Page 2.5.4 THE PEREZ FAMILY CASE STUDY The Perez Family Case Study 2.5.4.A1 per group of 2‐3 The...

Page | 1 2.5.4

© Take Charge Today – August 2013 – Perez Family Case Study 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

RECOMMENDED GRADE

LEVELS AVERAGE TIME TO COMPLETE

EACH LESSON PLAN IS DESIGNED AND CONTINUALLY

EVALUATED “BY EDUCATORS, FOR EDUCATORS”. THANK

YOU TO THE FOLLOWING EDUCATORS FOR DEVELOPING

COMPONENTS OF THIS LESSON PLAN.

10‐12 Facilitation: 60‐90 minutes

Time does not include optional items listed.

None available

NATIONAL STANDARDS LESSON PLAN OBJECTIVES

The curriculum is aligned to the following national standards: National Standards for Financial Literacy American Association of Family and Consumer Sciences Council for Economic Education National Business Education National Jump$tart Coalition Common Core English Language Arts

Upon completion of this lesson, participants will be able to: Assess how family, friends, non‐profit organizations

and government programs provide support in times of economic hardship

Identify government programs where individuals in need can receive income support

Consider how many programs are designed to provide income safety nets for temporary situations

Explain how employment benefits individuals and families who receive government benefits

Assess how insurance helps prepare financially for an unexpected event

MATERIALS

MATERIALS PROVIDED IN THIS LESSON PLAN

MATERIALS SPECIFIC TO THIS LESSON PLAN BUT

AVAILABLE AS A SEPARATE DOWNLOAD MATERIALS TO ACQUIRE SEPARATELY

DEPENDING ON OPTIONS TAUGHT

The Perez Family Case Study 2.5.4.A1

The Perez Family Case Study Answer Key 2.5.4.C1

The Perez Family PowerPoint 2.5.4.G1

The Perez Family Electronic Spending Plan 2.5.3.E1

The Perez Family Spending Plan Answer Key 2.5.3.C2

Receiving and Protecting Unit Multiple Choice Test Bank and Answer Key 2.5.0.M1 & C1

Computer access Calculators

RESOURCES

THE PEREZ FAMILY CASE STUDY

RECEIVING AND PROTECTING UNIT ASSESSMENT – ADVANCED LEVEL

www.takechargetoday.arizona.edu

Page | 2 2.5.4


EXTERNAL RESOURCES

External resources referenced in this lesson plan: Information about government programs: www.govbenefits.gov

TAKE CHARGE TODAY RESOURCES

Similar lesson plan at a different level: None available

Optional lesson plan resources: Receiving from Family, Friends, and Non‐profits

2.5.2 Receiving from Government Programs 2.5.3

Life in… United States 2.0.1

CONTENTEDUCATOR MATERIALS PARTICIPANT READING

Materials to support educators when preparing to teach this lesson plan are available on the Take Charge Today website.

The following reading materials prepare participants to complete this case study: Receiving from Family, Friends, and Non‐profits

Information Sheet 2.5.2.F1 Receiving from Government Programs Information

Sheet 2.5.3.F1

OPTIONAL ADVANCE INSTRUCTIONThis lesson is designed to be taught as a stand‐alone lesson. However, background content knowledge from the

following lesson plans is directly related to this lesson and may be helpful for participants.

This lesson has been designed to apply content from the Receiving (include protecting) Unit which includes the following lesson plans: Receiving from Family, Friends, and Non‐profits 2.5.2 Receiving from Government Programs 2.5.3

LESSON FACILITATION

PREPARE Visual indicators to help prepare the lesson

INSTRUCTInstructions to conduct the lesson facilitation

CUSTOMIZE

Potential modifications to lesson facilitation

ANTICIPATORY SET

What sources of support would you use in a time of need? Approximate time: 5 minutes Materials to prepare: None 1. Ask participants to imagine what their family would do if a parent or caregiver

was injured in a car accident and unable to work for an extended period of time.

2. Ask participants to speculate the financial effects a loss of income and injury would have on their family.

a. Would your family be able to pay typical expenses in addition to medical bills?

