building your future: succeeding - donate today · building your future, book 4: path to employment...

Building Your Future:Succeeding

A Student and Teacher Resource for Financial Literacy Education

Copyright © 2013, 2014, 2015The Actuarial Foundation

About This BookPersonal finance is part knowledge and part skill – and the Building Your Future book series gives students a foundation in both. It addresses knowledge by covering the essential principles of banking in Book One, financing in Book Two, investing in Book Three, and succeeding in Book Four. The series also addresses the mathematical skills that students need to live a financially healthy life. Students will be able to see the real-world consequences of mastering their finances, which helps them understand the relevance of good mathematical skills. We hope you enjoy this Building Your Future book series.

The catalyst for this book series was based on an original book authored and donated to The Actuarial Foundation by an actuary, James A. Tilley, FSA, who was interested in financial literacy education in schools. We thank Mr. Tilley for his original works that inspired this Building Your Future series.

About The Actuarial FoundationThe Actuarial Foundation is a 501(c)(3) nonprofit organization. The mission of The Actuarial Foundation is to enhance math education and financial literacy through the talents and resources of actuaries. Through Advancing Student Achievement, a program that seeks to improve and enhance student math education in classrooms across the country, we are proud to add Building Your Future, a financial literacy education curriculum for teachers and students, to our library of math resources. Please visit the Foundation’s Web site at: www.actuarialfoundation.org for additional educational materials.

What is an Actuary? Actuaries are the leading professionals in finding ways to manage risk. It takes a combination of strong math and analytical skills, business knowledge and understanding of human behavior to design and manage programs that control risk. “Actuary” was included as one of the Best Jobs of 2012 as reported in the Wall Street Journal. To learn more about the profession, go to: www.BeAnActuary.org.

Table of Contents

Teacher’s Guides

Chapter 1: Path to Employment ................................................................................................................1 Chapter 2: Paying for Post-secondary Education ................................................................................8 Chapter 3: Making a Living ...................................................................................................................... 14 Chapter 4: Making a Life ........................................................................................................................... 20 Chapter 5: Retirement ................................................................................................................................ 26

Appendices

Online Resources ......................................................................................................................................... 36 “Did You Know?” Sources ......................................................................................................................... 37

Some of the activities in this book reference specific Web pages. While active at the time of publication, it is possible that some of these Online Resource links may be renamed or removed by their hosts at some point in the future. Note that these links were provided simply as a convenience; a quick search should reveal some of the many other online resources that can be used to complete these activities. Facts and opinions contained are the sole responsibility of the organizations expressing them and should not be attributed to The Actuarial Foundation and/or its sponsor(s).

Building Your Future

Building Your Future, Book 4: Path to Employment 1

Chapter 1: Path to Employment

Looking AheadKnowing your interests, strengths, skills and aptitudes can help you identify a number of different career options that you can consider as you move toward adulthood. In choosing a career, you should also be aware of the various types of education needed for different occupations and the cost of completing an educational program. Finally, when selecting the right profession and the path for achieving it, you should consider your return on investment – how much you will gain from a certain career path – if you invest in the required training.

Getting Organized• Studentswillneedonetothreeclassperiodstocompletetheactivitiesforthislesson.• Whiletheuseofindividualcomputerswithspreadsheetsoftwarebestfacilitatesthelessonactivities, materials are provided for students to complete the activities as pencil/paper tasks.

Learning ObjectivesFocusing on the selection of employment options, students will:

• Reviewdefinitionsofkeytermsassociatedwithselectingacareerpathandadditionaltrainingoptions• Selectpotentialoccupationsandstudywageandemploymenttrends,mediansalaryandpercentageof change in various career paths• Constructaspreadsheetthatanalyzeswageandjobgrowthdata

Teacher’s Guide

Standards

JumpStart:

• Applyreliableinformationandsystematicdecisionmakingtopersonalfinancialdecisions Standard 2: Find and evaluate financial information from a variety of sources Standard 4: Make financial decisions by systematically considering alternatives and consequences• Useacareerplantodeveloppersonalincomepotential Standard 1: Explore career options Standard 2: Identify sources of personal income• Implementadiversifiedinvestmentstrategythatiscompatiblewithpersonalgoals Standard 2: Explain how investing builds wealth and helps meet financial goals

NCTM:

• Understandmeaningsofoperationsandhowtheyrelatetooneanother• Computefluentlyandmakereasonableestimate• Usemathematicalmodelstorepresentandunderstandquantitativerelationships• Formulatequestionsthatcanbeaddressedwithdataandcollect,organizeanddisplayrelevantdatato answer them• Developandevaluateinferencesandpredictionsthatarebasedondata• Applyandadaptavarietyofappropriatestrategiestosolveproblems• Communicatetheirmathematicalthinkingcoherentlyandclearlytopeers,teachersandothers• Createanduserepresentationstoorganize,recordandcommunicatemathematicalideas

2 Building Your Future, Book 4: Path to Employment

• Studyvariouscareereducationinvestmentoptionsandreturnoninvestmentincareertraining• Constructspreadsheetsthatanalyzepotentialearnings,lifetimeearnings,totalrawreturnoninvestment and return on investment for career training• Analyzedataaboutcareereducationinvestmentsanddrawconclusions• Constructaspreadsheetthatanalyzestwopotentialcareerpathsandtheopportunityforemployability, earning potential and return on investment for each position

Key Terms• Career path: from a group of careers that share common features one can select a path toward a specific job, knowing that with more education and experience comes the ability to move up within the path• Earning potential: the amount of money a person should be able to earn in his/her profession• Lifetime earnings: the total amount of money one can expect to be paid for work done in a specific career field over the course of their working years• Career aptitude: an individual’s innate ability, suitability, readiness, disposition, capacity or potential for being competent in a specific type of work • Skills: the ability to do something with competence• Employability: a set of achievements, skills, knowledge and personal attributes that make a person likely to gain employment and be successful in their chosen occupations• Career clusters: groupings of occupations in the same field of work that require similar skills• Job shadowing: accompanying an experienced worker on the job to learn the specific skills and responsibilities associated with the successful performance of a specific career• Return on investment: measures what is gained from an investment after subtracting the cost(s), usually in money and/or time, of the investment • On-the-job training: hands-on training by an experienced employee or trainer in the workplace to teach an employee the specific skills needed for the position • Apprenticeship: a combination of on-the-job training and related instruction where workers learn the practical and theoretical aspects of a highly skilled occupation• Internship: working, usually for free or a small wage, in your expected career field with supervision from more experienced professionals as a means of gaining the experience needed for an entry-level position • Vocational education: training for a specific industry or trade• Associate’s degree: a two-year academic degree awarded by community colleges, junior colleges, technical colleges and four year colleges and universities after the completion of a course of study that typically includes at least 60 credit hours • Bachelor’s degree: a four-year academic degree awarded by a college or university after the completion of a course of study that typically includes at least 120 credit hours• Master’s degree: an advanced university degree offered in a range of studies, beyond a bachelor’s but not to the doctorate level• Doctorate: the highest level of a university degree offered in a range of studies• Diploma: a document issued by an educational institution testifying that the recipient has successfully completed a particular course of study • Tuition: the amount one must pay for educational instruction• Wages: money paid or received for work or services completed, usually by the hour, day, or week• Hourly wage: the amount an employee is paid by an employer for completing an hour of work• Salary: wages an employee receives from the employer on a regular basis, usually weekly, bi-weekly or monthly.


• Tips: a sum of money one receives from a customer in recognition of quality service• Commission: money, in addition to regular wages, that is paid for work done or products sold• Bonus: a sum of money (not guaranteed by the employer) given to an employee in addition to the employee’s usual wages• Benefits: compensation beyond a salary or hourly wage such as insurance, paid vacation time, retirement plan (such as 401(k)) or free parking

Teaching Strategies1. Focus student attention by discussing the “Did You Know” factoids and working as a class to calculate the

percentage difference in potential earnings based on the level of education attained. Percentages are as follows:

• Highschoolgraduatesonlyearn83.1%ofwhatthosewhohaveanassociate’sdegreeearn • Highschoolgraduatesonlyearn60.6%ofwhatthosewhohaveabachelor’sdegreeearn • Thosewithassociate’sdegreesonlyearn72.9%ofwhatthosewithabachelor’sdegreeearn

2. Discuss the importance of investigating various career paths and researching employability factors using questions such as:

• Howcanlearningaboutcareerclustersandevaluatingyouroccupationalinterestshelpyoutakefull advantage of the education offered at the high school level? • Whataresomeoftheoccupationsthatyoubelieveofferthegreatestpotentialintermsof employability? Why? • Alljobsrequiresomesortofinvestment.Whataresomewayspeopleinvestintheiroccupationsand prepare to work in specific career fields?

3. Practice activities throughout the chapter are cumulative and will assist students with the completion of the Independent Practice assignment. These can be done using a computer and projects, with students at individual computers, or longhand on the board or overhead. For each of these activities, be sure to discuss the follow-up questions analyzing the data created in each spreadsheet.

4.Usetechniquessuchasstudentpair/sharetodiscusschaptercontent,vocabularytermsandmajorconcepts found in the chapter.

5. After students have completed the second practice activity, analyzing the return on investment for the various careers, expand the discussion by further examining each career path and having students work in pairsofsmallgroupstodrawaflowchartshowingwhattheythinkthecareerprogressioncouldbeforaperson in each of the five jobs listed. Then discuss how progressing through each career path might affect lifetime earnings.

6. After students complete the third practice activity, related to earning potential, work as a class to brainstorm a list of jobs that might be less affected by economic changes and discuss specifically what it is about those types of jobs that makes them more resistant to economic changes.


7. The practice activities help students consider the financial aspects of pursuing a career, including the cost of post-secondary training as well as financial returns. You may ask students whether there are other considerations as well, such as personal interests and abilities. Should you pursue a career in sales if you’re shy? Should your interest in math be a factor in considering a career in accounting?

