life in…united states 3.18.3.g1 © family economics & financial education - revised may 2009 -...
TRANSCRIPT
3.18.3.G1
© Family Economics & Financial Education - Revised May 2009 - Life in...United States Simulation - Bancroft-Notebook Cover and Profile Page 1
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
3.18.4.G1
Welcome to
Life in…United States
…a Family Finance Simulation
Developed by: Family Economics & Financial Education Project
Take Charge America Institute - University of ArizonaFunded by a grant from Take Charge America, Inc.
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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
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Objectives
Create a spending plan Incorporate the decision making
process into daily life Demonstrate the relationship
between income and education Provide realistic insights into the
costs of living associated with the spending plan process
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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
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What is “Life In…” ?
Family finance simulation Emulates the “real life” constraints
households encounter when managing their finances
All costs are national averages– United States Census Bureau, United States
Department of Labor, Bureau of Labor Statistics, United States Department of Agriculture, National Coalition on Health Care, and various private businesses
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3.18.4.G1Background
information
Background Information– Describes individual and/or family values,
needs and wants– Family dynamics and lifestyle choices are
explained
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Career descriptions
Occupational Outlook Handbook guides– Nature of work, working conditions,
training required, job outlook and earnings Read carefully to learn more about
your new identity
?Conditions of your job?Identify 3 work conditions characteristic to your job, training required, and median earnings
?Conditions of your job?Identify 3 work conditions characteristic to your job, training required, and median earnings
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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
3.18.4.G1What are
Spending plans? Spending Plan
– A financial statement used to assist in money management comprised of income and expenses
Income - money earned or received Expenses - money spent
– Fixed Expenses - stay the same every month, due on a certain date
– Flexible Expenses - vary month to month, can be decreased or eliminated
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Major expenditure Percentages
Identify the average percent of net income spent in a specific category
Use as a guide when making spending decisions– Percentages should be
adjusted to meet individual values, needs and wants
Other includes items such as:– Clothing– Personal care– Entertainment– Donations
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What to complete
Goal of “Life in…” – Make spending plan decisions to meet the
needs of the family by balancing their income and expenses
Assignments to complete– Setting a Financial Goal worksheet 3.18.4.A1
– Guided Spending Plan worksheet 3.18.4.A2
– Spending Plan Statement 3.18.4.A3
– Reflection Questions
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Life in…United States
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Who are you?
Review your profile– Remember to consider the family’s values,
needs and wants when making decisions All items printed in red text must be
included in the spending plan– If you’re not sure what to include, ask or check
your profile description in the Public Folder to read the text in color.
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3.18.4.G1
Setting a financial goal
Set a financial goal– Financial goals provide direction when creating
a spending plan – Behind Spending Plan tab, complete each
section of a SMART goal• Review profile and consider the families values,
needs and wants• Set SMART financial goal
– Complete question #2 on the Guided Spending Plan• Don’t forget to include the dollar amount of the goal
in the spending plan!
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3.18.4.G1Understanding the
paycheck Under the profile tab review the
paycheck(s) for your scenario Review all elements of a paycheck
– Gross income– Payroll deductions– Net income
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3.18.4.G1Complete the
following:
Based upon your paycheck, complete question #3 in the Guided Spending Plan: – Record gross income – Record all paycheck deductions – Calculate net income
For dual-income families, add both paychecks together
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3.18.4.G1
Saving
Saving versus Investing– Saving: income not spent on current
consumption– Investing: spending intended to gain by
adding to the assets, not available for immediate withdrawal
Saving– A person should save 10% of net income
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Saving
Guided Spending Plan question #4
Calculate what 10% of your families net income is
Determine what amount you will be saving or investing and record it
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Housing
Housing, on average, is 30% of an households net income
Calculate what 30% of your families net income is
The information sheet describes basic terminology, renting vs. buying, mortgages and how to determine insurance costs and various types of insurance – Review this to make the
best spending plan decision
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3.18.4.G1
Housing
Purchase Assume a 20% down
payment has been made on a 30-year mortgage with a 6% interest rate
Must include all items in red in your spending plan:– Mortgage– Insurance– Property taxes– Repairs and maintenance
Rent Assume a deposit has been
made Must include all items in red
in your spending plan– Rent– Laundromat (when
applicable) If you have a pet, your rental
unit must allow for them and applicable fees must be paid
Renter’s insurance is not required, but recommended– $15.83/mo. for $25,000
coverageOnly choose a house available for the type of location in which you live!