3. Ask participants to determine what sources of support they would turn to. Remind participants that the main sources of support are family, friends, non‐

https://takechargetoday.arizona.edu/lessonplans/receiving-family-friends-and-non-profit

https://takechargetoday.arizona.edu/lessonplans/receiving-government-programs

http://takechargetoday.arizona.edu/lessonplans/life-inunited-states-0





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profit organizations, and government programs. 4. Tell participants that they will be completing a case study to help a family

create a spending plan and survive an unexpected injury and loss of income.

RECOMMENDED FACILITATION There are two facilitation options provided for this lesson. Option 1: Complete the Case Study Independently Option 2: Complete the Case Study in Small Groups

Option 1: Complete the Case Study Independently Approximate time: 45 minutes Materials to prepare: 1 The Perez Family Case Study 2.5.4.A1 per participant 1. Provide each participant with The Perez Family Case Study 2.5.4.A1. 2. Describe the case study and what the participants are expected to complete.

a. Step one – Read the Perez family story and complete the reflection questions.

b. Step two – Consider the Perez family’s values, needs, and wants to calculate their income, set a SMART goal, and make major expenditure decisions.

c. Step three – Create a spending plan for the Perez family in the before accident column using the information from pages 3‐6. Ensure the spending plan has a net gain or zero balance. If not, modify expenditure choices.

d. Step four – Read about Camila’s accident, calculate her income from working part‐time and receiving government benefits and consider changes which should be made to the spending plan.

e. Step five – Learn about the Perez family 2 years after the accident and complete the reflection questions.

3. Have participants complete the case study during or outside of class time. 4. When completing the case study

a. Directions are embedded throughout in green bold/italic font. b. All reflection questions which must be answered are in yellow with a

question mark. c. When calculating income and making expenditure decisions, everything

in red must be included in the total expenditure for that item. d. Green, bold letters indicate a response should be provided for a section

when calculating the income, setting a goal, and making expenditure decisions.

Option 2: Complete the Case Study in Small Groups Approximate time: 60 minutes Materials to prepare: 1 The Perez Family Case Study 2.5.4.A1 per group of 2‐3 The Perez Family Case Study PowerPoint 2.5.4.G1 1. Break participants into groups of 2‐3. 2. Provide each group with The Perez Family Case Study 2.5.4.A1. 3. Use The Perez Family Case Study PowerPoint 2.5.4.G1 to facilitate completion of

If computer access is available use the electronic student workbook pages to complete the case study instead of printing.

If computer access is available use The Perez Family Electronic Spending Plan 2.5.4.E1 in replace of the spending plan on pages 7 and 8 of the case study.

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the case study. Part One: Meet the Perez Family 4. Slide 2: Meet the Perez Family

a. Identify that directions for each section are provided in green, bold/italic font.

b. Discuss elements of the scenario that will impact the case study. i. Who are the family members?

1. Ricardo, Camila, three children and Camila’s mom ii. What do they do for employment and how much do they earn?

1. Ricardo works as a truck driver earning $3,232 per month.

2. Camila works as a cashier at a hardware store earning $1,960 per month.

iii. What are some of the Perez family’s values? 1. Examples include:

a. Family b. Outdoors c. Hard work

iv. What did you learn about spending plan decisions the Perez family makes?

1. Ricardo’s employer provides health insurance for the family

2. Watch movies and play video games together 3. Live in the city 4. Ricardo rides the bus to work 5. Ricardo packs his own lunch 6. Camila’s mom cares for the children

c. Have the groups answer questions one and two of the scenario reflection and then discuss as a group.

d. Stress that participants should keep the families values, needs and wants in mind while making decisions for the case study.

Part Two: Paychecks and Taxes 5. Slide 3: Paychecks and Taxes

a. Throughout the case study, green letters indicate a calculation or decisions that should be made at that point.

b. Have participants calculate Camila and Ricardo’s net pay. Then, calculate the Perez family’s net income.

c. Discuss how Ricardo’s employer‐provided 401K and health care benefits support the family.

i. A $210 monthly health insurance premium for the entire Perez family is significantly lower than purchasing health insurance privately.

ii. Because the 401K is a matching benefit, the Perez family is receiving a much higher retirement benefit than the $171.30 they are investing monthly.