8. HelpstudentsapplywhattheyhavelearnedbydirectingthemtotheIndependent Practice Worksheet. All students should be able to answer the following question: Which occupation would you be most likely to pursue based on your findings? Explain.

• Ifindividualcomputersareavailable,directstudentstocompletetheworksheetandthendothe spreadsheet activity in step three using the computers. They should print their final copy of the spreadsheet for submission with the worksheet upon completing the activity.

9. Extendstudentlearningbyhavingthemresearchthecareertheyweremostlikelytopursueandcreateaflowchartofthecareerpathprogressionforthatoccupation.Encouragethemtotrackanyadditionaleducational investment that could be required along with how this investment could increase potential lifetime earnings and improve their employability outlook.

Assessment Recommendations1. Students could be assigned participation or completion grades for doing the in-class and large group

discussions and “Examples and Practice” activities.

2. Students should receive individual grades for the Independent Practice Worksheet activities. Since answers will vary greatly, a completion grade is suggested.

3. Assess participation or completion grades for the extended student learning activity in step 8 above, since it will have a wide range of possible answers.


Examples and Practice: Answer Key

Examples and Practice, p. 3

• MedianWageDifference=MedianWageU.S.–MedianWageinMyStateformula =C2-D2• PercentageofJobGrowth(Decline)Difference=PercentageofJobGrowth(Decline)U.S.– PercentageofJobGrowth(Decline)MyStateformula =F2-G2• Basedonwhatyoulearnedaboutwagesinyourstate,wouldyoustillbeinterestedinanyorallof these careers? Why? Answers will vary based on career and state selected by each student.• Whydoyouthinkthereisadifferencebetweenthenationalmediansandthoseofyourstate? Each state has specific economic needs based on population, common industries, climate, cost of living, and many other variables. • Basedonwhatyoulearnedaboutthepercentageofjobgrowth/declineforthesecareersbothin your state and nationally, would you still be interested in any of them? Why? Answers will vary based on career and state selected by each student.


• TotalSalary=AnnualSalary+AnnualTips,BonusesorCommissionformula =SUM(D2,E2)• LifetimeEarnings=TotalSalaryx40yearsformula =F2*40• TotalRawReturnonInvestment=LifetimeEarnings–CostofEducation formula =G2-C2

Usingtheformulas,constructthespreadsheettocalculatethedataforthefivecareerfieldsprovided.

• Lookingatthecareers,whichdoyouthinkhasthegreatestpotentialreturnoninvestment?Explain why. The lawyer and actuary provide the greatest total dollar return, but require a significant investment in education.• Thespreadsheetdoesnotaccountforthetimeinvestmentnecessarytocompletethetraining needed for some of the jobs. Taking into consideration the amount of education, potential lifetime earnings and the time investment needed for each job, which would career would you select if you were making a decision today? Explain why. Answers will vary based on student opinions.

A B C D E F G H

1 FieldRequired

Education(Investment)

Cost of Education

Investment

Annual Salary

Tips/Bonus/Commission

TotalSalary

LifetimeEarnings

(over 40 years)

TotalReturn on

Investment

2 Cashier None $0 $18,820 $0 $18,820 $752,800 $752,800

3 Construction/Carpenter

1 year as apprentice $0 $40,010 $0 $40,010 $1,600,400 $1,600,400

4 Licensed Practical Nurse

Associate’s degree $6,000 $41,150 $0 $41,150 $1,646,000 $1,640,000

5 Actuary Bachelor’s degree $60,000 $91,060 $3,300 $94,360 $3,774,400 $3,714,400

6 Lawyer Doctorate degree $195,000 $112,760 $4,500 $117,260 $4,690.400 $4,495.400



• Howwouldyouexpressthestatementaboveasaformulaforthespreadsheet? formula =B2*C2+D2+E2+F2• Lookingatthecareers,whichdoyouthinkhasthegreatestearningpotential?Answers will vary as

students will think about their individual abilities to earn tips, bonuses and commissions based on their individual skills sets.

• Howdoyouthinkvariablessuchastips,bonusesandcommissionsareaffectedbyaweakeconomy? A strong economy? Stress the importance of wants vs. needs and how the acquisition of wants is often directly related to the amount of disposable income individuals have. In a weak economy, people tend to hold on to money while they spend more when the economy is stronger. Further, lower levels of unemployment lead to greater overall spending and higher levels of pay from tips, commissions and bonus.

A B C D E F G

1 Career FieldHourly Wage

Hours Worked

Weekly Tips

Weekly Bonus

Weekly Commission

TotalEarnings

2 Cashier $7.25 40 $0.00 $0.00 $0.00 $290.00

3Retail

Salesperson$10.10 40 $0.00 $0.00 $20.20 $424.20

4 Barista $8.50 40 $80.00 $0.00 $0.00 $420.00

5 Telemarketer $10.83 40 $0.00 $25.00 $0.00 $458.20


Path to Employment: Independent Practice Worksheet

Name Date

Directions:Usewhatyouhavelearnedfromthischaptertocomputetheanswersforeachquestionbelow. Be prepared to discuss your answers.

1. TakeafewminutestostudythedatarelatedtotheFastestGrowingJobsathttp://www.bls.gov/ooh/fastest-growing.htm and the Most Projected New Jobs at http://www.bls.gov/ooh/most-new-jobs.htm.Recordtwocareersthatinterestyoufromtheselists.UsetheOccupationFinderathttp://www.bls.gov/ooh/occupation-finder.htm to select one additional career you would be interested in pursuing based on your skills and aptitudes.

2. Now calculate and record the approximate cost of the educational investment required by each job. For an accurate estimate, use the calculator provided at http://www.collegesavings.org/collegeCostCalculator.aspx. Make the following assumptions when calculating.

• Youare18yearsofage • Collegetuitionhasatypicalannualinflationrateof6-7% • Youwillneedtodecideifyouwillliveathomewithyourparents(youwillpaytuitionandfees only) or in campus/alternate housing (you will pay tuition, fees, room and board). • Youwillcompleteyoureducationwithinthetypicalamountoftimeallotted(i.e.Associate’s= two years, etc.)

3. Create a spreadsheet that presents your findings by showing each occupation, the required investment (in $), the annual salary, return on investment and lifetime earnings.

4. Useyourspreadsheettoanswerthefollowing: • Whichoccupationoffersthebestreturnoninvestment? • Whichoccupationoffersthegreatestlifetimeearningpotential? • Whichoccupationoffersthemostopportunityforemployability? • Whichoccupationwouldyoubemostlikelytopursuebasedonyourfindings?Explainwhy.

OccupationGrowth Rate/# of New Jobs

Annual Salary ($)Educational Investment

(Type of Degree/Training)

Occupation Educational Investment (in $)

Occupation Investment ($) Annual Salary ($)Return on

InvestmentLifetime Earning

8 Building Your Future, Book 4: Paying for Post-secondary Education

Chapter 2: Paying for Post-secondary Education

Looking AheadMany careers require additional instruction or training after high school. Some training takes weeks or months, other preparation takes years. Regardless of the duration of the training, it must be paid for. Knowing how to determine approximate post-secondary expenses, how to save for these expenses, and how to combine savings with financial aid, student loans, scholarships and work to finance your ongoing education can make post-secondary education more attainable.

Getting Organized• Studentswillneedtwotofourclassperiodstocompletetheactivitiesforthislesson.• Whiletheuseofindividualcomputerswithspreadsheetsoftwarebestfacilitatesthelessonactivities,

materials are provided for students to complete the activities as pencil/paper tasks.

Learning ObjectivesFocusing on the selection of employment options, students will:

• Reviewdefinitionsofkeytermsassociatedwithpost-secondaryeducation• Learnaboutvariousoptionsforsavingforpost-secondaryeducation• Constructaspreadsheetthatcalculatesthetotalcostofattendanceforcollege

Teacher’s Guide

Standards

JumpStart:

• Applyreliableinformationandsystematicdecisionmakingtopersonalfinancialdecisions Standard 2: Find and evaluate financial information from a variety of sources Standard 4: Make financial decisions by systematically considering alternatives and consequences• Organizepersonalfinancesanduseabudgettomanagecashflow Standard 4: Apply consumer skills to purchase decisions Standard 6: Develop a personal financial plan• Implementadiversifiedinvestmentstrategythatiscompatiblewithpersonalgoals Standard 1: Discuss how saving contributes to financial well-being Standard 2: Explain how investing builds wealth and helps meet financial goals

NCTM:

• Understandmeaningsofoperationsandhowtheyrelatetooneanother• Computefluentlyandmakereasonableestimate• Usemathematicalmodelstorepresentandunderstandquantitativerelationships• Formulatequestionsthatcanbeaddressedwithdataandcollect,organizeanddisplayrelevantdatato

answer them• Developandevaluateinferencesandpredictionsthatarebasedondata• Applyandadaptavarietyofappropriatestrategiestosolveproblems• Communicatetheirmathematicalthinkingcoherentlyandclearlytopeers,teachersandothers• Createanduserepresentationstoorganize,recordandcommunicatemathematicalideas

Building Your Future, Book 4: Paying for Post-secondary Education 9

• ReviewsampleFAFSAformsandawardletterstogainunderstandingofterminologyandhowawardsarecalculated

• Explorevariousloanoptionsandevaluateloanpaymentschedulestoseethetruecostofborrowingtopayfor post-secondary education

• Constructaspreadsheetthatanalyzesthreefinancialaidawardlettersforthreedifferentschoolstodetermine which makes the best financial sense in terms of paying for post-secondary education

