In particular, we want the
government to provide seasonal grants of £100 per child in
summer and winter, and £100 per household in winter, to
ease seasonal pressures on household budgets, like extra
heating in the winter or activities in the summer holidays.
Significant expenditure today may reduce pressure on national
services such as healthcare, housing and the welfare system
tomorrow.
HOW TO MANAGE A HOUSEHOLD BUDGET
Students’ activity sheet 1
Shopping list
Item
FRUIT
Apples
Bananas
Grapes
Oranges
Pears
Cost
£0.86
£0.73
£1.78
£0.98
£0.99
SALAD AND VEGETABLES
Broccoli
£0.68
Carrots
£0.64
Cucumber
£0.62
Garlic
£0.69
Lettuce
£0.75
Mushrooms
£1.15
Onions
£0.80
Peas
£1.49
Peppers
£1.29
Potatoes
£1.38
Spinach
£1.69
Tomatoes
£1.08
MEAT, FISH AND POULTRY
Bacon
£1.36
Beef
£4.94
Chicken
£2.32
Fish
£2.48
Mince
£1.40
Pepperami
£2.16
Sausages
£0.47
Turkey
£0.99
DAIRY, EGGS AND CHEESE
Cheddar
£2.27
Cheesestrings
£2.08
Cream cheese
£1.18
Dunkers
£1.98
Eggs
£1.19
Flavoured yoghurt
£0.48
Milk
£1.68
BREAKFAST CEREALS
Cornflakes
£1.98
Porrridge oats
£0.39
Rice Crispies
£1.83
Weetabix
£1.59
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BISCUITS, SNACKS
AND SWEETS
Cream crackers
Chocolate bar selection
Crisps
Digestives
£0.88
£1.38
£1.34
£0.40
FROZEN FOODS
Curry (Indian)
Chips
Ice cream
Pizza
Shepherd’s Pie
Vegetable Pie
£1.79
£1.02
£1.48
£0.91
£1.99
£1.27
BAKERY AND CAKES
Crossiants
£1.29
Crumpets
£0.29
Doughnut selection
£0.55
Loaf (brown)
£0.73
Loaf (white)
£0.76
Pitta bread
£0.34
HOUSEHOLD ITEMS
Body wash
Detergent
Furniture polish
Hand soap
Washing up liquid
£0.72
£3.00
£0.64
£0.40
£0.60
CLOTHES
Coat
Jumper
Shirt
Skirt
Shoes
Socks
Tights
Trousers
£26.00
£11.00
£9 for three
£8.00
£22.00
£3.50 for 10 pairs
£6 for four pairs
£9 for two pairs
*Prices taken from Tesco (September 2007), apart from prices
for clothes which were taken from M&S website
HOW TO MANAGE A HOUSEHOLD BUDGET
Students’ activity sheet
Weekly budget
Group
Weekly budget
Weekly interest rate on loans
1
2
3
4
5
6
7
8
9
10
11
12
£100
£100
£120
£120
£140
£140
£160
£160
£200
£200
£300
£300
3.00%
3.00%
2.50%
2.50%
2.00%
2.00%
1.50%
1.50%
1.00%
1.00%
0.50%
0.50%
The weekly interest rates in column 3 are based on annual interest rates for different types of loans.
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