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© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 1Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Welcome to
Life in…United States
…a Family Finance Simulation
Developed by Family Economics & Financial Education
ProjectUniversity of Arizona
Funded by a grant from Take Charge America, Inc.
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 2Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Objectives
Create a spending plan Provide realistic insights into the costs
of living associated with the spending plan process
Incorporate the use of the decision making process into daily life
Demonstrate the relationship between income and education
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 3Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
What is “Life In…” ?
Research based family finance spending plan simulation– 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
Designed as a community of 25 individuals in 18 households– 18 households create a diverse community with
accurate representation of United States demographics
Emulates the “real life” constraints households encounter when managing their finances
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 4Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Personal Profiles
Scenario Notebook contents:– Personal Profile
• Race – White, African American, Native American, Hispanic, Asian• Gender – 12 men and 13 women• Age – working individuals ages 16-64• Educational attainment – includes all levels from less than 9th
grade to professional degrees• Marital/Family status – single and married with or without children• Place of birth – United States and other countries• Field of occupation – management, professional, service, sales,
construction• Average annual salary – $9,270 to $140,580• Location of residence – metropolitan or non-metropolitan
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 5Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Background Information
Background Information– Describes individual and/or family values, needs
and wants– Family dynamics and lifestyle choices are
explained
? Who is in the community?? Create a poster including your family name, all
family members and ages, occupation(s), two things you value or enjoy doing, and interesting habits
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 6Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Career Descriptions
Occupational Outlook Handbook guides– Nature of work, working conditions, training
required, job outlook and earnings Read carefully to learn more about your
new identity
? Conditions of your job? Identify 3 work conditions characteristic to
your job, training required, and median earnings.
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 7Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Spending Plan Worksheets
Setting a Financial Goal worksheet– After carefully considering all information
shared in the profile and background information, financial goals will be set
Guided Spending Plan worksheet– Provides guidance when making spending
plan decisions Spending Plan statement
– Transfer all final decisions to the Spending Plan statement
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 8Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Spending Plans
Spending Plan– A financial statement used to assist in money
management comprised of income and expenses
Income - money earned or received Expenses - money spent
– Fixed Expenses - stay the same every month, due on a certain date
– Variable Expenses - vary month to month, can be decreased or eliminated
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 9Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Paycheck
Sample paycheck and information sheet– Found in the notebook behind the paycheck tab– Explains all portions of the paycheck
Profile’s paycheck– Found in an envelope in the front cover of the
notebook for all working adults– Includes a profile specific monthly paycheck
• Review carefully to identify all paycheck withholdings, health care, retirement, gross income and net income
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 10Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Major Expenditures
Housing – 30% Transportation –
20% Food – 15% Insurance – 7% Other – 28%
– Saving– Clothing– Personal care– Entertainment– Donations
30%
20%15%
7%
28%
Housing
Transportation
Food
Insurance
Other
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 11Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Major Expenditure Percentages
Major expenditure percentages– Provide guidance about how much
should be spent in each area to prevent overspending
– Percentages should be adjusted to meet individual values, needs and wants
– Helpful when creating a spending plan, but remember to consider other expenses as well
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 12Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Housing
Where will you live?– Housing options include renting or purchasing– Various amenity options are described
• Utilities, cell phone, internet, television
– Information Sheet provides additional information about renting vs. buying, costs of a mortgage, and homeowner’s and renter’s insurance• Review to make the best spending plan decisions
– Location – is the housing option available for your location?
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 13Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Transportation
How will you get from here to there?– Transportation options include new and used
vehicles or alternative forms of transportation• Car, motorcycle, bicycle, subway, taxi• Review residence location to determine if you live in
a metropolitan area and can access public transportation
– Information Sheet describes automobile operating costs, new vs. used vehicles, depreciation, auto insurance and auto financing• Review to make the best spending plan decisions
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 14Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Insurance
Review the personal profile to determine if you currently have health insurance or other benefits– If specific premiums are listed, they indicate the
type of insurance you currently have– If no health insurance is identified, use the options
behind the insurance tab to purchase coverage if desired
– Information Sheet describes basic terminology, how to determine insurance costs and various types of insurance• Review to make the best spending plan decisions
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 15Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Food
Review personal profile to determine if you prepare meals at home or eat out often– If the profile does not describe your eating
habits, refer to the Cost of Food at Home chart behind the food tab
– Decide which food plan you feel is best based upon your age, work schedule and lifestyle
– Cost of Food at Home includes national averages for adults only
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 16Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Cost of Raising Children
Do you have children?– If so, review the Cost of Raising Children
chart – Costs are identified for single and two-
parent families with various incomes
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 17Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Average Expenditure Chart
Charts are based on income Use the percentages as a
guideline to determine spending plan expenses– Food at home– Food away from home– Housing– Apparel– Transportation– Health care– Entertainment
– Education– Contributions– Insurance– Pensions and social
security– Personal care– Other items
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 18Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
What to Complete
Final Goal of “Life in…” – Make spending plan decisions to meet the
needs of the family by balancing their income and expenses
Assignments to complete– Setting a Financial Goal worksheet– Guided Spending Plan worksheet– Spending Plan Statement– Life in…United States Reflection Essay
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 19Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Life in…United States
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 20Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Education vs. Income
Job announcement envelopes– In the front cover of the notebooks – The color your name is printed in on the front of the
envelopes represents your obtained level of education
– All children are printed in hot-pink
Who is in our community? – Orange: less than 9th grade– Light pink: high school drop out– Green: high school graduate of GED– Sky blue: some college
? How does having individuals with various levels of education benefit a community?