Key Terms• Total cost of attendance: the price to attend college for a year including tuition, room and board, books

and fees• Education IRA: an education savings plan that offers tax advantages• 529 account (ESA): a higher education savings plan where the funds can be withdrawn tax-free when they

are used for educational purposes • Tuition pre-payment: state program in which families can purchase tuition credits at their present price

and use the credits in the future, when tuition costs will have most likely increased• Scholarship: an award of financial aid for a student to further their education, often based on merit such as

academic achievement or athletic skill• ACT: a standardized achievement examination for college admissions• SAT: astandardizedtestforcollegeadmissionsintheUnitedStates• Reserve Officers’ Training Corps (ROTC): a college-based program for training commissioned officers of

theU.S.armedforcesbyprovidingcompetitive,merit-basedscholarshipsfortuitioninreturnforanobligation of active military service after graduation

• Financial aid: grant or scholarship, loan or paid employment offered to help a student meet his/her college expenses

• FAFSA: Free Application for Federal Student Aid, a form that must be completed in order to qualify for any type of governmental financial aid for higher education

• Estimated Family Contribution (EFC): The amount of money that a student’s family is expected to contribute to college costs for one year

• Grant: monetary award given by the federal, state or local government to an eligible student for educational expenses and without the expectation of repayment

• Pell Grant: money for post-secondary education that does not have to be repaid and is awarded to eligible students based on financial need

• Supplemental Educational Opportunity Grant (SEOG): need-based grants awarded to low-income undergraduate students to finance the costs of post-secondary education

• Work-study: program that provides students with part-time jobs while in school in order to subsidize the cost of education

• Default: failure to meet a financial obligation such as repaying a loan• Student loan: loan offered to students which is used to pay education-related expenses including college

tuition, room and board or textbooks• Interest rate: the percentage you pay on the money you have borrowed• Grace period: time in which a debt may be paid without accruing further interest or penalty• Deferred payment: loan arrangement in which the borrower is allowed to start making payments at some

specified time in the future • Perkins Loan: A need-based, low-interest loan available to students with exceptional financial need


• Stafford Loan: loan that is provided by a lending institution but backed by the federal government to assure repayment

• Parent Loan for Undergraduate Students (PLUS): federal loans for parents of undergraduate students to help pay for college or career school

• Subsidized loan: a loan on which the government pays the interest while the student is enrolled in a qualified college/university, essentially erasing the interest that would have been added to the loan during the time of study. The Perkins Loan is an example of a subsidized loan

• Unsubsidized loan: a college loan usually taken by students who do not meet financial need standards and still need to fund their post-secondary education. These loans accrue interest while the student is in school and can result in significantly higher debt because of the interest added to the loan over time. The PLUSloanisanexampleofanunsubsidizedloan

Teaching Strategies1. Practice activities throughout the chapter are cumulative and will assist students with the completion of

the Independent Practice assignment. These can be done using a computer and projector, with students at individual computers, or longhand on the board or overhead. For each of these activities, be sure to discuss the follow-up questions that analyze the data that is created in each spreadsheet.

2. Usetechniquessuchasstudentpair/sharetodiscusschaptercontent,vocabularytermsandmajorconcepts found in the chapter.

3. Begin class by polling students about how many plan to get some additional education after completing high school; work as a class to determine the percentage of the class this represents.

4. Focus student attention by discussing the “Did You Know” factoids and facilitating a short discussion including questions such as:

• Haveyouconsideredhowmuchyourpost-secondaryeducationwillcost? • Doyouknowhowyoumightpayforpost-secondaryeducation? • Whatwillyoudoifyoucannotaffordtogettheeducationyoudesire?

5. Discuss options for creating savings, even if students will be moving toward post-secondary education within the year. Brainstorm ways that students can decrease expenses and increase income.

6. As a class, visit either http://www.finaid.org/scholarships/ or http://studentaid.ed.gov/types/grants-scholarships/finding-scholarships to learn about ways that students can apply for and access information related to scholarships. Discuss various criteria for earning scholarships and review tips for things students can do to begin searching for scholarships now or in the near future.

7. Complete the practice activity based on creating a budget that assesses the total cost of attendance and then discuss the questions related to this activity.

8. Visit http://www.fafsa.ed.gov and review the financial aid information. Pay special attention to the student section and the information that students need to be ready to supply to be considered for financial aid. Discuss the Estimated Family Contribution as well so students understand that the income earned by their parents is considered as part of the financial aid process.


9. Reviewthesamplefinancialaidawardletteranddiscusseachofthefollowingsectionssostudentsclearlyunderstand how to read the letter and interpret what is being offered in terms of “free” money vs. loan options they can consider:

• Section1:Thetotalcostofattendanceattheparticularinstitution • Section2:Grantsandscholarshipsthatarebeingofferedtoyou • Section3:Thecostyouwillhavetopayoutofpockettoattendtheinstitution • Section4:Workoptionsavailabletoyou(i.e.work-study) • Section5:Loanoptionsyoucanconsiderincludingthetypeofloanandrecommendedamountbased on the total cost of attendance • Section6:OtherOptionsincludestheEstimatedFamilyContributionascalculatedbytheFAFSAalong with various institutional payment plans, military and service benefits offered by the institution, private educationloanoptionsandPLUSloanoptions • Thefarrightcolumncontainsagraphicthatnotesdatarelatedtotheinstitutionincludinggraduation and loan default rates, median borrowing and loan repayment information

10.Helpstudentsseetherealcostoftheinteresttheywillpayonstudentloansbycompletingtheexamplesand practice activity related to loans and discussing the questions below.

• LoanA:$5500at5%interestfor10years.Howmuchinterestdidyoupay?$1,500.80 • LoanB:$5500at6.8%interestfor10years.Howmuchinterestdidyoupay?$2,094.30 • LoanC:$5500at7.9%interestfor10years.Howmuchinterestdidyoupay? $3,025.20 (including $220 loan fee) • Whathappenstotheprincipalandinterestamountsfromthebeginningoftheloantotheendofthe loan? At the beginning of the repayment process, the amount of interest paid back to the lender is at its highest, while the amount of principal paid is at its lowest. Why? The lender is taking a risk by lending money in hopes of making a profit. By having interest repaid first, the lender helps to ensure profits will be made in the form of interest and the principal amount that was lent will be repaid over time.

11.HelpstudentsapplywhattheyhavelearnedbydirectingthemtotheIndependent Practice activity. All students should be able to answer the question: Considering only the total debt you would incur, which schoolprovidedyouwiththebestfinancialaidpackage?Explainwhy.UsetheIndependent Practice Teacher Answer Key to discuss the assignment.

12. Extend student learning by inviting in a high school or college guidance counselor in to the class to talk with students about specific things they can do right now to start saving money, applying for scholarships, andlookingintovariousotherfundingoptions(forexample,theA+Program:http://dhe.mo.gov/ppc/grants/aplusscholarship.php) for their post-secondary education.

13. Provide additional information about military service and the post-secondary training that can be received during active duty and then funded through the Department of Veteran Affairs after being discharged from active duty by inviting a Military Recruiter into the classroom to discuss the role that military service can play in helping students achieve their career goals.



discussion and “Examples and Practice” activities.

2. Students should receive individual accuracy grades for the Independent Practice activity spreadsheet since they are working from specified data.

3. Assess participation grade for the extended student learning activity in step 12 above since it involves a guest speaker.


• HowdoesyourtotalcostforattendancecomparetothenationalaveragesintheDidYouKnowfactoid?It is slightly higher ($700)

• Dotheseexpensesseemreasonabletoyou?Why?Answers will vary.• Howcouldyoulowerthecostofattendingcollegewithoutsacrificingthenumberofclassesyoutakeor

the quality of the education? Answers will vary but could include living at home, working part-time, or purchasing used or e-books rather than new hard bound books

Examples and Practice, p. 16• LoanA:$5500at5%interestfor10years.Whatwereyourcumulativepayments? $7,000.80 Howmuch

interest did you pay? $1,500.80• LoanB:$5500at6.8%interestfor10years.Whatwereyourcumulativepayments? $7,594.80 Howmuch

interest did you pay? $2,094.80• LoanC:$5500at7.9%interestfor10years.Whatwereyourcumulativepayments? $8,305.20 Howmuch

interest did you pay? $3,025.20 (including fees)• Howdoestheinterestrateeffecttheminimummonthlypayment?Thetotalamountpaidfortheloan?The

lower interest rate requires a lower minimum monthly payment while still allowing the borrower to pay back the debt within 10 years. All monthly loan payments exceed the minimum payment so the minimum payment does not apply.

A B C D E F

Monthly Rent and Utilities

Monthly Food and Other Living Expenses

Tuition Books FeesTotal Cost of Attendance

1 $2,700.00 $1,350.00 $8,250.00 $1,250.00 $750.00 $14,300.00


Independent Practice, p. 17

Create a spreadsheet that will help you analyze each award offer.

As you construct the spreadsheet, think about the following:• Whatcanyoudotoreduceexpenses?Answers will vary but could include living at home or working

more.• Whatcanyoudotoincreaseyourincome? Answers will vary but could include working more.• Wouldyouconsidertakingaloanfortheremainingexpenses?Ifso,whatkind?Why?Ifnot,why

not? Answers will vary. Howdoyouplantocoverthoseexpenses?Answers will vary.

1. Considering only the total debt and the type of debt you would incur, which school provided you with the best financial aid package? Explain why. School B because you don’t have to take a loan, and it requires the least amount of investment from you after exhausting all other resources.

2. When you consider the amount of time you will need to spend working and your own academic skills and study habits, which financial aid package would provide you with the proper amount of study time. Explain why. Answers will vary, but most students would consider the amount of work study needed at schools A and C more difficult than what B requires.

3. Does any school offer you an option that would require no additional out of pocket expenses if you consider price, location and work-study options? If so, explain. If you live at home, School A might be affordable without incurring additional debt.