Part Three: Expenses

Rather than providing participants with the entire case study at the beginning distribute it as sections are discussed.

Slide 2 with pages 1‐2

Slides 3‐10 with pages 3‐8

Slides 11‐13 with pages 9‐11

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6. Slide 4: Typical Expenditure Amounts a. Calculate the typical expenditure amounts for each category using the

Perez family’s net income ($3,631.41). b. Discuss how the numbers can be used as a guideline when making

spending plan decisions. i. The numbers represent typical amounts only. Some allocations

may be higher or lower. 7. Slide 5: Financial or Education Goal

a. Instruct each group to write a SMART financial or education goal. b. Have the groups share their goals and discuss why they set them.

8. Slide 6: Savings & Housing a. Savings

i. Calculate the monthly savings allocation which is 5% of net income for the Perez family and record this amount ($181.57) in the table.

ii. Stress that this is the minimum amount saved by the family. The family tries to save even more every month.

b. Housing i. Determine which housing option is the best selection and place

a check mark next to that selection. Then, record the applicable expenses (in red) in the table.

ii. Discuss which house is the best selection for the Perez family and why.

1. Homes 2 or 3 should be selected because they are in the city, a short walk to the local bus stop for Ricardo, and have enough rooms for the Perez family.

9. Slide 7: Food & Transportation a. Food

i. Determine which food option is the best selection and place a check mark next to that selection. Then, record the applicable expense (in red) in the table.

ii. Discuss what food plan is best for the Perez family and why. 1. Food plans 1 (thrifty) or 2 (low‐cost) should be selected

because Camila’s savvy shopping and cooking skills allows the family to spend less on food while still having nutritious meals.

b. Transportation i. Determine which transportation option is the best selection

and place a check mark next to that selection. Then, record the applicable expenses (in red) in the table.

ii. Remind participants to consider both Ricardo and Camila’s needs. The family must have at least one family automobile for Camila to take to work.

iii. Discuss which transportation options are the best for the Perez family and why.

1. Ricardo takes the bus to and from work ($75). 2. Options 1, 2, or 3 should be selected for Camila,

because they have space for the entire family. However, option 3 is more expensive and will require

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the family to make cuts in other categories to be affordable.

10. Slide 8: Insurance a. Determine if the Perez family will purchase disability insurance for

Ricardo. If so, calculate 2% of his net income and record the amount ($37.23) in the table.

b. Determine if the Perez family will purchase life insurance for Camila and Ricardo. If so, determine the policy amount and record it in the table.

c. Because disability and life insurance are optional expenses, discuss with the participants if they choose to purchase them or why not.

i. Stress the importance of disability insurance to replace a portion of income if an individual cannot work.

ii. Identify that life insurance is important since the Perez family has children that must be supported.

11. Slide 9: Other Expenditures a. Determine which other expenditures the Perez family will have. Then,

record the applicable expenses in the table. b. Remind participants that most families have expenses in each category. c. Discuss what expenses each group selected and why.

i. Because of the values stated in the scenario 1. Movies and video games should be selected because

that is the family’s entertainment. 2. Eating out should not be selected because the family

cooks meals at home. Part Four: Spending Plan 12. Slide 10: Spending Plan

a. Use the income and expenditure amounts determined for each category from pages 3‐6 to develop a spending plan.

b. Record the amounts in the before accident column. c. Ensure the Perez family spending plan has a net gain or zero balance

(income less expenses). i. If the balance is negative, review the expenditure decisions

and make the appropriate changes. Part Five: Camila’s Accident 13. Slide 11: Camila’s Accident

a. Have the groups read about Camila’s accident. b. As a result of the accident, calculate the Perez family’s new income

with SSDI benefits and Camila working part‐time. c. Have participants record the new income in the “After Accident

(working part‐time)” column of the Perez family’s spending plan on pages 7‐8.

