Budgeting · Video Lesson
What are Income and Expenses?
Income is the money you bring in; expenses are what you spend. This foundational lesson explains the types of income (including passive income from investments), fixed vs. variable expenses, how taxes reduce take-home pay, and how comparing income to expenses is the basis of every budget and emergency fund.
For Teachers
Lesson at a glance
- Topic
- Budgeting
- Grade Level
- Grades 7–12 + adult
- Resource Type
- Video Lesson + Worksheet
- Estimated Time
- 30–45 minutes
- Format
- Class discussion + budgeting activity
- Materials
- Video, worksheet, calculators, whiteboard
What Students Learn
Learning objectives
- Define income and identify its different sources, including passive income
- Define expenses and distinguish fixed from variable expenses
- Explain how taxes reduce take-home income
- Compare income to expenses to build a basic budget
- Explain the role of an emergency fund for unexpected expenses
Video Lesson
Watch: What are Income and Expenses?
Materials
What you’ll need
- Internet access for the video
- Printed copies of the worksheet quiz (one per student)
- Calculators
- Whiteboard or projector for the budgeting activity
Key Terms
Vocabulary
- Income
- Money you receive from work, gifts, or investments.
- Passive income
- Money earned without active work, such as interest or dividends.
- Expense
- Money you spend.
- Fixed expense
- A cost that stays about the same each period, like rent.
- Variable expense
- A cost that changes, like groceries or gas.
- Take-home pay
- Income left after taxes and deductions.
- Emergency fund
- Savings set aside for unexpected costs.
For Teachers
Lesson plan
Estimated time: one 30–45 minute class period.
Lesson sequence
- Introduction (5 min). Preview the two halves of every budget: money in (income) and money out (expenses).
- Watch the video (10 min). Play the lesson video. Ask students to note types of income and expenses.
- Discussion (10 min). Cover income sources (including passive), fixed vs. variable expenses, how taxes cut take-home pay, and why an emergency fund matters.
- Activity — budget (12 min). Students build a simple budget from a sample income and expense list and see whether it balances.
- Quiz (8 min). Students complete the printable quiz; the answer key is included for teacher use.
Assessment
Assess participation, the budget activity, and the printable quiz.
Discussion
Discussion questions
- What are the different types of income, and how do taxes affect what you keep?
- What is the difference between a fixed and a variable expense?
- Why is comparing income to expenses the foundation of a budget?
- What steps would you take if your expenses exceeded your income?
- How can an emergency fund help with unexpected expenses?
Printable Quiz
Income and Expenses — Quiz & Answer Key
Multiple-choice quiz based on the video, with an answer key for teacher use.
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