F. Financial Literacy · Money and Finances: Payments, Financial Plans, Budgets, Interest and Smart Spending

Ways to Keep a Budget Balanced

F1.3 A1About 45 minutes

Learning goals

I can tell whether a budget is balanced, has a surplus or has a deficit.
I can describe different ways to balance a budget: spend less, earn more, plan ahead.
I can spread irregular costs over the months and plan an emergency fund.
I can balance budgets for different scenarios: a student, a family and a young adult.

Words to know

balanced budget
A budget where planned spending and saving are not more than income.

surplus
Money left over when income is more than expenses and savings.

deficit
A shortfall when expenses and savings are more than income.

fixed expense
A cost that is the same every month, like rent or a phone plan.

variable expense
A cost that changes from month to month, like groceries or outings.

irregular expense
A cost that doesn't come every month, like a yearly registration fee or birthday gifts.

emergency fund
Money saved for unexpected costs, like a car repair or a broken phone.

Remember from Grade 7

In Grade 7 you created, tracked and adjusted budgets. You know a budget lists income, expenses and savings.

This year you'll collect a toolbox of ways to keep a budget balanced, and use them for very different people: a student, a family and a young adult in a first apartment.

Surplus, balanced or deficit?

Compare income with expenses + savings:

Income is more: there's a surplus. The budget is balanced, with money to spare.
Income is equal: the budget is balanced exactly.
Income is less: there's a deficit. Something has to change, or the person will run out of money or go into debt.

Think of a budget as a balance scale. When income outweighs expenses + savings, there is a surplus; when it is lighter, there is a deficit. The $132 is Hana's first plan in Example 1.

Ways to keep a budget balanced

Spend less

Separate needs (food, housing, transportation) from wants (extra treats, new games).
Reduce or swap: pack lunch instead of buying it, borrow books from the library, share a streaming plan within the family.
Compare prices and use sales on things you really need.
Wait a day or two before buying a want. Often the urge passes.

Earn more

Extra work: babysitting, dog walking, shovelling snow, selling things you no longer use.

Plan ahead

Pay yourself first: move savings aside as soon as you get paid.
Spread irregular expenses over the year: a $120 yearly fee is $10 a month.
Build an emergency fund so a surprise cost doesn't wreck the budget.
Track your spending so you notice problems early (next lesson!).

One common guideline some people use is 50/30/20: about 50% of net income for needs, 30% for wants and 20% for savings. It's a starting point, not a rule. Real budgets depend on the person and where they live.

The 50/30/20 guideline for a net income of $3 000: half for needs, 30% for wants and 20% for savings. Each piece is drawn to scale.

Worked example

Example 1: A student's budget

Hana's monthly income: babysitting $90, allowance $30. Her plan: snacks $35, streaming $12, outings $40, gifts $15, savings $30. Is it balanced? If not, fix it.

Income: 90 + 30 = $120.
Expenses + savings: 35 + 12 + 40 + 15 + 30 = $132.
Deficit: 132 − 120 = $12.
Fix: cut snacks to $25 (bring snacks from home) and join the family's streaming plan instead of paying $12. New total: 25 + 0 + 40 + 15 + 30 = 110.
Surplus: 120 − 110 = $10. She puts it toward savings: savings becomes $40.

Hana's budget had a $12 deficit. After swapping and cutting, it's balanced, and she saves $40 instead of $30.

Category	Planned	Adjusted
Housing (rent or mortgage)	$1 950	$1 950
Food	$1 100	$1 000
Transportation	$650	$650
Utilities and phone	$380	$380
Child care and activities	$420	$420
Insurance	$210	$210
Savings	$300	$300
Other	$290	$290
Total	$5 300	$5 200

The Leblanc family's monthly budget (example amounts). Their net income is $5 200 a month.

Worked example

Example 2: A family's budget

The Leblanc family's net income is $5 200 a month. Their planned budget totals $5 300 (see the table). How can they balance it?

Deficit: 5 300 − 5 200 = $100.
Housing, insurance and child care are hard to change quickly (fixed expenses).
Food is a variable expense. By planning meals, checking flyers and cooking more at home, they cut food by $100: 1 100 → 1 000.
New total: $5 200 = income. ✓ They keep their $300 savings.

Cutting a variable expense balances the budget without touching savings. Families often look at variable expenses first.

Worked example

Example 3: Planning for irregular costs and emergencies

Luca, a young adult, needs a new winter coat about once a year ($150) and pays a yearly $90 gym fee. He also wants a $600 emergency fund within a year. How much should he set aside each month?