Only choose a house available for the type of location in which you live!
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Housing Amenities
Required amenities– Power– Water/sewer– Garbage
Some rentals include all or some of the required amenities
Optional amenities– Internet– Cellular phone– Land line in home– Cable/Satellite– Recycling
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3.18.4.G1
Housing
Guided Spending Plan Question #5– Determine whether to
rent or buy• Unless indicated in the
profile
– Select a home and amenities
– Record all housing expenses
– Identify which housing and amenities options were chosen
Select additional housing expenses – Under the “Average
Expenditures” tab – Record cost(s) in the
“other” section Calculate your housing
sub-total– Is it approximately
30% of net income?
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3.18.4.G1
Housing Reflection
? What might influence a family to spend more or less than 30% of net income for housing?
? What might influence a family to spend more or less than 30% of net income for housing?
? Will utility bills be higher during different seasons of the year?
? Will utility bills be higher during different seasons of the year?
? How does the housing selected fit with the family’s values, needs and wants?
? How does the housing selected fit with the family’s values, needs and wants?
? Did you choose to rent or purchase a home and why?
? Did you choose to rent or purchase a home and why?
? Was renter’s insurance selected? Why or why not?
? Was renter’s insurance selected? Why or why not?
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3.18.4.G1
Transportation
Transportation, on average, is 20% of a households net income
Calculate what 20% of your households net income is
The information sheet describes basic terminology, new vs. used, automobile financing, how to determine insurance costs and various types of insurance – Review this to make the
best spending plan decision
3.18.3.G1
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3.18.4.G1
Transportation
Transportation options: Purchasing new:
– Not pre-owned, warranty, wide selection
Purchasing used:
– Costs less, lower insurance rates, depreciates more slowly
Alternative options:
– Less expensive than a vehicle
– Availability is limited in some locations
Things to know: Assume down payment,
license, registration and other fees have been paid
All items in red must be included in the spending plan– Payment– Insurance– Fuel costs– Repairs and maintenance
If an alternative option is chosen, it must be appropriate for the location
Some profiles indicate transportation choices the family has made
Some profiles indicate transportation choices the family has made
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3.18.4.G1
Transportation
Guided Spending Plan Question #6– Determine new, used, or alternative options
• Unless indicated in the profile• If a family already owns a vehicle, only insurance, fuel,
and repairs and maintenance must be included
– Select transportation– Identify which transportation option(s) was
chosen– Record all transportation expenses
Calculate your transportation sub-total– Is it approximately 20% of net income?
3.18.3.G1
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3.18.4.G1Transportation
Reflection
? What might influence a family to spend more or less than 20% of net income for transportation?
? What might influence a family to spend more or less than 20% of net income for transportation?
? How does the transportation selected fit with the family’s values, needs and wants?
? How does the transportation selected fit with the family’s values, needs and wants?
? Did you choose new, used, or alternative options and why?
? Did you choose new, used, or alternative options and why?
? What are ways a family can reduce their transportation expenses?
? What are ways a family can reduce their transportation expenses?
3.18.3.G1
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3.18.4.G1
Food
Food, on average, is 15% of a households net income
Calculate what 15% of your households net income is
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3.18.4.G1
Types of Food Plans
Thrifty– Generic brands– Canned fruits and
vegetables– No junk food– Chicken and hamburger
Low-cost– Generic brands– Some fresh fruit and
vegetables– Chicken, hamburger,
turkey, ham
Moderate-cost – Mostly fresh fruit and
vegetables– Both name brand and
generic– Variety of meats
Liberal– Organic – Name brands– Fresh fruit and
vegetables– Variety of meats
including steak and lobster
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3.18.4.G1
Food
Guided Spending Plan Question #7– If the profile indicates the amount spent on food,
record it– Food tab is for adults only– Cost of food at home for adults chart:
• Determine if you are allocating food for an individual or 2 adults
• Identify which food plan is affordable and fits with your scenario
• Identify the age of the adult(s) • Record the food plan selected and amount
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3.18.4.G1
Food
Cost of eating out– Go to the Average Expenditures tab– Analyze the average costs based upon income level– Determine and record the amount
Cost of food for children– Go to the Cost of Raising Children document behind
the cost of raising children tab– Select the appropriate table based upon single or two-
parent families and income– Record the proper amount in the “food at home”
category Calculate your food sub-total
– Is it approximately 15% of net income?