4. If your family was unable to provide the EFC, would that change the financial aid package you would select? Explain why. Answers will vary.

Examples and Practice: Answer Key

A B C D E F G H I

1 School Total Cost of Attendance

Pell Grant

Work Study Scholarships

Perkins Loan

AmountEFC Money from

529 Account

Remaining Expenses to be Paid

2 A $15,000 $2,200 $4,800 $500 $0 $2,700 $2,500 $2,300

3 B $12,500 $2,800 $3,200 $0 $0 $2,700 $2,500 $1,300

4 C $17,750 $2,500 $5,000 $1,000 $2,200 $2,700 $2,500 $1,850

14 Building Your Future, Book 4: Making a Living

Chapter 3: Making a Living

Looking AheadWhen searching for the right job, it is important to consider the entire compensation package offered by potential employers. By understanding the various types of compensation and how to calculate the total value of that compensation, you can ensure you are getting the most from the job you choose.

Getting Organized• Studentswillneedoneortwoclassperiodstocompletetheactivitiesforthislesson.• Whiletheuseofindividualcomputerswithspreadsheetsoftwarebestfacilitatesthelessonactivities,

materials are provided for students to complete the activities as pencil/paper tasks.• AllstudentswillneedtohaveacopyofthesamplepaystubandthesampleW-2statementfrompages25

and 26.

Learning ObjectivesFocusing on understanding job offers and earnings, students will:

• Reviewdefinitionsofkeytermsassociatedwithemploymentoffers,paychecks,andannualtaxes• Analyzeexemptandnon-exemptemploymentopportunitiesandcalculateearningpotentialusing

spreadsheets and data about various employment offers• Constructaspreadsheettoanalyzepotentialincomebasedonbonusesandcommissions• Constructaspreadsheettoanalyzethevalueofvariouscompensationpackagesofferedbycompeting

employers• Studyasamplepaystubandanswerquestionsaboutearnings

Teacher’s Guide

Standards

JumpStart:

• Applyreliableinformationandsystematicdecisionmakingtopersonalfinancialdecisions Standard 2: Find and evaluate financial information from a variety of sources Standard 4: Make financial decisions by systematically considering alternatives and consequences• Useacareerplantodeveloppersonalincomepotential Standard 3: Describe factors affecting take-home pay

NCTM:



Building Your Future, Book 4: Making a Living 15

• Learntheprosandconsofmakingcareerchanges• Constructaspreadsheetthatanalyzesthecompensationpackagesfromtwojoboffersanddetermine

which job offers the best financial incentive for accepting the offer of employment.

Key Terms• Compensation package: all of the wages (salary, bonus, commission) and benefits provided by an

employer• Exempt: classification of an employee who is paid a salary rather than hourly wages and is not eligible for

overtime pay• Non-exempt: classification of an employee who is paid on an hourly basis and is entitled to overtime pay

generally at a rate of 1 ½ times the hourly wage• Base pay: the basic rate of pay for a particular job not including overtime, bonuses or commissions• Bonus: a sum of money given to an employee (usually one that is paid a salary) in addition to the

employee’s usual wages; usually based on business or employee performance, not guaranteed• Commission: a fee paid to an employee or agent for providing a service, such as a sale• Variable pay: compensation that must be earned (such as commission) each time in order to be paid to the

employee • Insurance: promised payment for specific, potential and/or future losses in exchange for a periodic

payment• Paid time off (PTO): time not worked by an employee for which the regular rate, a fixed or a prorated

amount of pay, is accrued and paid to the employee• Sick leave: paid or unpaid time off from work for an employee temporarily unable to perform duties due to

illness or disability• Profit sharing: a program in which the employer shares some of its profits with employees through stocks,

bonds or cash• Income taxes: percentage of your income, including wages, salaries, commissions and bonuses paid to the

government each year• Gross pay: regular pay, overtime pay, and other taxable earnings paid to an employee during a pay period

before any obligations, such as taxes, are deducted• Withholding: part of an employee’s wages or salary that is withheld by the employer as partial payment of

the employee’s income taxes• Net pay: remaining amount of pay after taxes, retirement contributions and other deductions are made• FICA: stands for Federal Insurance Contributions Act, a federal payroll tax paid by employers and employees

to fund government programs that provide benefits to retirees• Dependent: someone (such as a child under 18) who relies on an adult for support • W-4: a form that the employee fills out to let the employer know his or her tax situation, allowing the

employer to figure out the correct amount of tax to withhold from the employee’s paycheck• W-2: a form that the employer sends to the employee and the IRS that reports the employee’s annual wages

and the amount of taxes withheld during the year • Career change: moving from one profession to another


Teaching Strategies1. Practice activities throughout the chapter are cumulative and will assist students with the completion of

the Independent Practice assignment at the end. These can be done using a computer and projector, with students at individual computers, or longhand on the board or overhead. For each of these activities, be sure to discuss the follow-up questions that analyze the data in each spreadsheet.

2. Usetechniquessuchasstudentpair/sharetodiscusschaptercontent,vocabularytermsandmajorconcepts found in the chapter.

3. Focus student attention by discussing the “Did You Know” factoids and brainstorming answers to the question: Besides taxes, are there any other things that can affect take-home pay?

4. Discuss the difference between exempt and non-exempt employees and ask students whether they think one type of employee (exempt or non-exempt) is better than the other, and if so, why?

5. After completing the Compensation Basics Examples and Practice activities, focus attention on UnderstandingYourPaycheckbyshowingstudentsasampleW-4formathttp://www.irs.gov/. Review the form as a class and discuss how the form is completed when you are hired for a job.

6. Next, direct students to look at the sample pay stub. Discuss this as a class and point out the following information:

• Ontheleftyoucanseethisisanhourlyemployee.Sheispaid1½timesherhourlyrateforovertime. She also gets holiday pay and reimbursement for tuition as benefits. • Ontherightyoucanseethefederalwithholdingsalongwithstateandlocaltaxes. • Lookatthevariousbenefitstheemployeegets.Youcanseetheselistedunderthe“Other”categoryon the right side. • Studythefournumbersatthebottomofthepaystub:Totals,TaxableGross,DeductionTotalsandNet Pay. You can see how the various withholdings and deductions impact the amount of pay the employee takes home for the week.

7. Discuss the answers to the questions related to the sample pay stub. (See Understanding Your Paycheck exerciseonpage19,referencingtheExamplesandPracticefrompage24ofthestudentbook).

8. View the sample W-2 form and discuss the information that is placed in each box on the form. Refer back to the sample pay stub to tell students which information would go in each box so students can see how the data from the pay stub eventually transfers to the year-end W-2. You may wish to note that W-2 forms are required by federal law to be mailed to employees no later than January 31.

9. HelpstudentsapplywhattheyhavelearnedbydirectingthemtotheIndependent Practice activity. All students should be able to answer the question: Which job makes better financial sense, your current job or the job offer? Explain why. When students have completed the activity, discuss and correct it as a class using the Independent Practice Activity Teacher Key.


10. Extend student learning by working as a class to complete a W-2 form based on the data for the job they selected as the better opportunity in the Independent Practice activity. Discuss the accuracy of the form and use http://www.irs.gov to learn more about the percentage of federal taxes that would be due based on the taxable income for the year and the federal taxes that were already paid through payroll deductions.

Assessment Recommendations1. Students could be assigned participation or completion grades for doing the in-class and large

group discussion and Examples and Practice activities.

2. Students should receive individual grades for the Independent Practice activity. Students should receive an accuracy grade for their computations on the spreadsheet.

3. Assess the extension activity from step 10 above by using a participation grade since you will be working as a group to complete the activity.



• WhatistheweeklypayforJob1?(Whatformulawillyouenterforthiscalculation?)Base pay x12 /52 weeks• WhatisthehourlywageforJob1includingovertimehours?(Whatformulawillyouenterforthis

calculation?) There are two ways to do this. You may opt for a straight average (Weekly Pay/Average Work Week), or you may use a more sophisticated, and more accurate, formula to distinguish between regular pay and “time and a half” pay for overtime hours (40+(7*1.5) = 53.5 hours, an hourly rate of $10.78 per hour.

• WhatistheweeklypayforJob2?(Whatformulawillyouenterforthiscalculation?) (40 x Base Pay) + ((1.5 x Base Pay) x (Average Work Week – 40))

• Whichofthetwojobswouldyouratherhave?Why?Answers will vary, but Job 1 provides higher levels of income


• Assumeyoumeetthegoalofobtaining5newcustomerspermonthfor10orthe12monthsoftheyear.Howmuchwouldyouearninbonusmoneyfortheyear?$2000

• Assumeyousellanaverageof$700worthofproducteachweek.Howmuchwouldyouearnincommissionfor the month? $91=700*.03*52/12 Howmuchwouldthatequatetothroughouttheyear? $1092

• Basedonyourcalculations,andassumingidenticalbasepay,whichoftheseisabetterpayingjob?Why?Varies; Job 1 appears to be the better job, because the bonus is nearly double the commission; however, if an employee is not a good salesperson (shy, untrained, etc.), the bonus may not be attainable.


• ForJob1,howmuchwouldyouhavetopayforyourhalfofthemedical,dentalandvisioninsuranceandall the other benefits listed? $235• ForJob2howmuchwouldyouhavetopayforyourportionofthemedical,dentalandvisioninsurance and all the other benefits listed? $165 =$125+$35+5• Allotherthingsbeingequal,whichjobwouldyouratherhave?Why?Job 2 offers a better benefits package because you get presumably equal benefits (medical, dental, vision and disability) for less money and the life insurance policy offers 50% more coverage.

