Budgeting made easier: spending limit

Spending limit exercise TOT Tanzania 2014
training the trainers in Tanzania 2014 ICS

 
Using picture cards and toy banknotes makes budgeting and prioritising easier. For example, give a daily income to each group using toy banknotes, and 5 or 6 cards of usual expenses (various food, clothes, soap) and ask them to choose how to spend their income. Then give them one or two cards representing monthly or yearly commitments (rent, school fee, or debt to pay back…); if they struggle with division, using toy banknotes or little objects (seeds, little stones…), calculate together how much is the monthly commitment divided by 30 (30 days in a month) or the yearly commitment divided by 12 (months) then 30 (days). Then ask them to reprioritise the toy banknotes: some should go to the commitments (according to the amount you have calculated) and the rest to the other expenses.  Let them count the money available for daily spending (income minus savings for commitments): this is the daily spending limit. If they spend more, they won’t have enough to pay for commitments and will end up borrowing.
Use this game in one to one visit and have the families calculate their own daily spending limit.
You can go further and introduce an emergency expense in order to encourage them to save for emergencies. Add a box for them to keep the savings and make it clear what is spent and saved.
Once participants are getting used to prioritising, run several rounds with different income amounts: they will practise saving when the incomes are higher and take from their savings when the income is too low or there is no income. Introduce other expenses such as holidays, celebrations, etc… but keep it simple. Ask participants what other expenses they can think of to add to this game.
Adapt it: use a yearly income if participants are farmers with a yearly crop for example. The other skill that this game makes practise is communication: participants have to discuss and decide on priorities with their other group peers. Don’t be afraid to run many rounds, with slight variations: we take hundreds of decisions about money every month or week, so practising how to prioritise a few times in a row is nothing but a healthy practise.

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