14. Slide 12: Modify the Spending Plan a. Instruct each group to determine what expenses they would reduce or

cut to balance the spending plan. b. Have participants make a new spending plan for the Perez family in the

“After Accident” column. c. Have participants answer question 8 to explain three expenses that

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were reduced in the family’s spending plan and the impact eliminating or reducing each expense had on the family.

d. As a class, discuss what changes each group made to their spending plan and the impact on the family of modifying this expense.

Part 6: 2 Years Later… 15. Slide 13: 2 Years Later…

a. Read about Camila’s return to full‐time work

CONCLUSION

Reflection Approximate time: 15 minutes Materials to prepare: 1 The Perez Family Case Study 2.5.4.A1 per participant

1. Complete the reflection questions and discuss as a class.

a. Stress how the SSDI benefits Camila received were a short‐term benefit that helped the Perez family supplement their income while Camila was hurt. However, the family was ultimately better off once Camila returned to full‐time work.

© Take Charge Today— August 2013—The Perez Family Case Study—Page 1

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Ins tute at the University of Arizona

2.5.4.A1

The Perez Family

Case Study

Take Charge Today Receiving and Protec ng Unit Assessment—Advanced Level

Ricardo Perez was born into a large family in Mexico. A er his 8th grade year, Ricardo found a job as a groundskeeper at a local

hacienda. The job was perfect for Ricardo’s personality and his need to quickly see results of his work. Observing how rapidly his

income helped his family, Ricardo decided not to return to school the following year. He was happy with his job, his family deeply

appreciated the income and Ricardo quickly earned a high level of respect and responsibility from his supervisors and co‐workers.

Two years later Ricardo heard of an opportunity to work for a large farm just outside of town. He applied for the job, and because

of his experience as a groundskeeper, he was hired on the spot. Ricardo had learned to drive a truck with his previous job, so the

farm o en gave him the task of hauling produce from field to warehouse. Ricardo’s employers were impressed with his a en on

to detail and soon had him delivering produce all over the region and some mes up to the border with the United States. Ricardo

was earning $20.20 per hour ($3,232 per month) as a truck driver with health care benefits for the en re family.

At the age of 21 Ricardo decided to immigrate to the United States. The knowledge and experience Ricardo gained in his previous

jobs proved invaluable. He was able to find another job on a large organic farm. Soon Ricardo was issued a U.S. Commercial

Driver’s License and began driving trucks and transpor ng produce to local U.S. markets. He became a naturalized ci zen at the

age of 27.

Name:___________________ Date:____________________ Class:___________________ ______Total points earned 90 Total points possible _____Percentage Direc ons: Complete the Perez Family Case Study by following the detailed instruc ons throughout the case study. Begin by reading the Perez Family story and comple ng the reflec on ques ons on page 2.



2.5.4.A1

Scenario Reflec on Direc ons: A er reading the scenario above, answer the following reflec on ques ons.

Camila was raised in the United States in a family that she loved very much. However, what Camila did not love was school and at

the age of 16 dropped out and entered the U.S. workforce. Camila felt that earning money and being out on her own was a good

idea. Her family, friends, and teachers tried to convince her otherwise, but Camila loved having her own money. She worked a

number of odd jobs she really did not like including clearing tables, selling newspaper subscrip ons, and cleaning hotel rooms.

Ricardo and Camila met at a rodeo. The rela onship was slow to develop, but over me both Ricardo and Camila seemed

inseparable. A year later they were married. Within the year Ricardo and Camila had their first child, a boy. Ricardo con nued to

work at the organic farm. He enjoyed his job and was thankful that he didn’t have to work evenings or weekends so he could

spend more me with his family. Eventually their family grew to three healthy boys, and Camila enjoyed the role of a stay‐at‐home

mom. The family enjoyed watching movies and playing video games together. Camila loved that they lived in the city and could

easily walk to the nearest park or playground to let the children play.