A B C D E F

1 Job Base PayAverage

Work WeekRegular Pay Overtime Pay Weekly Pay

2 2 $10.25 47 $410.00 $107.63 $517.63

A B C D E

1 Job Base PayAverage

Work WeekWeekly Pay Hourrly Wage

2 1 $2,500.00 47 $576.92 $12.27


Examples and Practice, p. 23• Whatisthetotalvalueofyourpaidtimeofffortheyearforeachjob?Job 1 = $1152, Job 2 = $1248• Whichoftheseisthebetterfinancialoffer?Explainwhy.Job 2 because it provides $96 more in paid

time off

Examples and Practice, p. 24• Howmanyhoursdidsheworklastweek,includingovertime?41• Whatbenefitsdoesthisemployergivetheemployee?401(k),life insurance, dental, medical (HMO),

Dependent Care Flexible Spending Account, tuition assistance, paid holidays and a loan• Doesshepaytaxesonthetuitionreimbursement?Howcanyoutell?No, excluded from federal taxes• Whatotherdeductionsarenottaxableandmadebeforetaxesarecalculated?All the other items that

are marked with *• Whatpercentageofthemoneyearnedwasactuallypaidtotheemployee?259.39/415.00=62.5%• Howmuchdidtheemployeeputintothe401(k)?$27.15Howmuchdidshepayfordental,medical

(HMO)andlifeinsurance?Total of $24.00. Also, the employee contributed $30 to a dependent care flexible spending account (FSA) which was not technically part of this question.

• Usingthedatafromthecurrentpayperiodcolumn,approximatelyhowmuchwillbewithheldforthis employee’s annual federal taxes? 52 weeks*(37.29)=$1,939.08

Independent Practice, p. 27• Whatistheannualnetpayforyourcurrentjob? (($14.25 x 40) + ($21.38 x 4) - $85) x 52 = $29,667.04,

before commissions• Whatwouldtheannualnetpaybeforthejobbeingoffered?$30,000 - ($320 x 12) = $26,160, before

bonus• Whichjobwouldrequireyoutoworkmorehours?Howmanymore? Job 2 averages 4 more hours per

week than Job 1, or 208 more hours per year (52 x 4)• Atwhichjobcouldyouearnmorevariablepay?Howmuchmore?Job 1 offers ($570.00 + $85.52) x

5% x 52 weeks = up to $1,704.35 per year; Job 2 offers $150 x 12 = up to $1,800 per year. • Whichjoboffersabettercompensationpackage?Explainwhy.Job 2 offers the better package; Job 1

pays more towards health and dental insurance, but Job 2 also offers vision, and the employer pays for disability and life insurance. Additionally, Job 2 pays for 120 hours of time off, versus 100 hours for Job 1.

• Basedonyourcalculations,whichjobmakesbetterfinancialsense,yourcurrentjoborthejoboffer?Explain why. Answers may vary based on importance of net pay, variable pay, and benefits

20 Building Your Future, Book 4: Making a Life

Chapter 4: Making a Life

Looking AheadLiving within their means - spending no more than a family has available from their income – can be a struggle forpeople.Understandingthedifferencebetweenawantandaneed,knowingwheremoneyisspent,howtobudget so that expenses do not exceed income and establishing and maintaining a good credit rating are all essential life skills. By identifying wants and needs and creating a spreadsheet to track income and expenses, you can see how to live your life on a balanced budget and avoid debt. Finally, we will explore identity theft, including what can be done to minimize the chance of being a victim as well as identifying the best strategies to use if your identity is stolen.

Getting Organized• Studentswillneedonetotwoclassperiodstocompletetheactivitiesforthislesson.• Whiletheuseofindividualcomputerswithspreadsheetsoftwarebestfacilitatesthelessonactivities,

materials are provided for students to complete the activities as pencil/paper tasks.• Eachstudentwillneedacopyofthesamplebudgetthatappearsinthechapter.

Learning ObjectivesFocusing on creating a household budget and establishing good credit, students will:

• Reviewdefinitionsofkeytermsassociatedwithcreatingabudget,makingtimelypaymentsandestablishing good credit

Teacher’s Guide

Standards

JumpStart:

• Applyreliableinformationandsystematicdecisionmakingtopersonalfinancialdecisions Standard 2: Find and evaluate financial information from a variety of sources Standard 4: Make financial decisions by systematically considering alternatives and consequences Standard 6: Control personal information• Organizepersonalfinancesanduseabudgettomanagecashflow Standard 1: Develop a plan for spending and saving Standard 5: Consider charitable giving• Maintaincreditworthiness,borrowatfavorableterms,andmanagedebt. Standard 2: Explain the purpose of a credit record and identify borrowers’ credit report rights

NCTM:



Building Your Future, Book 4: Making a Life 21

• Learnthedifferencebetweenwantsandneedsandcategorizebudgetlineitemsaswantsorneeds• Analyzeasamplehouseholdbudgetspreadsheetandcalculatethelineitems’percentagesindicatingthe

amount of income spent on each item• Evaluatewantsandneedsonaspreadsheetanddeterminewhereexpensescouldbecuttopayunexpected

costs and establish a safety net of savings• Constructaspreadsheetthatcalculatesvariouslatepaymentfeesandanalyzetheadditionalcostsofnot

paying bills on time• Reviewasamplecreditreporttolearnthepositiveandnegativeinformationthatcreditorscanseefrom

reading the report• Learnaboutidentifytheftandwaystopreventitandcombatitifyouareavictim• Constructaspreadsheetthatrepresentsabalancedhouseholdbudgetthatprovidesforallneedsand

savings, and allows for some wants.

Key Terms• Needs: basic survival necessities • Expense: an expenditure of money; cost• Want: something a person desires that is not essential• Budget: an itemized list of income and expenses over a given period of time• Late fees: an extra charge imposed when your payment is received after the due date or grace period• Credit history: information about the number and types of credit accounts, how long the accounts have

been open, the amounts owed on each account, the amount of available credit being used, whether bills are paid on time, the number of recent credit inquiries and information about bankruptcies, liens, judgments and collections

• Credit report: a report detailing an individual’s credit history, including timeliness of payments related to bills, loans, credit accounts and bankruptcies; used to determine creditworthiness

• Credit rating: a ranking typically expressed as a number or letter, based on one’s credit history and used by financial institutions for loan and credit approval as well as determination of loan or credit terms

• FICO score: payment history, current level of indebtedness, types of credit used and length of credit history, and new credit information are used to determine creditworthiness and risk by assessing a score between 300 and 850

• Installment loan: a loan where the principal and interest are repaid in equal payments at fixed intervals, usually monthly

• Identity theft: stealing someone’s personal, identifying information and using it to make purchases or to get other benefits

Teaching Strategies1. Practice activities throughout the chapter are cumulative and will assist students with the completion of the

Independent Practice assignment. These can be done using a computer and projects, with students at individual computers, or longhand on the board or overhead. For each of these activities, be sure to discuss the follow-up questions that analyze the data that is created in each spreadsheet.

2. Usetechniquessuchasstudentpair/sharetodiscusschaptercontent,vocabularytermsandmajorconceptsfound in the chapter.

3. Focus student attention by discussing the “Did You Know” factoids.


4. Discuss the phrase “living within your means” using questions like: • Whatdoesitmeantolivewithinyourmeans? • WhataresomeofthethingsthatcausepeopleNOTtolivewithintheirmeans? • Whataresomeofthenegativeconsequencesofnotlivingwithinyourmeans?

5. Discuss the difference between wants and needs by asking students to do a pair-share and define the two concepts with a partner.

6. Complete the Budget Basics section by taking time to review the sample budget as a class and pointing out

the following information: • Expensesaredividedupintocategories;someofthoseexpenseshavevariableamounts. • Therearethreecolumnsforexpenses:thebudgetedamount,theactualamountandthedifference between the two. When an item is over budget, it appears in ( ) to show the overage. If an item is under budget, it simply shows up as a dollar amount. If an item is exactly on budget, an amount of $0.00 appears in the difference column. • Sinceeachcategoryhasatotalbudgetedamount,actualamountandamountofdifference,itiseasyto see if a category is on, over or under budget. • Thebottomtwolinesofthebudgetshowthetotalamountofbudgetedandactualexpensesalong with the amount under or over the budgeted amount. • The“Cashshort/extra”categoryisespeciallyimportant.Byplanningabudgetthatallowsforextra money each month, you can help to build the “safety net” mentioned previously.

7. After students have completed the Budget Basics Try It! practice activity, discuss the scenario as a class. • Supposeyouareinacaraccidentandneedtopaya$750insurancedeductibletorepairyourcarand another $1000 in medical bills from injuries you sustained in the accident. In addition, you miss 2 weeks of work because of your injuries, resulting in the loss of pay (about $1750) during that time since you don’t have any paid time off remaining for the year. All totaled, this equals approximately $3500, which is a full month’s wages. Review the budget carefully and decide where you can realistically make the cuts necessary to pay for your car repairs and medical bills and make up for lost wages over the course of one year.

8. DirectstudentsthroughtheKeepingItBalancedactivityandthediscussionofMaintainingGoodCredit.Asa class, visit the website http://www.aie.org/managing-your-money/credit-scores-and-reports/read-a-credit-report.cfm and review the sample credit report by pointing out examples of what a potential lender might see if this person applied for credit. Discuss the positive and negative items reported in the sample.

9. HelpstudentsapplywhattheyhavelearnedbydirectingthemtotheIndependent Practice activity. All students should be able to answer the questions below as you discuss the completed assignment as a class.

• Whatpercentageofyourincomewasspentonwants? • Whatpercentageofyourincomeswasspentonneeds? • Didyouhavetocutanythingfromyourbudgetinordertolivewithinyourmeans?Ifso,what? • Wereyouabletoincorporate5%savingsintoyourbudget?Whatwantsdidyouhavetoforegotodothis?


10. Extend student learning by inviting a guest speaker from a non-profit consumer credit counseling service to come and discuss more about budgeting and steps that students can take now to budget themoneytheycurrentlyhave.Haveeachstudentwriteaspecificbudget-relatedquestionthatthespeaker can address during the discussion.