3.18.3.G1
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3.18.4.G1
Food Reflection
? How was the cost of food at home plan selected?
? How was the cost of food at home plan selected?
?Will the cost of food vary depending on where an individual lives? Why or why not?
?Will the cost of food vary depending on where an individual lives? Why or why not?
? What impact does eating out have on a spending plan?
? What impact does eating out have on a spending plan?
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3.18.4.G1
Insurance
Insurance, on average, is 7% of a households net income
Calculate what 7% of your households net income is
The information sheet describes basic terminology, how to determine insurance costs and various types of insurance – Review this to make the
best spending plan decision
3.18.3.G1
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3.18.4.G1
Insurance
Health Disability Life
What is it?
Provides financial protection for injury and illness
Replaces a portion of income if unable to work because of injury or illness
Provides a specific sum of money to beneficiaries if an individual dies
When is it
needed?
Always!Almost always
If others depend upon an individual for financial support (families with children)
My be provided by the employerMy be provided by the employer
3.18.3.G1
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3.18.4.G1
Health Insurance
1. Determine if health insurance is provided by employer
– If provided, analyze what family members are protected
2. If not provided, determine if it will be purchased separately
3. If so:– Identify the age of the
oldest individual being covered
– Review the appropriate plan
• 1 individual = single• 2 individuals = single +
dependent• More than 2 = family
plan
– Select from the row of the appropriate age and column of the appropriate plan
3.18.3.G1
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3.18.4.G1
Disability Insurance
1. Determine if disability insurance is provided by employer
2. If not provided, determine if it will be purchased separately
3. If so:– Monthly net income x .02 = monthly cost
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3.18.4.G1
Life Insurance
1. Determine if life insurance is provided by employer
2. If not provided, determine if it will be purchased separately
If so:– Identify who will be
insured – Must be purchased for
each individual being insured separately
Select the amount of coverage– $100,000– $250,000– $350,000
Determine if your scenario uses tobacco or not
Determine the monthly cost
3.18.3.G1
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3.18.4.G1
Insurance
Guided Spending Plan Question #8– Determine if insurance is provided by employer
or will be purchased– If necessary, select insurance options– Record all insurance expenses
Calculate your insurance sub-total– Is it approximately 7% of net income?
3.18.3.G1
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3.18.4.G1
Insurance Reflection
? If insurance was not provided by the employer, how did insurance costs impact the spending plan?
? If insurance was not provided by the employer, how did insurance costs impact the spending plan?
? What factors influenced the choice whether or not to purchase insurance?
? What factors influenced the choice whether or not to purchase insurance?
? If life insurance was selected, how was the coverage amount chosen?
? If life insurance was selected, how was the coverage amount chosen?? If disability insurance was not chosen, what would happen if an individual was injured and could not work for 6 months?
? If disability insurance was not chosen, what would happen if an individual was injured and could not work for 6 months?
3.18.3.G1
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3.18.4.G1Costs of raising
children If you have children, go to the Cost of
Raising Children tab1.Select the appropriate table based upon
single or two-parent families and income2.Find the row for the oldest child3.Add together the costs of:
Clothing + Healthcare (could be reduced if insured) + Childcare + Education + Miscellaneous = Total cost
3.18.3.G1
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3.18.4.G1Cost of Raising
Children
Total cost is based on families with 2 children
If there are not two children:– Single parent family
• 1 child = total cost x 1.35• 3 or more children = total cost x .72
– Two-parent family• 1 child = total cost x 1.24• 3 or more children = total cost x .77
Record total on the Guided Spending Plan #9
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3.18.4.G1
Credit card statements
America’s Debt A 2007 survey of college students said that one-
third of students reported having two credit cards or more, while 12% had three or more credit cards.
Many students believe they will make much more money after college than they will actually earn. Students take on debt because they expect to be able to repay it.
College students carry an average of $1,035 of credit card debt (this does not include college loans).