But, the bills began to mount. The family made adjustments to their expenses; Ricardo began riding the bus to and from work

instead of driving the family’s only automobile. He also began packing his own lunch rather than ea ng out. It wasn’t quite enough

though. Camila decided to go back to work full me as a cashier at a family‐owned hardware store. Camila felt fortunate to be

hired on so quickly at the store when so many people were being laid off with the downturn in the economy. Camila was also

thankful that her mother offered to take care of the children free of charge while she was working since the boys weren’t old

enough to stay home alone. The only downfall is that the hardware store was far enough away that Camila had to drive the family

automobile. Camila eventually rose to the role of shi supervisor for all cashiers at the hardware store. Her hourly wages jumped

from $10.00 to $14.50 ($2550 per month) with the promo on. With this new job came a shared sense of pride among the adults

in Camila’s family. The store owner was pleased to see how quickly Camila adapted to her new job. All was well with the family.

2. Describe at least three of the family’s values (stated or inferred) throughout the story that may have had an impact on their career and spending plan decisions. (3 points)

Take Charge Today Receiving and Protec ng Unit Assessment—Advanced Level The Perez Family Story

Case Study

1. Do you agree or disagree with Camila’s belief that dropping out of school at the age of 16 was a good idea? Why? (2 points)



2.5.4.A1

Paycheck and Taxes

Calculate Camila and Ricardo’s net income. Ricardo’s employer provides a matching 401K and health care benefits. (8 points)

Camila’s gross

income

$2,550 *

15% Federal tax rate + 6.2% Social

Security + 1.45% Medicare +

7.95% State taxes = 30.6% Total Tax

Total tax

deduc ons: = Camila’s net pay: (Gross

income—deduc ons)

Ricardo’s

gross income

$3,232

* 15% Federal tax rate + 6.2% Social

Security + 1.45% Medicare +

7.95% State taxes = 30.6% Total Tax

Total tax

deduc ons: =

Ricardo’s net pay: (Gross

income—deduc ons) $210 Health Care Benefits

5.3% 401K Re rement Benefit Total 401K

deduc on: = *

$210 deduc on

Perez family total household net income: (Camila + Ricardo’s net pay)

Typical Expenditure Amounts

The following percentages represent typical amounts families allocate to each major expenditure area. Use the Perez families net income to calculate each amount in rows G‐L. Use these figures as guidelines when making decisions for the Perez family. However, remember that they are simply guidelines, and the actual amounts allocated may be higher or lower depending on many factors. (1/2 point each, 3 points total)

Expenditure area Perez family alloca on

Savings

Insurance

Housing

Transporta on

Food

Other

G

H

I

J

K

L

Financial or Educa on Goal

Perez family goal:

Determine a financial or educa on goal for the Perez family. Make sure to consider the family’s values, needs, and wants. This

goal should be considered when making expenditure decisions throughout this simula on. Write your goal as a SMART goal

(Specific, Measurable, A ainable, Realis c, and Time Bound). Include all five elements of goal se ng (2 points)


The Perez Family Spending Plan

With the added income from Camila’s new job, the Perez family needs help making spending decisions and adjus ng their

spending plan to ensure they are living within their means.

A B

C

D

E

F

M

What is

Camila’s net

income?

What is

Ricardo’s

net income?

What is the

family’s total

net income?



2.5.4.A1

Savings

The Perez family currently saves a

minimum of 5% of their net

income every month for

emergencies. The family tries to save more money when possible. Calculate this amount and record it in N of the table. (1 point)

Expenditure area Perez family

alloca on

Savings N

Food at Home

Camila and Ricardo pack their lunches on days they work. Because Camila is an excellent

cook and savvy shopper they rarely go out to eat. Place a next to the food op on you

would select for the Perez family and record the applicable expense in row R of the table. (1 point)


alloca on

Food at home R

1. Thri y Plan

(generic brands, canned

fruits and vegetables, no

junk food)

$491.10

4. Liberal Plan

(organic, name brands,

fresh fruit and vegetables,

variety of meats including

steak and lobster)

$841.40

3. Moderate‐cost

(name brands, mostly fresh

fruit and vegetables, variety

of meats)

$699.30

2. Low‐cost Plan

(generic brands, some fresh

fruit and vegetables, chick‐

en, hamburger, turkey,

ham)

$589.30


Expenses

Housing

Place a next to the housing op on you would select for the Perez family. Record

the applicable expenses for that housing op on (in red) in rows O‐Q of the table.