Assessment Recommendations1. Students could be assigned participation or completion grades for doing the in-class and large

group discussion and “Examples and Practice” activities.

2. Students should receive individual grades for the Independent Practice activity. Since answers will vary greatly, a pass/no pass grade is suggested with students who create budgets that cover all their needs, allow for savings and are balanced receiving a passing grade.

3. Assess the extension activity from step 10 above by using a participation or pass/no pass grade based on completion of the discussion question and appropriate interaction with the guest speaker.



Answers will vary based on where students categorize items. There is room for discussion of some items that could be placed in either the wants or needs column, depending on personal preference

A B C

1Needs

Budget ItemAmount

Budgeted% of

Income

2 Mortgate/rent 725 20.71%

3 Utilities 250 7.14%

4 Groceries 240 6.86%

5 Trash service 20 0.57%

6 Homerepairs 75 2.14%

7 Car payment 250 7.14%

8 Gas/fuel 170 4.86%

9 Car insurance 75 2.14%

10 Car repairs/maint. 50 1.43%

11 Healthinsurance 150 4.29%

12 Prescriptions 10 0.29%

13 OTC Drugs 10 0.29%

14Co-payments/out of pocket

25 0.71%

15 Life insurance 20 0.57%

16 Clothing 75 2.14%

17Credit card payments

150 4.29%

18 Total Needs 2,295 65.57%

A B C

1Wants

Budget ItemAmount

Budgeted% of

Income

2 Cellular phone 80 2.29%

3 Dining out 200 5.71%

4 Cable television 110 3.14%

5 Parking 75 2.14%

6Public

transportation20 0.57%

7 Video/DVD rental 10 0.29%

8 Movies/plays 25 0.71%

9 Sporting events 50 1.43%

10 Concerts / clubs 50 1.43%

11 Other activities 50 1.43%

12 Healthclubdues 25 0.71%

13 Dry cleaning 20 0.57%

14 Salon / barber 40 1.14%

15Charitable donations

75 2.14%

16 Gifts 50 1.43%

17 Retirement 100 2.86%

18Long-term

savings100 2.86%

19Other misc.

payments75 2.14%

20 Total Wants 1,155 33.00%


• Howwouldyouexpressthestatementsaboveasaformulaforthespreadsheet?Formula =B2/3500• Whatisthetotalpercentageofincomethatwillbespentonneeds?65.57%• Whatpercentageofincomeremainstobespentonwants?28.00% (remember that 5% is allocated to

savings)• Whatwouldcausethetotalpercentageofincomebetweenthetwocategoriesnottoequal100%?

A certain percentage of the income in this scenario is not used and falls into the Cash short/extra category, which should account for the discrepancy of 1.43%

• Supposeyouareinacaraccidentandneedtopaya$750insurancedeductibletorepairyourcarand another $1000 in medical bills from injuries you sustained in the accident. In addition, you miss 2 weeks of work because of your injuries, resulting in the loss of pay (about $1750) during that time since you don’t have any paid time off remaining for the year. All totaled, this equals approximately $3500, which is a full month’s wages. Review the budget carefully and decide where you can realistically make the cuts necessary to pay for your car repairs and medical bills and make up for lost wages over the course of one year. Answers will vary.


• TotalAmountPaid=BillingAmount+EITHERtheSetLateFeeORthePercentageLateFeeformula =SUM(A2:B2) OR A3+(A3*C3)

• PercentageLateFee=BillingAmountxPercentageLateFeeformula =(A3*C3)• Inthisscenario,whichfeeresultsinagreatercosttoyou?The $35.00 late fee on bill 1• Ifyoupaidbothofthesebillslate,whatwouldbethetotalamountofmoneyyouwouldpayinlate

fees for the month? $41.00

Independent Practice, p. 38Answers will vary based on student selections. Savings of $129 must be placed in the needs column, as should the student loan payment of $200 per month and the car payment of $250 per month• Howwouldyouexpressthestatementsaboveasformulasforthespreadsheet?To calculate total

expenses per the formula given, you would use E2=SUM(B2:D2); however, if you prefer to calculate only required expenses, to determine how much is left over for wants, you would use E2=B2+C2.

• Whatpercentageofyourincomewasusedbywants?Answers will vary.• Whatpercentageofyourincomewasspentonneeds?Answers will vary.• Didyouhavetocutanythingfromyourbudgetinordertolivewithinyourmeans(notexceedyour

monthly income)? If so, what did you cut? Why? Answers will vary.• Wereyouabletoincorporate5%savingsintoyourbudget?Whatwantsdidyouhavetoforegoto

do this? Answers will vary.

A B C D

1 Billing Amount Set Late Fee % Late Fee Total Amount Paid

2 $200.00 $35.00 0.00% $235.00

3 $200.00 $0.00 3.00% $206.00

26 Building Your Future, Book 4: Retirement

Chapter 5: Retirement

Looking AheadWhile it is still many years in the future, it is never too early to start thinking about and educating yourself on the costs of retirement and various ways to fund your retirement. By considering options early and planning your savings strategy, you will be able to enjoy a retirement lifestyle that allows you to do the things you want to do. Learning about ways to save and how you can use the power of compounding interest to build wealth can lead to a retirement free from financial stress.

Getting Organized• Studentswillneedonetotwoclassperiodstocompletetheactivitiesforthislesson.• Whiletheuseofindividualcomputerswithspreadsheetsoftwarebestfacilitatesthelessonactivities,

materials are provided for students to complete the activities as pencil/paper tasks.

Learning ObjectivesFocusing on the planning for retirement, students will:

• Utilizevocabulary,onlinecalculatorsandretirementscenariostolearnaboutthecostsofretirement• ReviewcompoundinginterestandlearnaboutcommonretirementinvestmentstrategiessuchasIRAs,

401(k) plans, annuities, pensions and government sponsored programs such as Social Security and Medicare

Teacher’s Guide

Standards

JumpStart:

• ApplyreliableinformationandsystematicdecisionmakingtopersonalfinancialdecisionsStandard 2: Find and evaluate financial information from a variety of sourcesStandard 4: Make financial decisions by systematically considering alternatives and consequences• Useappropriateandcost-effectiveriskmanagementstrategiesStandard 1: Identify common types of risks and basic risk management methods• ImplementadiversifiedinvestmentstrategythatiscompatiblewithpersonalgoalsStandard 1: Discuss how saving contributes to financial well-beingStandard 2: Explain how investing builds wealth and helps meet financial goalsStandard 3: Evaluate investment alternatives

NCTM:



Building Your Future, Book 4: Retirement 27

• UnderstandbasicinformationabouttheroleofSocialSecurityandMedicareforretireesandhelpstudentsget an idea of the amount and types of benefits available.

• Usinganumberofresources,lookatretirementplanningconsiderationsincludingage,maritalstatus,salaryand lifestyle and use sample Excel spreadsheets to calculate various retirement scenarios.

• Learnaboutvariousmeansofinvestingandhowtoconsiderfactorssuchasinflationandcompoundinginterest to calculate retirement savings on sample Excel spreadsheets.

• Usingthecurrentsalaryforanentryleveljobinthecareerfieldtheyhaveselected,studentswillresearchand create a spreadsheet that will calculate accumulated retirement contributions with interest.

Key Terms• Retirement: the point in time when a person chooses to leave the workforce permanently, usually at age 65

or older• Compounding interest: when money is earned on the total amount in the account including the initial

deposit and interest that has already been credited to the account • Risk: likelihood of suffering losses or earning less than expected on financial investments • Inflation: the annual percentage increase in the prices of goods and services• Social Security: a federal government program funded through payroll taxes; designed to provide retirement and disability income for those meeting the specified criteria• Medicare: a federal government program funded through payroll taxes; pays for health care expenses for citizens over age 65, or who meet other special criteria • IRA (Individual Retirement Account): a retirement investment account that allows a person to save a

specified amount of income each year in a tax-deferred account • 401(k): a retirement investment plan that allows an employee to invest a percentage of their wages into a

tax-deferred account chosen by the employer• 403(b): a retirement plan available to employees of certain non-profit organizations that allows them to

invest a percentage of their wages in a tax-deferred account• Pension: money paid to an employee by the employer from a specific, employer-funded (and in some cases

partially employee funded) retirement investment fund after retirement or separation from service before retirement

Teaching Strategies1. Practice activities throughout the chapter are cumulative and will assist students with the completion of the

Independent Practice assignment. These can be done using a computer and projects, with students at individual computers, or longhand on the board or overhead. For each of these activities, be sure to discuss the follow-up questions that analyze the data that is created in each spreadsheet.

2. Usetechniquessuchasstudentpair/sharetodiscusschaptercontent,vocabularytermsandmajorconceptsfound in the chapter.

3. Focus student attention by discussing the “Did You Know” factoids and calculating the amount of money that should be saved by the average American, who earned approximately $43,000 in 2011 (http://www.ssa.gov/oact/cola/AWI.html).Usequestionssuchas:

• Accordingtothefactoid,whatistheminimumamountofmoneythatshouldbesavedforretirementAnswer: 8 times the annual salary

• Howwouldwecalculate8timestheannualsalary?Answer: $43,000 x 8


• Ifonlytheminimumwassaved,howmuchshouldthispersonhaveinsavingsatretirement? Answer: $344,000

4. Discuss retirement by reminding students that even though they have their whole work lives ahead of them, without planning for retirement, they may not ever be able to stop working. Address questions such as:

• Ifyouwerenotabletoretire,whatkindsofthingscouldyoupotentiallymissoutoninyourlateryears? • Ifyoudonotsaveenoughforretirement,howmightyourlifestylechangeifyoudostopworkingat retirement age?

