Transcript of …A Family Finance Simulation Developed by: Family Economics & Financial Education Project.
- Slide 1
- A Family Finance Simulation Developed by: Family Economics
& Financial Education Project
- Slide 2
- You will become a Financial Planner for a family Manage the
real life challenges households face when handling finances All
costs are national averages United States Census Bureau, United
States Department of Labor, Bureau of Labor Statistics, United
States Department of Agriculture, National Coalition on Health
Care, and various private businesses
- Slide 3
- Spending Plan: (also called a budget) A financial statement
used to assist in money management comprised of income and expenses
Income money earned or received Expenses money spent Fixed Expenses
stay the same every month, due on a certain date Flexible Expenses
vary month to month, can be decreased or eliminated
- Slide 4
- Go through the Power Point taking notes on the main points Used
as a guide when making spending decisions Percentages should be
adjusted to meet individual values, needs and wants Average percent
of net income spent Housing: 30% Transportation 20% Food: 15 %
Insurance 7% Savings 10% Other 18% (clothing, personal care,
entertainment, donations)
- Slide 5
- Slide 6
- SETTING A FINANCIAL GOAL Financial goals provide direction when
creating a spending plan Complete Task 9.1 (using your familys
profile as a guide) When finished, transfer your SMART goal to the
Guided Spending Plan
- Slide 7
- Review your familys paycheck(s) Record gross income Record all
paycheck deductions (taxes, retirement, etc) Calculate net income
For duel-income families, add both paychecks together Why do some
paychecks have additional withholdings for retirement and medical
and others do not?
- Slide 8
- Recommended: each family should save 10% of net income -net
income x.10 If your profile indicates any monthly savings or
investments, record it Otherwise, determine an appropriate amount
to be saved and/or invested Why should families have 3-6 months
income saved for emergencies?
- Slide 9
- Recommended: 30% of a households net income. CALCULATE 30% OF
YOUR Familys NET INCOME= $_______ The information sheet describes
basic terminology: renting vs. buying, mortgages and how to
determine insurance costs and various types of insurance. Review
this to make the best spending plan decision for your family
Determine whether to rent or buy (unless indicated in the profile)
Housing is the largest expense for most families
- Slide 10
- Only choose a house available for the type of location in which
you live!
- Slide 11
- After reading the information choose the best housing for your
family HOUSING AMENIITIES: Required amenities Power, water/sewer,
garbage Some rentals include all or some of the required amenities
Optional amenities Internet, cell phone, land line, cable,
recycling Average Expenditures Housekeeping supplies Furniture
Appliances & housewares
- Slide 12
- Recommended: 20% of a households net income. CALCULATE 20% OF
YOUR Familys NET INCOME=$________ The information sheet describes
basic terminology: new vs. used, automobile financing, how to
determine insurance costs and various types of insurance. Use this
to make the best possible spending decisions for your family Your
family must have some form of transportation
- Slide 13
- Transportation Options: Purchasing new: Not pre-owned,
warranty, wide selection Purchasing used: Costs less, lower
insurance rates, depreciates more slowly Alternative options: Less
expensive than a vehicle Availability is limited in some location
Some profiles indicate transportation choices the family has
made
- Slide 14
- Determine new, used or alternative options Unless already
indicated in the profile If a family already owns a vehicle, only
insurance, fuel and repairs/maintenance must be included Record all
transportation expenses Calculate your transportation sub-total Is
it approximately 20% of net income?
- Slide 15
- Food, on average, is 15% of a households net income. CALCULATE
15% OF YOUR Familys NET INCOME = $_________
- Slide 16
- Thrifty Generic brands Canned fruits and vegetables No junk
food Chicken and hamburger Low-cost Generic brands Some fresh fruit
and vegetables Chicken, hamburger, turkey, ham Moderate-cost Mostly
fresh fruit and vegetables Both name brand and generic Variety of
meats Liberal Organic Name brands Fresh fruit and vegetables
Variety of meats including steak and lobster
- Slide 17
- If your profile indicates the amount spent on food, record it
Food tab is for adults only Determine if you are allocating food
for an individual or 2 adults Identify which food plan is
affordable and fits with your scenario Identify the age of the
adults(s) Record the food plan selected and amount
- Slide 18
- Cost of eating out Got to the Average Expenditures tab Analyze
the average costs based on income level Determine and record the
amount Cost of food for children Go to the Cost of Raising Children
document behind the cost of raising children tab Select the
appropriate table based upon single or two-parent families and
income Record the proper amount in the food at home category
Calculate your food sub-total Is it approximately 15 % of net
income?
- Slide 19
- Insurance, on average, is 7% of a households net income.
CALCULATE WHAT 7% OF YOUR HOUSEHOLD NET INCOME IS. The information
sheet describes basic terminology, how to determine insurance costs
and various types of insurance. Everyone needs health
insurance
- Slide 20
- Determine if health, disability and/or life insurance is
provided by employer (it would be on your paycheck page) If
necessary, select insurance options Record all insurance expenses
Calculate your insurance sub-total Is it approximately 7% of your
net income?
- Slide 21
- If you have children, go to the Cost of Raising Children tab 1.
Select the appropriate table based upon single or two-parent
families and income 2. Find the row for the oldest child 3. Add
together the cost of: Clothing + Healthcare (could be reduced if
insured) + Childcare + Education + Miscellaneous = TOTAL COST
- Slide 22
- Total cost is based on families with 2 children If there are
not two children: Single parent family 1 child = total cost x 1.35
3 or more children= total cost x.72 Two-parent family 1 child =
total cost x 1.24 3 or more children = total cost x.77
- Slide 23
- Congratulations! Your monthly credit card bill has arrived!
(see teacher to receive yours) Identify how much debt, if any, was
received Need to include at least the minimum payment
- Slide 24
- Review Personal Profile page Record all the expenses printed in
red that havent been accounted for elsewhere Hobbies, activities,
medical expenses, pets, charity donations, extra bills, habits,
etc. Go to the Average Expenditures tab Record the following
expenses (based on your income level) Entertainment Personal Care
Health Care Apparel & Services Contributions Education &
Reading Remember to allocate enough money to cover all members of
your family!
- Slide 25
- Each day brings new surprises! Spending plans are always
evaluated and adjusted based on lifes events Choose a Chance Card
(from teacher) Incorporate that chance card into your spending plan
(go back and put it somewhere in the previous sections/adjust
subtotal)
- Slide 26
- Transfer all income and expense subtotals throughout the
worksheet onto this chart Subtract the total expenses from the
total income Do you have money left over (net gain)? Where will the
extra money be allotted? Are you in debt (net loss)? What changes
will be made? Identify what decisions you had to make in order for
your spending plan to balance (reach zero)
- Slide 27
- Were you able to reach your SMART goal? Why or why not?
Re-write your goal to reflect what your spending indicates.
- Slide 28
- Write your revised SMART goal on the Spending Plan Statement
Transfer all FINAL income and expense information to the Spending
Plan Statement (reflecting the changes you made to balance your
budget) Identify the percentage of net income spent on each
category.
- Slide 29
- Complete the pie chart reflecting the percentages you spent in
each budget category. Answer the reflection questions Turn-in this
project to moodle Tk 9.2 YOURE DONE! CONGRATULATIONS!