Consider the family’s values, needs, wants, goals, and spending plan when making

your selec on. (3 points)

1. Rent: Cedarwood

Located on a busy street that

makes all needs easily

accessible

950 square feet

1 Bedroom, 1 Bath

Rent $910

Renters Insurance $30

U li es $113

2. Rent: Belvedere Towers

Short walk to the local public

school and the bus stop;

Camila’s mom lives here

1190 square feet

2 Bedroom, 2 Bath

Rent $1,280

Renters Insurance $30

U li es $141

3. Own: Chase Street

Remodeled home with a large

back yard; short walk to the local

bus stop and grocery store

1420 square feet

3 Bedroom, 1 Bath

Mortgage (includes taxes) $1,410

Insurance $80

U li es $168

4. Own: Jersey Street

Located away from the noise of

the city; excellent place to raise a

family

2310 square feet

4 Bedroom, 2 Bath

Mortgage (includes taxes) $2,250

Insurance $145

U li es $274


alloca on

Mortgage/Rent O

Insurance P

U li es Q

Perez Family

monthly net

income 5%

Monthly saving

amount:

= *



2.5.4.A1

Insurance

Health: An important benefit of Ricardo’s job is that he receives health insurance for

his en re family for $210 per month. The $210 is deducted directly from his paycheck.

Housing and Automobile: This expense was determined in the housing and

transporta on sec ons.

Disability: Disability insurance is highly recommended, yet op onal. Rates vary

depending upon several factors including coverage, occupa on, age and gender.

Typical consumers pay 2% of net income for disability insurance. The Perez family has

decided not to purchase disability insurance for Camila. However, considering the

families needs, wants, values, goals, and spending plan, determine if

they should purchase disability insurance for Ricardo. If so, calculate

the amount and record the expense in row X of the table. (1 point)


alloca on

Health insurance Deducted from

paycheck

Housing &

automobile

Included in housing

& auto sec ons

Disability X

Life Y

Ricardo’s

monthly net

income 2%

Monthly disability

insurance amount: = *

Transporta on Expenditure area

Perez family

alloca on

Monthly payment S

Insurance T

Fuel costs U

Repairs & Maintenance V

Public transporta on W

Place a next to the transporta on op on(s) you would select for the

Perez family and record the applicable expenses (in red) in rows S‐W of

the table. Consider the family’s values, needs, wants, goals, and spending

plan when making your selec on. Keep both Ricardo and Camila’s trans‐

porta on needs in mind when making your selec ons. The family must

have at least one family automobile. (5 points)

2. $15,998— 2006 Chevrolet Equinox

Monthly Payment $282.56

Insurance $115.30

Fuel Costs $150

Repairs & Maintenance $68

1. $9,097— 2001 Honda Accord


Insurance $90.50

Fuel Costs $120

Repairs & Maintenance $45 3. Metro Subway Pass

Monthly Unlimited Pass $125 per person

5. $14,998— 2005 Toyota Tundra


Insurance $143.40

Fuel Costs $210


4. $19,599— 2008 Dodge Caravan


Insurance $139.40

Fuel Costs $150


6. Howard County Bus Pass

Monthly Unlimited Pass $75 per person


Expenses



2.5.4.A1

Other Expenditures


alloca on Expenditure Area

Perez

family

alloca on

Communica on &

Computers Z Health care DD

Entertainment AA Food away from home EE

Housing BB Gi s & charitable

contribu ons FF

Personal care CC Educa on and reading GG

Food Away from Home

Fast Food—$100 per month

Sit‐down Restaurants—$322 per

month


Expenses

Entertainment

Spor ng Events and Concerts—$124 per month

Movies and Video Games —$108 per month

Housing

House care—$83 per month

Laundry, cleaning, lawn, etc.

Household furnishings—$123 per

month

Furniture, décor, etc.

Personal Care

Products and services—$69 per month

Soap, hair products, etc.

Footwear—$43 per month

Shoes, slippers, boots, etc.

Clothing—$133 per month

Coats, shirts, pants, etc.