5. After students have completed the Retirement Basics practice activity, introduce compounding interest and complete and discuss the practice activity to ensure understanding.

6. Toprovidestudentswithanideaofhowinflationaffectsthepricesofcommonitems,sharecomparisonssuch as:

• In1960,pricesforcommongoodswere:gallonofgas=25¢,packofgum=5¢,fastfoodhamburger= 20¢.Howmuchdothoseitemscosttoday?Answerswillvarybasedonmarket.

7. Take time to review the sample Social Security statement at http://www.socialsecurity.gov/mystatement/SSA-7005-OL.pdf. Pay special attention to:

• Page3earningsrecord • Page2benefiteligibilityforbothSocialSecurityandMedicare • DefiningCOLAandexplaininghowthesearedesignedtohelpretireescombatinflation • Discusstheexamplesandpracticequestionsincluding: • Inmostcases,willtheincomeprovidedbySocialSecuritybenefitsallowyoutomeetallofyour budget needs? Answers will vary, but most students will not be able to meet their budgeted needs. What about your budget wants? Answers will vary, but students most likely will have to eliminate many of their budget wants. • Whatotherthingscanyoudotoensureyoucanmeetallofyourexpensesduringretirement?Answers will vary but could include: Save for retirement through investing in different ways.

8. Introduce IRAs and 401(k) and 403(b) retirement plan options and complete the practice activities for each as directed in the text.

9. HelpstudentsapplywhattheyhavelearnedbydirectingthemtotheIndependentPracticeactivity.Allstudents should be able to answer the questions: What is the total amount you will have saved for retirement and which is the better investment, the 401(k) or the IRA? When students have completed the activity, discuss and correct it as a class using the Independent Practice Activity Teacher Key.

10. Extend student learning by having students calculate the cost of the items on the budget they created earlierusingthehistoricalinflationratesfromthepast45years.Havethemusetheseprojectedbudgetedcosts to recalculate their actual cost of living when they reach retirement age so they can see the importance of saving for retirement.



discussion and “Examples and Practice” activities.

2. Students should receive individual grades for the Independent Practice activity. Students should receive an accuracy grade for their computations on the spreadsheet.

3. Assess the extension activity from step 10 above by using a completion grade since student answers will vary based on their original budgeted amounts.

Examples and Practice, p. 40• Calculatetheamountyouwouldneedtohavesavedovertheyearsifyouwanttoretirewithtentimesyour

last annual salary amount. $750,000• Howmuchwouldyouhavetosaveeachyear,onaverage,inordertohavethisamountofmoney?$16,666

($750,000/45 years). Teachers may wish to introduce the next section, on compounding interest, by noting that this amount does not reflect any interest accumulations, which will be significant. Based on a 5% rate of return, for example, the amount that needs to be saved is approximately $4,700 per year. (This calculation is outside the scope of this curriculum.)

A B C D E

1

Interest Compounding Terms (Daily/

Monthly/Annual)

Interest Rate

Beginning Balance

Interest Payment

Ending Balance

2 Annual 7.000% $1,000.00 $70.00 $1,070.00

3 7.000% $1,070.00 $74.90 $1,144.90

4 7.000% $1,144.90 $80.14 $1,225.04

5 7.000% $1,225.04 $85.75 $1,310.80

6 7.000% $1,310.80 $91.76 $1,402.55


A B C D E

1


Monthly/Annual) Interest Rate

Beginning Balance

Interest Payment

Ending Balance

7 Monthly 0.583333% $1,000.00 $5.83 $1,005.83

8 0.583333% $1,005.83 $5.87 $1,011.70

9 0.583333% $1,011.70 $5.90 $1,017.60

10 0.583333% $1,017.60 $5.94 $1,023.54

11 0.583333% $1,023.54 $5.97 $1,029.51

12 0.583333% $1,029.51 $6.01 $1,035.51

13 0.583333% $1,035.51 $6.04 $1,041.55

14 0.583333% $1,041.55 $6.08 $1,047.63

15 0.583333% $1,047.63 $6.11 $1,053.74

16 0.583333% $1,053.74 $6.15 $1,059.89

17 0.583333% $1,059.89 $6.18 $1,066.07

18 end of yr. 1 0.583333% $1,066.07 $6.22 $1,072.29

19 0.583333% $1,072.29 $6.26 $1,078.55

20 0.583333% $1,078.55 $6.29 $1,084.84

21 0.583333% $1,084.84 $6.33 $1,091.16

22 0.583333% $1,091.16 $6.37 $1,097.53

23 0.583333% $1,097.53 $6.40 $1,103.93

24 0.583333% $1,103.93 $6.44 $1,110.37

25 0.583333% $1,110.37 $6.48 $1,116.85

26 0.583333% $1,116.85 $6.51 $1,123.36

27 0.583333% $1,123.36 $6.55 $1,129.92

28 0.583333% $1,129.92 $6.59 $1,136.51

29 0.583333% $1,136.51 $6.63 $1,143.14

30 0.583333% $1,143.14 $6.67 $1,149.81

31 0.583333% $1,149.81 $6.71 $1,156.51

32 0.583333% $1,156.51 $6.75 $1,163.26

33 0.583333% $1,163.26 $6.79 $1,170.05

34 0.583333% $1,170.05 $6.83 $1,176.87

35 0.583333% $1,176.87 $6.87 $1,183.74

36 0.583333% $1,183.74 $6.91 $1,190.64

37 0.583333% $1,190.64 $6.95 $1,197.59

38 0.583333% $1,197.59 $6.99 $1,204.57

39 0.583333% $1,204.57 $7.03 $1,211.60

40 0.583333% $1,211.60 $7.07 $1,218.67

41 0.583333% $1,218.67 $7.11 $1,225.78

42 end of yr. 3 0.583333% $1,225.78 $7.15 $1,232.93


Examples and Practice, p. 41• InterestPayment=InterestRatexBeginningBalance=B2*C2 is annual, 0.07/12 must be entered in

the Interest Rate column for the monthly calculation• EndingBalance=BeginningBalance+InterestPayment=SUM(C2:D2)• BeginningBalance=EndingBalancefrompreviousline=E2• Youinvest$1,000atanannualrateof7%.• Howmuchwillyouearnafter1year?$1,070.00 3 years? $1,225.04 5 years? $1,402.55• Youinvest$1,000atanannualrateof7%withinterestcompoundedmonthly.• Howmuchwillyouearnafter1year?$1,072.29 3 years? $1,232.93 5 years? $1,417.63• Whyisitimportanttolooknotjustattheinterestrateonaninvestment,butalsoathowoften

interest is compounded? When interest is compounded more frequently, then the amount of money earned in interest can be greater, even if the interest rate on the investment is lower. For example, an annual rate of 7% might look great, but a rate of 6.85%, compounded monthly, will produce a higher rate of return.

A B C D E

1


Monthly/Annual)

Interest Rate

Beginning Balance

Interest Payment

Ending Balance

43 0.583333% $1,232.93 $7.19 $1,240.12

44 0.583333% $1,240.12 $7.23 $1,247.35

45 0.583333% $1,247.35 $7.28 $1,254.63

46 0.583333% $1,254.63 $7.32 $1,261.95

47 0.583333% $1,261.95 $7.36 $1,269.31

48 0.583333% $1,269.31 $7.40 $1,276.71

49 0.583333% $1,276.71 $7.45 $1,284.16

50 0.583333% $1,284.16 $7.49 $1,291.65

51 0.583333% $1,291.65 $7.53 $1,299.19

52 0.583333% $1,299.19 $7.58 $1,306.76

53 0.583333% $1,306.76 $7.62 $1,314.39

54 0.583333% $1,314.39 $7.67 $1,322.05

55 0.583333% $1,322.05 $7.71 $1,329.77

56 0.583333% $1,329.77 $7.76 $1,337.52

57 0.583333% $1,337.52 $7.80 $1,345.33

58 0.583333% $1,345.33 $7.85 $1,353.17

59 0.583333% $1,353.17 $7.89 $1,361.07

60 0.583333% $1,361.07 $7.94 $1,369.01

61 0.583333% $1,369.01 $7.99 $1,376.99

62 0.583333% $1,376.99 $8.03 $1,385.02

63 0.583333% $1,385.02 $8.08 $1,393.10

64 0.583333% $1,393.10 $8.13 $1,401.23

65 0.583333% $1,401.23 $8.17 $1,409.40

66 end of yr. 5 0.583333% $1,409.40 $8.22 $1,417.63


Examples and Practice, p. 44• Inmostcases,willtheincomeprovidedbySocialSecuritybenefitsallowyoutomeetallofyourbudget

needs? Answers will vary, but most students will not be able to meet their budgeted needs. What about your budget wants? Answers will vary, but students most likely will have to eliminate many of their budget wants.

• Whatotherthingscanyoudotoensureyoucanmeetallofyourexpensesduringretirement?Answers will vary but could include: Save for retirement through investing in different ways.


• Howwouldyouexpresseachofthestatementsaboveasaformulaforthespreadsheet?Interest Payment = Interest Rate x (Beginning Balance + Annual Investment) =(C2 + D2)*B2; Ending Balance = Beginning Balance + Annual Investment + Interest Payment =SUM(C2:E2)• Overthecourseof5yearsyouinvested$20,000.Howmuchdidyouearnininterest?$3,000.42• Whatwastheaverageinterestrateoverthat5yearperiod?4.34% (Add interest rate column/5 and note this is not a dollar weighted calculation)• Explainhowcompoundinginterestaddsvaluetothisinvestment.When interest is added annually along with an additional investment, the amount of interest increases incrementally because of the increase in principal.