Source: Buffalo State College, Financial Literacy Key to Prevent College Student Credit Card Debt, October 2007, http://www.newswise.com/articles/view/534061
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3.18.4.G1
Credit card statements
Congratulations!– Your monthly credit card bill has arrived
Guided Spending Plan Question #10– Identify how much debt, if any, was
received– Need to include at least the minimum
payment?How will credit card debt impact other spending plan decisions?
?How will credit card debt impact other spending plan decisions?
?How long do you estimate it will take to pay off your debt?
?How long do you estimate it will take to pay off your debt?
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3.18.4.G1Personal Profile
Expenses
Review personal profile and record all expenses printed in red– Hobbies, activities, medical expenses, pets,
charity donations, extra bills, habits, etc. Expenses identified in red are valued or
necessary and can not be eliminated Incorporate any expenses not already
included in the Average Expenditures section of the Guided Spending Plan question 11
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3.18.4.G1
Average Expenditures
Guided Spending Plan Question # 11
Review the average expenditures for:– Entertainment– Personal Care– Health Care– Apparel & Services– Contributions– Education and
Reading
Based upon your scenarios income level select expenses
These are flexible expenses based upon averages– Therefore, you may
choose to allocate more or less money to each category
Record expenses and total them
Remember to allocate enough money to cover all members of the
family!
Remember to allocate enough money to cover all members of the
family!
3.18.3.G1
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3.18.4.G1Average Expenditures
Reflection? What average
expenditures were selected and why?
? What average expenditures were selected and why?
?How do the expenses and amounts selected reflect your family’s values, needs, and wants?
?How do the expenses and amounts selected reflect your family’s values, needs, and wants?
? Did you chose to allocate more or less money in a certain category and why?
? Did you chose to allocate more or less money in a certain category and why?
?If an individual is insured, why would they still have health care expenses?
?If an individual is insured, why would they still have health care expenses?
3.18.3.G1
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3.18.4.G1
Chance cards
Each day brings new surprises…– Why a spending plan is a “plan” for how to
allocate your money– Spending plans are always evaluated and
adjusted based upon life's events Guided Spending Plan Question #12
– Identify what chance card was received– Incorporate that chance card into your
spending plan
3.18.3.G1
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3.18.4.G1Chance Cards
Reflection
?Would insurance have protected against the risk?
?Would insurance have protected against the risk?
?Are you financially prepared for unexpected events?
?Are you financially prepared for unexpected events?
? What impact does the chance card have on your spending plan?
? What impact does the chance card have on your spending plan?
?If received, how was extra money allocated and why?
?If received, how was extra money allocated and why?
3.18.3.G1
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3.18.4.G1Balancing the spending
plan Guided Spending Plan Question #13
1. Transfer all income and expense subtotals throughout the worksheet onto this chart
2. Subtract the total expenses from the total income
Your balance must equal zero– Make changes as necessary
• If there is a net gain, where will the extra money be allocated?
• If there is a net loss, identify what changes may be made?
Identify decisions made to have the spending plan balance
3.18.3.G1
© Family Economics & Financial Education - Revised May 2009 - Life in...United States Simulation - Bancroft-Notebook Cover and Profile Page 47
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
3.18.4.G1
Evaluating your goal
Were you able to reach your SMART goal?– Why or why not?
Re-write your goal to reflect what your spending plan indicates
Guided Spending Plan Question #14
3.18.3.G1
© Family Economics & Financial Education - Revised May 2009 - Life in...United States Simulation - Bancroft-Notebook Cover and Profile Page 48
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
3.18.4.G1Creating the Spending
Plan Statement
Write your revised goal on the Spending Plan Statement
Transfer all income and expense information to the Spending Plan Statement
Identify the percentage of net income spent on each category
3.18.3.G1
© Family Economics & Financial Education - Revised May 2009 - Life in...United States Simulation - Bancroft-Notebook Cover and Profile Page 49
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
3.18.4.G1
Reflection
?How does your percent allocation in categories compare with the national average?
?How does your percent allocation in categories compare with the national average?
?If there was a net gain, how was the money allocated?
?If there was a net gain, how was the money allocated?
? How does this process emulate real life?
? How does this process emulate real life?
?If there was a net loss, what changes were made to the spending plan?
?If there was a net loss, what changes were made to the spending plan?
? How did working with a partner and discussing options influence decisions? Was it hard, easy?
? How did working with a partner and discussing options influence decisions? Was it hard, easy?