family economics & financial education 3.19.2.g 1 get ready to take charge of your finances life...

Family Economics & Financial Education 3.19.2.G1

Get ready to Take Charge of Your Finances

Life Of…..

Monica Erickson“A Teenager’s Spending Plan”

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 2 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Snapshot – Monica Erickson

• Sneak peak of the life of Monica and her family– Monica– Sharise– Tyrone– Grandma and Grandpa

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 3 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

SnapshotMonica’s Income and Expenses

• Monica’s Income– Lucy’s Luscious Cakes and Pastries

•$10.00/hour•15 hours a week

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 4 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

SnapshotMonica’s Income and Expenses

• Monica’s Expenses– Saving for culinary school

• Half of monthly income

– Pebblebrook Culinary Team• $60.00

– Transportation• Subway or city bus pass

– Other Items

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 5 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Spending Plan

• The goal is to create a spending plan that balances Monica’s expenses with her income.

• She can not have more expenses than income.

• Spending Plan– Financial statement– Tracks income and expenses– Used to assist with money management and help

individuals reach financial goals– An individual’s perception of needs, wants and values

will affect decisions made when creating a spending plan

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 6 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

SnapshotErickson Family Expenses

• Monica’s Expenses• Housing

– Monthly Payment– Utilities– Others – television,

internet and telephone• Transportation

– Vehicle for Sharise and the family

– Monthly payment and fuel

• Insurance– Health, life, auto

• Food– Groceries– Eat out three times a

week and pick up take-out once a week

• Saving– Down payment on a

condominium or apartment– Monica’s future education

expenses– A portion of child support

from Monica’s dad is saved for future education expenses

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 7 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Housing

• Monthly Payment– Housing

payment– Insurance– Property taxes– Repairs– Maintenance

• Utilities– Heat– Electricity– Water– Sewer– Garbage

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 8 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

• Satellite Dish

• Digital Cable

• Telephone

• Internet

Housing Others

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 9 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Transportation

• Monthly Payment– Car payment– Maintenance

• Fuel– An average is listed– This cost may

increase/decrease depending on the cost of fuel

• Erickson Family– Pay for Sharise’s

vehicle monthly payment and fuel costs

• Monica– Pays for her

public transportation pass

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 10 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Others

• Cellular Phone• Culinary Upgrades• Electronics• Clothes• Entertainment• Create Your Own

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 11 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Goal:To Create A Balance Spending Plan

• Make all choices for the Erickson family and Monica

• Complete a Major Expenditures Summary for the Erickson family

• Complete a Spending Plan for Monica• Answer reflection questions• Write a summary essay

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 12 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Quick Review

• Erickson Family– Monica, Sharise, Tyrone, Grandparents

• Create a Major Expenditures Summary for the Erickson’s– Housing– Transportation

• Create a Spending Plan for Monica– Savings– Public transportation costs– Others

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 13 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Snapshot Reflection

• Review Monica’s Snapshot on pages 2-4• Answer questions 1-5 on page 10

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 14 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Monica’s Paycheck

Personal Information

State the employee’s name, address, and social security number.

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 15 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Monica’s Paycheck

Pay Period

The length of time which an employee’s wages are calculated.

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 16 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Monica’s Paycheck

The total amount of money earned during the pay period before payroll withholdings.

Gross Pay

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 17 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Monica’s Paycheck

The amount of money subtracted from the gross pay for taxes.Payroll Withholdings

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 18 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Monica’s Paycheck

The amount required by law for employer to withhold from earned wages to pay taxes.Withholding Tax

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 19 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Monica’s Paycheck

Federal Insurance Contribution Act – includes Social Security and MedicareFICA

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 20 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Monica’s Paycheck

Net Pay

The amount of money remaining after all payroll withholdings have been removed from gross pay.

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 21 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Monica’s Paycheck

Totals of the deductions which have been withheld from an individual’s paycheck from January 1 to the last day of the pay period indicated on the paycheck stub.

Year-to-Date

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 22 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Setting Financial Goals

•Short Term – less than one year

•Long Term – more than one year

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 23 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Erickson’s Major ExpendituresHousing

• Choose a house and housing others for the Erickson family

• Refer to the Snapshot on pages 2-4• Remember

– Family size– Lifestyle– Other family dynamics

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 24 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Erickson’s Major ExpendituresTransportation

• Choose a vehicle for the Erickson family• Refer to the Snapshot on pages 2-4• Remember

– Family size– Sharise often transports clients in her

vehicle

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 25 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Erickson’s Major ExpendituresMajor Expenditures Summary

• Transfer numbers to complete the summary

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 26 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Monica’s Spending PlanPayroll Withholdings

• Review Monica’s paycheck on page 11– State Withholding Tax– Federal Withholding Tax– FICA

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 27 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Monica’s Spending PlanSavings

• Review Monica’s Snapshot on pages 2-4– Identify her needs, wants, values

• Review the short term and long term goals set for Monica on page 12

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 28 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Monica’s Spending PlanTransportation

• Monica will pay for her public transportation pass

• She does not have a vehicle or other form of transportation and needs to get to school and work

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 29 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Monica’s Spending PlanOthers

• Choose which “others” items Monica would like– Cellular Phone– Culinary Upgrades– Electronics– Clothing– Entertainment– Create Your Own

• Draw an item and identify the cost in the space provided

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 30 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Monica’s Spending Plan Summary

• Gross Income• Expenses

• Calculate the Difference

• If the difference is a negative number, go back and adjust some of Monica’s expenses.

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 31 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Negative or Positive Difference?

• If the number on TT is positive, adjust Monica’s expenses.– Saving additional money for unexpected emergencies

or expenses may be a good idea.

• If the number on TT is negative, go back and make adjustments to Monica’s expenses.– Changes need to be made consistently throughout the

simulation.– Keep in mind Monica’s needs, wants, values and goals

when making changes.

• If the number on TT is zero, congratulations! You have balanced Monica’s Spending Plan!

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© Family Economics & Financial Education –Updated April 2010 – Get Ready to Take Charge of Your Finances – Life Of...Monica – Slide 32 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of

Arizona

Reflection Questions

• Once the difference equals zero….– Answer questions 17-21 on pages 15 and

16– Answer questions 22-26 on page 18