A B C D E F

1Year

Interest Rate

Beginning Balance

Annual Investment

Interest Payment

Ending Balance

2 1 3.20% $0 $4,000.00 $128.00 $4,128.00

3 2 2.80% $4,000.00 $227.58 $8,355.58

4 3 5.70% $4,000.00 $704.27 $13,059.85

5 4 5.20% $4,000.00 $887.11 $17,946.96

6 5 4.80% $4,000.00 $1,053.45 $23,000.42


Examples and Practice, p. 46-47

• InterestPayment=InterestRatex(BeginningBalance+AnnualInvestment+EmployerMatch)=B2*SUM(C2:E2)

• EndingBalance=BeginningBalance+AnnualInvestment+EmployerMatch+InterestPayment=SUM(C2:F2)

• EmployerMatch(percentage)=AnnualInvestmentxMatchPercentage=D8*0.3

Scenario 1• Overthecourseof5yearsyouinvested$20,000.Howmuchdidyouyouremployerinvest?$5,000• Howmuchdidthisemployermatchchangeyourinterestpayment? Increased it by 25% Your ending

balance? Increased it by 25%• Explainhowtheemployermatchaddsvaluetothisinvestment.By getting an extra $1,000, you are investing,

in essence, 25% more, making this a significant portion of your retirement.

A B C D E F G

1Scenario

Interest Rate

Beginning Balance

Annual Investment

Employer Match

Interest Payment

Ending Balance

2 1 3.20% $0.00 $4,000.00 $1,000.00 $160.00 $5,160.00

3 2.80% $5,160.00 $4,000.00 $1,000.00 $284.48 $10,444.48

4 5.70% $10,444.48 $4,000.00 $1,000.00 $880.34 $16,324.82

5 5.20% $16,324.82 $4,000.00 $1,000.00 $1,108.89 $22,433.71

6 4.80% $22,433.71 $4,000.00 $1,000.00 $1,316.82 $28,750.52

7

8 2 3.20% $0.00 $4,000.00 $1,200.00 $166.40 $5,366.40

9 2.80% $5,366.40 $4,000.00 $1,200.00 $295.86 $10,862.26

10 5.70% $10,862.26 $4,000.00 $1,200.00 $915.55 $16,977.81

11 5.20% $16,977.81 $4,000.00 $1,200.00 $1,153.25 $23,331.05

12 4.80% $23,331.05 $4,000.00 $1,200.00 $1,369.49 $29,900.54

13

14 3 4.25% $0.00 $4,000.00 $250.00 $180.63 $4,430.63

15 4.25% $4,430.63 $4,000.00 $250.00 $368.93 $9,049.55

16 4.25% $9,049.55 $4,000.00 $250.00 $565.23 $13,864.78

17 4.25% $13,864.78 $4,000.00 $250.00 $769.88 $18,884.66

18 4.25% $18,884.66 $4,000.00 $250.00 $983.22 $24,117.88


Scenario 2• Overthecourseof5yearsyouinvested$20,000.Howmuchdidyouyouremployerinvest?$6,000• Howmuchdidthisemployermatchchangeyourinterestpayment?Since the employer match represents a

30% addition ($6,000/$20,000), the match increased it by 30% Your ending balance? Increased by 30%• Whichemployermatchisbetter,Scenario1or2?Why?Two is a better scenario assuming that you always put

away $4,000. If the amount that you contribute in order to obtain the match is optional, then Scenario 1 may be better if you contribute a lower amount (say $1,000) on your investment. Once your investment amount exceeds $3,334, the second scenario will provide more money because it is a percentage rather than a flat amount.

Scenario 3• Overthecourseof5yearsyouinvested$20,000.Howmuchdidyouyouremployerinvest? $1,250• Howmuchdidthisemployermatchchangeyourinterestpayment?Increased it by 6.25% ($250/$4,000) Your

ending balance? Increased by 6.25%• Isthis403(b)abetterinvestmentthaneitheroftheotherscenarios?Why?No. It offers a lower employer

match, and the set interest rate does not produce as good an overall return as the variable rate.• Ifyouweregoingtoselectoneoftheseinvestmentsfromanemployer,whichwoulditbeassumingyou

will be in the workforce for another 25 years? Why? Answers will vary based on student values, however, mathematically, assuming the student puts away the maximum amount allowed, Scenario 2 provides the best opportunity for earning.


Independent Practice Teacher Key, p. 48

A B C D E F G

1Scenario

Beginning Balance

Interest Rate

Annual Investment

Employer Match

Interest Payment

Ending Balance

2 401(k) $0.00 4.00% $1,200.00 $60.00 $50.40 $1,310.40

3 $1,310.40 4.00% $1,200.00 $60.00 $102.82 $2,673.22

4 $2,673.22 4.00% $1,200.00 $60.00 $157.33 $4,090.54

5 $4,090.54 4.00% $1,200.00 $60.00 $214.02 $5,564.57

6 $5,564.57 4.00% $1,200.00 $60.00 $272.98 $7,097.55

7 $7,097.55 4.00% $1,200.00 $60.00 $334.30 $8,691.85

8 $8,691.85 4.00% $1,200.00 $60.00 $398.07 $10,349.93

9 $10,349.93 4.00% $1,200.00 $60.00 $464.40 $12,074.32

10 $12,074.32 4.00% $1,200.00 $60.00 $533.37 $13,867.69

11 $13,867.69 4.00% $1,200.00 $60.00 $605.11 $15,732.80

12

13 IRA $0.00 4.25% $1,200.00 $0.00 $51.00 $1,251.00

14 $1,251.00 4.25% $1,200.00 $0.00 $104.17 $2,555.17

15 $2,555.17 4.25% $1,200.00 $0.00 $159.59 $3,914.76

16 $3,914.76 4.25% $1,200.00 $0.00 $217.38 $5,332.14

17 $5,332.14 4.25% $1,200.00 $0.00 $277.62 $6,809.76

18 $6,809.76 4.25% $1,200.00 $0.00 $340.41 $8,350.17

19 $8,350.17 4.25% $1,200.00 $0.00 $405.88 $9,956.05

20 $9,956.05 4.25% $1,200.00 $0.00 $474.13 $11,630.18

21 $11,630.18 4.25% $1,200.00 $0.00 $545.28 $13,375.47

22 $13,375.47 4.25% $1,200.00 $0.00 $619.46 $15,194.92

36 Building Your Future, Book 4: Appendix

Appendix: Online Resources

Below you will find a list of additional resources related to the chapters in this book. These resources can be used to extend your understanding and study of the subjects in each section.

Chapter 1: Path to EmploymentO*Net OnlineAcareerresearchresourcefromtheU.S.DepartmentofLaborhttp://www.onetonline.org/

Chapter 2: Paying for Post-secondary EducationStudent AidInformationonfederalfinancialaidfromtheU.S.DepartmentofEducationhttp://studentaid.ed.gov/home

Big FutureInformation on attending and paying for college from The College Boardhttps://bigfuture.collegeboard.org/

Chapter 3: Making a LifeInternal Revenue ServiceA wide range of information on federal taxeshttp://www.irs.gov

Chapter 4: Making a LivingIdentity Theft Information on preventing identity theft from the Federal Trade Commissionhttp://www.consumer.ftc.gov/features/feature-0014-identity-theft

Chapter 5: RetirementConsumer Information on Retirement PlansInformation on various retirement plan options from the Department of Laborhttp://www.dol.gov/ebsa/consumer_info_pension.html

How Should I Plan for Retirement?The Social Security Administration’s guide to planning for retirementhttp://www.ssa.gov/retirement/


Building Your Future, Book 4: Appendix 37

?Appendix: “Did You Know” Sources

Below you will find a list of sources for the “Did You Know” statements at the beginning of each chapter in the student guides.

Chapter 1: Path to EmploymentUnemploymentandearningsaredirectlylinkedtoeducationalattainment.In2011theaveragehighschoolgraduateearned$638perweekandhadanunemploymentrateof9.4%,workerswithassociate’sdegreesearned$768perweekandwereunemployedatarateof6.8%andpeoplewitha4-yeardegreeearned$1053weeklywithanunemploymentrateofonly4.9%accordingtotheBureauofLaborStatistics.Source: Bureau of Labor Statistics http://www.bls.gov/emp/ep_chart_001.htm

Chapter 2: Paying for Post-secondary EducationIn 2010–11 the cost of undergraduate tuition, room, and board were estimated to be $13,600 at public institutions, $36,300 at private not-for-profit institutions, and $23,500 at private for-profit institutions? Between 2000–01 and 2010–11, prices for undergraduate tuition, room, and board at public institutions rose 42 percent, and prices at private not-for-profit institutions rose 31 percent.Source: U.S. Department of Education, National Center for Education Statistics. (2012). Digest of Education Statistics, 2011 http://nces.ed.gov/programs/digest/d11/ch_3.asp

Chapter 3: Making a LivingEmployees do not take home every dollar they earn. A percentage of what you earn is taxed to pay for programssuchasSocialSecurityandMedicare.Itamountstoapproximately7.65%ofwhatyouearn.Inaddition, income taxes are also automatically deducted from your wages as well, and can range from an additional10-35%deduction.Source: Internal Revenue Service http://www.irs.gov/Individuals/Employees/Tax-Withholding

Chapter 4: Making a LifeTheaverageAmericanfamilyspends34%ofthehouseholdbudgetonhousing.Carsarethesecondmostcostlyitemat17.6%ofthebudget,whilefoodholdsthethirdplacepositionat12.4%.Source: Bureau of Labor Statistics http://www.bls.gov/news.release/cesan.nr0.htm

Chapter 5: RetirementOnly58%ofusarecurrentlysavingmoneyforretirement–and60%ofthosethatarehavelessthan$25,000. Thirty percent have less than $1,000. Most financial planners advise their clients to expect to save eight to 10 times their final annual salary for retirement.Source: http://www.marketwatch.com/story/what-matters-most-in-retirement-planning-2012-12-04


building your future: succeeding - donate today · building your future, book 4: path to employment...

Documents