Health Care (not covered by insurance)

Drugs/Medical Supplies—$55 per

month

Vitamins, bandages,

medica ons, etc.

Gi s & Charitable Contribu ons

Gi s for others— $50 per month

Charitable Contribu ons—$324 per

month

Educa on & Reading

Educa on—$181 per month

Tui on, fees, textbooks, etc.

Reading—$15 per month

Books, subscrip ons, etc.

Communica on & Computers

Telephone land line— $35 per month

Cell phone— $60 for the first person, $10 for each addi onal

phone per month

Internet— $40 per month

Television—$25 per month; basic plan (local channels)

$85 per month; advanced package (movie channels)

The following expenses are what families spend on

average in each category based upon household

income. Considering the family’s needs, wants,

values, goals, and spending plan, place a next to

the op ons you would select for the Perez family.

Record the applicable expenses in rows Z‐GG of the

table. Keep in mind that most families will have

expenses in each category. Also, keep in mind that any

extra money not spent on other expenses will be

added to the family’s savings fund. (8 points)

Insurance

Life: Life insurance is highly recommended, yet op onal. Considering the family’s needs, wants, values, goals, and spending

plan, should the Perez family purchase life insurance for Ricardo and/or Camila? If so, determine the policy amount and record

the expense in row Y of the table on page 5. (1 point)

Camila’s Life Insurance Premiums

$100,000 policy—$22.67 per month



Ricardo’s Life Insurance Premiums






2.5.4.A1


Spending Plan

Time Period: Before Accident A er Accident (working part‐ me)

Earned Income

Wages or salary before withholding (gross income), Ricardo

Wages or salary before withholding (gross income) Camila

Income Received from Other Sources

SSDI benefits

Total Income $ $

Expenses

Deduc ons O en Taken from Paychecks

Contribu on to a re rement program (401k, 403b)

Paycheck deduc ons (Federal taxes, Social Security, Medicare, State taxes), Ricardo

Paycheck deduc ons (Federal taxes, Social Security, Medicare, State taxes), Camila

Saving and Inves ng (Pay Yourself First)

Contribu on to savings and investments

Insurance Premiums

Health insurance

Disability insurance

Property insurance (renters or homeowners)

Automobile insurance

Life insurance

Housing Costs

Housing (rent, mortgage)

U li es (gas, electricity, water, garbage)

Household furnishings and appliances

Household repairs, cleaning, and care (housekeeping)

Transporta on Costs

Monthly payment

Fuel costs

Repairs and Maintenance

Public transporta on

Food Costs

Food at home

Food away from home


Develop a spending plan for the Perez family using the income and expenditure amounts determined for each category from

pages 3‐6. Record the amounts in the Before Accident column. Ensure the Perez family spending plan has a net gain or zero

balance (income less expenses). If the balance is nega ve, review the expenditure decisions and make the appropriate changes.

Any addi onal money remaining should be added to savings and investments. (10 points for comple on and a net gain or zero balance)

Con nued on the following page



2.5.4.A1


Spending Plan

Time Period: Before Accident A er accident, working part‐ me

Communica on and Computers

Telephone land line

Cell phone equipment and plan

Television

Internet monthly fee

Health Care Not Covered by Insurance

Drugs/Medical supplies

Clothing and Personal Care

Clothing

Footwear

Products and Services

Educa on & Reading

Educa on

Reading

Entertainment

Spor ng events and concerts

Movies and video games

Gi s and Charitable Contribu ons

Cash contribu ons

Gi s for others

Total Expenses $ $

Net Gain or Net Loss (Income less Expenses) $ $



2.5.4.A1

Camila’s Accident Read about Camila’s accident and answer the following reflec on ques ons.

With both Ricardo and Camila’s incomes and their new spending plan the family was doing well. Then, a year a er Camila began

working, she was involved in a serious car accident while driving to work that le her with a crushed sternum and two broken

wrists. She was in the hospital two weeks and con nued her recupera on at home with the help of her mother and family.