Coat: 150 ÷ 12 = $12.50 a month.
Gym: 90 ÷ 12 = $7.50 a month.
Emergency fund: 600 ÷ 12 = $50 a month.
Total: 12.50 + 7.50 + 50 = $70 a month.

$70 a month. When the coat or the gym fee comes due, the money is already there, and the budget stays balanced.

Cut, swap, earn, plan

When a budget doesn't balance, try these four words:

Cut a want, or spend less on it.
Swap for something cheaper.
Earn a bit more.
Plan for irregular costs and emergencies.

Usually the best fix uses more than one.

Respect different situations

Every family's budget is different, and money can be a private topic. Our examples are made up. It's fine to talk about budgets in general without sharing your own family's numbers.

Just for fun

Why was the budget so calm all month?

It finally found some balance in its life.

Hands-on activity

Balance the budget challenge

You need: paper, a calculator, and a grocery flyer (paper or online).

Make a pretend weekly grocery budget of $200 for a family of four.
Using the flyer, plan meals for 3 days and list what you'd buy and its cost.
Imagine the family's budget is cut to $180. Use cut, swap, earn, plan ideas to balance it: choose store brands, buy what's on sale, swap a meat meal for a bean or lentil meal, and so on.
Show your before-and-after totals.

What to look for: a correct total, at least two different strategies, and meals that are still healthy.

Your turn

Income $200, expenses + savings $185. Surplus, balanced or deficit? By how much?

Income $150, expenses + savings $170. What is the deficit? Give two ways to fix it.

Sort into needs and wants: groceries, concert tickets, rent, a new phone case (the old one works fine).

A club fee of $90 is paid once a year. How much should be set aside each month?

Use the 50/30/20 guideline for a net income of $2 400 a month.

What is an emergency fund for?

What does "pay yourself first" mean?

More practice: warm-up

Income $80, expenses + savings $80. Surplus, balanced or deficit?

Income $60, expenses $75. What is the deficit?

A $120 yearly cost is how much per month?

Is a movie night out a need or a want?

Name one way a Grade 8 student could earn more money.

More practice: on your own

Ravi's income is $140 a month. His plan: transit $30, lunch out $48 (4 lunches at $12), phone $25, fun $30, savings $20. Is it balanced? If not, fix it by packing lunch more often.

A family's net income is $4 800. Their budget totals $4 950, with food $1 000 and entertainment $200. If they cut food by 10% and entertainment to $150, is it balanced?

A young adult earns $2 600 net a month and wants to save 15%. How much is that?

You buy birthday gifts for 6 people a year, about $25 each. How much should you set aside each month?

A car repair might cost $600. If you save $200 a month for an emergency fund, how long until you're ready?

Challenge

A young adult's net income is $3 200 a month. Budget: rent $1 450, food $450, transit pass $156, phone $55, internet $60, insurance $30, fun $300, clothing $100, savings $300. (a) What is the surplus? (b) Rent goes up 5%. What is the new surplus? (c) About what percent of income is the new rent?

Mei's income changes: $90 in January, $150 in February, $60 in March. Her expenses are $80 each month. (a) What happens in March if she spends everything she gets each month? (b) How can she plan to stay balanced?

A family's net income is $2 800. They spend $1 610 on needs, $630 on wants and $560 on savings. Find each as a percent. Does it match the 50/30/20 guideline?

Check your understanding

Quiz

Income is $250. Expenses and savings total $270. What is true?

Which is a variable expense?

A $240 yearly insurance payment should be budgeted as how much per month?

Using 50/30/20, how much of a $3 000 net income goes to savings?

Which is not a way to balance a budget?

Why is an emergency fund useful?

For parents and teachers

Big idea: Ontario's F1.3 asks Grade 8 students to identify different ways to maintain a balanced budget and use tools to track income and spending for several scenarios. This lesson is about the strategies; the next is about tracking tools.

How to help at home:

Talk about general strategies your family uses (meal planning, waiting before big purchases, saving for yearly costs). You don't need to share actual numbers.
Let your child plan and stay within a small budget, such as a pizza night or a weekly lunch budget.

Common difficulties:

Thinking "balanced" means zero left over. A surplus is also balanced.
Forgetting irregular costs (yearly fees, gifts, seasonal clothing). Dividing by 12 helps.
Cutting savings first. Encourage looking at wants and variable expenses first. These choices build A1 skills: reasoning, reflecting and making decisions.