Family Economics & Financial Education 3.19.3.G1

Get ready to Take Charge of Your Finances

Life Of…..

Ben West“A Teenager’s Spending Plan”

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

Arizona

3.19.3.G1

Snapshot – Ben West

• Sneak peak into the life of Ben and his family– Ben– James– Brenda– Anna

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

Arizona

3.19.3.G1

SnapshotBen’s Income and Expenses

• Ben’s Income– Lou’s Logging Service

•$13.00/hour•15 hours a week

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

Arizona

3.19.3.G1

SnapshotBen’s Income and Expenses

• Ben’s Expenses– Social activities with Maria

• $75

– Cellular Phone• Monthly budget is $50, however Ben often uses

more minutes than the plan allows and sends numerous text messages thus increasing his bill

• Spends $90

– Saving• $200

– Other Items

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

Arizona

3.19.3.G1

Spending Plan

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

• He can not have more expenses than income.

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

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

will affect decisions made when creating a spending plan

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

Arizona

3.19.3.G1

SnapshotWest Family Expenses

• Ben’s Expenses• Housing

– Monthly Payment– Utilities– Others – television,

internet and telephone• Transportation

– Vehicle for Ben and Brenda

– Monthly payment and fuel• Insurance

– Homeowners, disability, life, auto, and health

• Food– Groceries– Pack daily lunches with

leftovers• Credit Card Balance

– Currently have $6,500 in credit card debt

– Monthly minimum payment is $160

– They often do not have enough to pay more than the minimum balance

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

Arizona

3.19.3.G1

Housing

• Monthly Payment– Housing

payment– Insurance– Property taxes– Repairs– Maintenance

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

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

Arizona

3.19.3.G1

• Local Antenna

• Satellite Dish

• Digital Cable

• Telephone

• Internet

Housing Others

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

Arizona

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Transportation

• Monthly Payment– Car payment– Maintenance

• Fuel– An average is listed– This cost may

increase/decrease depending on the cost of fuel

• West Family– Pay for Ben and

Brenda’s vehicle monthly payment and fuel costs

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

Arizona

3.19.3.G1

Others

• Dirt bike tools and upgrades

• Snowboarding • Electronics• Hunting• Entertainment• Create Your Own

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

Arizona

3.19.3.G1

Goal:To Create A Balance Spending Plan

• Make all choices for the West family and Ben

• Complete a Major Expenditures Summary for the West family

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

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

Arizona

3.19.3.G1

Quick Review

• West Family– Ben, James, Brenda, Anna

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

• Create a Spending Plan for Ben– Social Activities– Cellular Phone– Savings– Others

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

Arizona

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Snapshot Reflection

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

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

Arizona

3.19.3.G1

Ben’s Paycheck

Personal Information

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

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

Arizona

3.19.3.G1

Ben’s Paycheck

Pay Period

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

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

Arizona

3.19.3.G1

Ben’s Paycheck

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

Gross Pay

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

Arizona

3.19.3.G1

Ben’s Paycheck

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

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

Arizona

3.19.3.G1

Ben’s Paycheck

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

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

Arizona

3.19.3.G1

Ben’s Paycheck

Federal Insurance Contribution Act – includes Social Security and MedicareFICA

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

Arizona

3.19.3.G1

Ben’s Paycheck

Net Pay

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

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

Arizona

3.19.3.G1

Ben’s Paycheck

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

Year-to-Date

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

Arizona

3.19.3.G1

Setting Education and Financial Goals

•Short Term – less than one year

•Long Term – more than one year

SMART Goal

SpecificState exactly what is to be

done.

MeasurableInclude how the goal can

be measured.

AttainableDetermine

steps to reach the goal.

RealisticDo not set the

goal for something unrealistic.

Time BoundState when the

goal will be met.

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

Arizona

3.19.3.G1

West’s Major ExpendituresHousing

• Choose a house and housing others for the West family

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

– Family size– Lifestyle– Other family dynamics

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

Arizona

3.19.3.G1

West’s Major ExpendituresTransportation

• Choose a vehicle for the Ben and Brenda

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

– Ben and Brenda will share the vehicle

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

Arizona

3.19.3.G1

West’s Major ExpendituresMajor Expenditures Summary

• Transfer numbers to complete the summary– Total housing cost– Total transportation cost– Insurance– Food– Credit Card Balance

• West family usually only pays the minimum monthly payment

• If they continue this habit, their $6,500 debt will cost $9,120 • It will take 4.75 years to pay in full if only the minimum

payment is paid each month

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

Arizona

3.19.3.G1

Ben’s Spending PlanPayroll Withholdings

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

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

Arizona

3.19.3.G1

Ben’s Spending PlanSavings

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

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

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

Arizona

3.19.3.G1

Ben’s Spending PlanOthers

• Social activities with Maria• Cellular phone

– How could Ben decrease the amount spent on his cell phone each month?

• Choose which “others” items Ben would like– Dirt bike tools and upgrades– Snowboarding– Electronics– Hunting– Entertainment– Create Your Own

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

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

Arizona

3.19.3.G1

Ben’s Spending Plan Summary

• Gross Income• Expenses

• Calculate the Difference

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

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

Arizona

3.19.3.G1

Negative or Positive Difference?

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

expenses may be a good idea.

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

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

making changes.

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

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

Arizona

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Reflection Questions

• Once the difference equals zero….– Answer questions 17-22 on pages 15 and

16– Answer questions 23-27 on page 18