Budgeting Lesson Plan: Teaching Basic Budgeting Skills to High Schoolers (Part I)

Lesson Plan Part I: Estimating Net Pay



Budgeting is one of the backbones of money management and personal finance. Understanding what’s coming in and what’s going out can help a household pinpoint areas to improve savings rates, prioritize spending on things that truly matter, and plan for expected goals as well as unexpected emergencies.

I’m a fan of budgeting. I actually love tracking my income and spending while trying to “beat” last year’s totals. Although I’m aware many do not share my love of Excel spreadsheets, I would recommend a good old-fashioned budget to anyone wondering where their money is going and how they can save for the future.

Note: There is not one “right” way to budget. Reading personal finance blogs has introduced me to so many different methods and approaches, and I’m still refining my own budgeting. It’s impossible to introduce all possible strategies to students, so I try to keep it as simple as possible. This 3 part lesson plan works for me and my students, but feel free to change anything to make it work in your classroom.


Since many of my students have no concept of a budget, we begin with the basics. First, how much is actually going to end up in your bank account during your first years as an “adult?” We will continue to the spending portion of the budget in Part II and Part III.

I take this step for granted as I can easily check my pay stub to figure out my net pay in a second, but we have to estimate students’ future paychecks. It’s easy to get bogged down in the many deductions each individual’s gross pay, but I try to stay basic for students. We need to start with the input so students have an idea of how much they can allocate to necessities and the fun stuff — and students CANNOT spend more than they make.

Some lesson plans include cute activities like taking pieces of candy or poker chips and putting them on different pre-selected categories (rent, groceries, clothes, eating out, etc) to symbolize choices that have to be made when budgeting. While these activities are fun little introductions to budgeting and opportunity costs, I do not want a “one-sized-fits-all” approach to budgets. I want students to walk away with a more complete vision of what their lifestyle may actually be like with their possible career options.


Part I: Estimating Net Pay

Hopefully students will be happy with their net pay

I keep calculations of net income (take-home pay) very simple. Students find their average starting salary, determine their expected retirement contributions, and estimate their federal taxes as a baseline.

Note: Many calculations can go into net income in the “real world,” but as far as the math goes, I stick to a simple formula. Feel free to add more variables with your students.

Simple “Net Pay Formula” I use with students: Gross Wage (expected salary) – Retirement Contributions – Federal Taxes = Net Pay


Gross Wage or Salary

Obviously students may start their own businesses, have one or more side hustles, or other unique situations when they start with “adult life,” but I have them begin with researching 3 salaries in desired fields.

Why 3? So they have options. If they want to be a doctor, for example, what are three different positions within the medical field they may pursue? How might the training and pay be different?

For students who may not be sure of their desired career path, I encourage them to find jobs with different requirements for training and education. Is there a job you can start with a training certification? An associate’s degree? A bachelor’s degree? Post-graduate studies? It’s great for students to see these options side-by-side for comparison.

I have students put them into this chart:

I utilize charts for students to compare their options

I am lucky to have access to computers and internet for students to research careers they really would consider pursuing to make this exercise more meaningful. If your school does not have the ability for student research, you can compile a list of salaries for careers that may be interesting for your students.


Retirement Contributions

Students MUST set aside money for retirement in this exercise. We assume students set up a 401(k) without employer matching (I do this budgeting assignment before diving deeper into retirement options, so, once again, we keep it simple).

I encourage students to aim for at least 10% of gross pay in their 401(k), but they are free to choose their own contribution (as long as it’s more than zero). I tell students to use pencil on this part because once they use the tax calculator, they may choose to increase their pre-tax amounts.


Estimating Federal Taxes

Students with jobs are already aware of the bite taxes may take from their expected pay. And, again, although each student may have a unique tax situation, we keep it simple for their federal tax calculations in this budgeting exercise.

Nerd Wallet has a simple tax calculator so students can estimate their withholdings: https://www.nerdwallet.com/taxes/tax-calculator

This calculator allows for students to pay around with their retirement contributions so I emphasize students should try several contribution amounts they could consider.

Income of $50,000 with $5,000 in 401(k)

Since 401(k)s use pretax income, I see the lightbulbs go off when students realize if they add more to their personal retirement account, their payments to Uncle Sam may decrease. More money for their future is always a good thing.

Income of $50,000 with $10,000 in 401(k)

Putting it all together

Once students have their values, we figure do some math to figure out their estimated net pay with their top job choice:


This is a very basic exercise for students to have an idea of about how much they may be paid each month as an “adult.” I try to allow for students to customize the assignment but I try to keep it as simple as possible. This won’t produce a 100% accurate assessment of their net pay, but it provides a good starting point for students to think about their salary, retirement contribution, and federal taxes.

From here, students will take their net pay and allocate their money to pay bills and buy the things that make them happy — without going over their net pay.

For the Bills, see Part II

For the Fun Stuff, see Part III

6 thoughts on “Budgeting Lesson Plan: Teaching Basic Budgeting Skills to High Schoolers (Part I)”

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