Because of her physical injuries, Camila lost her job at the store. Because they had met their goal to save money for emergencies,

the family had $3000 in savings. However, their savings only replaced two months worth of Camilla’s income. With the help of her

local church Camila was counseled through the applica on process for Social Security Disability Insurance (SSDI) monthly cash

benefits ($620 per month). Her children were also eligible for monthly cash benefits totaling $310 per month for all three children.

Although the benefits were a big help, the family’s income was s ll substan ally lower than what it was before Camila’s accident.

S ll weak from her injuries and not able to work an eight‐hour shi , Camila was rehired as a part‐ me cashier by her former

employer twelve months a er the accident. She works 25 hours per week and earns $9.75 per hour ($925 per month). Her wrist

injuries require on‐going physical therapy sessions twice a week. Although the therapy is covered by her health insurance (she is

covered by Ricardo’s medical plan), she must pay co‐payments of $20 per session.

Camila learns that SSDI rules do not limit her work income, and that allows her to con nue receiving SSDI checks for the first 12

months. Because of this, she gladly con nues to work part me for a year. At the end of that year, she learns that her earnings

would exceed the SSDI income limit which would make her ineligible for SSDI and her children would lose their Social Security

benefits. However, because Social Security deducts from her earnings the co‐payments she pays for physical therapy, her net

income amount is low enough to allow Camila and her children to con nue receiving their Social Security benefits.


Camila’s Accident

Changes to the Perez family’s income (5 points)

3. What was the Perez family’s net income before the accident:

4. What is the total value of the SSDI monthly cash benefits that Camila and her children receive a er her accident?

5. Camila is working part me earning $925 gross income per month. If Camila has 30.6% in tax deduc ons, what is her net income?

6. What is the Perez family’s net income a er the accident? (Ricardo’s net income + SSDI benefits + Camila’s net income when working part

me)

7. What is the total reduc on in household net income a er the accident?


Refer back to the Perez family’s Spending Plan. Enter the family’s new income in the A er Accident (working part‐ me) column.

Using the family’s reduced income, determine what expenses the family will need to reduce. Make a new spending plan for the

family in the A er Accident column that has a net gain or zero balance. (10 points for comple on and a net gain or zero balance)



2.5.4.A1


Camila’s Accident

8. Explain three expenses that you changed in the Perez family’s spending plan a er the accident. Iden fy the impact elimina ng/reducing each of these expenses will have on the family. What trade‐offs will the family have to make in order to reduce or eliminate each expense? (6 points)

9. Camila returns to work part me a er her accident. She could have maintained all of her benefits without working. What do you think this says about Camila and her personal investment in her human capital? (2 points)

Two years later…

A er a second year on the job Camila is finally strong enough to resume her job full‐ me. She is re‐hired as shi supervisor

earning $14.50 ($2550 per month) .

Once Camila recovered and returned to full me employment she and her children lost their Social Security benefits, but, the

benefits allowed the Perez family to bridge the income gap un l Camila recovered sufficiently to return to her full‐ me job.

10. Thanks to the help of insurance, non‐profits, family and friends, and government, the Perez family was able to make it through their me of need. How did the family benefit (financially and emo onally) from each of these sources? (8 points)

Insurance: Non‐profits:

Family & Friends: Government:



2.5.4.A1


Camila’s Accident

11. What would the family have done if they had opted out of paying the $210 monthly premium for health insurance?

(2 points)

12. What challenges would the Perez family have encountered if the SSDI benefits were not available while Camila recovered? (2 points)

14. Is the family be er off financially now that Camila has returned to work full‐ me than when they were receiving SSID benefits? Why or why not? (2 points)

13. Accidents can happen to anyone at any me, and individuals must make financial choices to help protect them in case of unforeseen events. What elements were in the Perez family’s financial plan before the accident that helped the Perez family prepare for their unexpected event (Camila’s accident)? What could the family have done to be er prepare financially for an

unexpected event? (3 points)

15. It would have cost the family an addi onal $27.20 a month to purchase disability insurance for Camila. The family opted out of this expense. Assuming you had no knowledge of Camila’s impending accident, would you have made the same decision to not purchase disability insurance? Explain. (2 points)

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