– Red: associate’s degree– Navy: bachelor’s degree– Purple: graduate degree– Black: doctorate degree
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 21Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Who are you?
Open your notebooks– Review your profile to make wise financial
decisions– Remember to focus on family values, needs and
wants– All items printed in red text must be included in
the spending plan
Turn to page 6 behind the Spending Plan tab– Record your family name after question 1 on the
Guided Spending Plan worksheet
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 22Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Setting A Financial Goal
Set a financial goal– Financial goals provide direction when
creating a spending plan – Turn to page 5 behind Spending Plan tab and
complete each section of a SMART goal• Review profile• Identify values, needs and wants• Set SMART financial goal
Complete:– Question 2 on the Guided Spending Plan
worksheet
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 23Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Understanding the Paycheck
Turn to page 14 behind the paycheck tab and review the individualized paycheck from the notebook front cover
Review all elements of a paycheck– Gross income– Payroll withholdings– Net income
? Why do some paychecks have additional withholding such as retirement and others do not?
Complete:– Question 3 and the chart on the Guided Spending Plan
worksheet• Don’t forget to combine paycheck amounts for dual income
families
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 24Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Saving
Saving versus Investing– Saving: income not spent on current consumption– Investing: spending intended to gain by adding to the assets,
not available for immediate withdrawal
Saving– A person should save 10 to 15% of gross income? Why should individuals save 3 to 6 months income for
emergencies
Complete:• Question 4 and the chart on the Guided Spending Plan
worksheet • Review SMART goal to ensure appropriate amount is
included
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 25Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Housing
Housing– Review Information Sheet to make the best housing
decision– Total recommended housing costs should be up to
30% of gross income• Purchasing:
– Assume down payment has been paid– Financed with an APR 8.0% for 30 years
• If the family already owns a home:– Select a home and account for insurance, property taxes,
repairs and maintenance• Renting:
– Utilities may or may not be included in the rental price– Pets – may cost extra– Insurance – highly recommended
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 26Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Housing
? Are all types of houses available in non-metropolitan areas?
? Will utility bills be higher during different seasons of the year?
Make housing decisions from the options on pages 13-18– Items in red must be accounted for
Complete:– Questions 5-6 and the charts on the Guided Spending
Plan worksheet
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 27Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Transportation
Transportation– Review Information Sheet to make the best
transportation decision– Total recommended transportation costs should be
15-20% of gross income• Purchasing new:
– Not pre-owned, warranty, wide selection• Purchasing used:
– Costs les, less to insure, depreciates more slowly• Additional options:
– May be cheaper than a vehicle– Availability is limited in some locations
• If the family already owns a vehicle:– Select a vehicle and account for insurance, fuel costs, and
repairs
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 28Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Transportation
Make transportation decisions from the options on pages 21-26– Items in red must be accounted for
Complete:– Question 7 and the chart on the Guided
Spending Plan worksheet
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 29Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Insurance
Insurance– Health
• May be offered or provided through employer• Health care costs should be about 5-10% of gross income
– Disability• Provides income if unable to work
– Life• Provides a lump sum to a beneficiary upon death
If insurance was not received through the employer, review policies on pages 27-30 and decide whether or not to purchase
Answer question 8 and complete the chart on the Guided Spending Plan Worksheet (pages 8 and 9)
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 30Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Food
Cost of Food at Home – page 31– Food should be about 15% of gross income– USDA charts represent average monthly cost of food
• Meals prepared at home• Cost of meals eaten in restaurants needs to be added in to the
subtotal• Chart is only for individual adults and families of 2• Cost of food for children is identified in the Cost of Raising
Children section
? Will the cost of food vary depending on where an individual lives? Why or why not.
Complete:– Question 9 and the chart on the Guided Spending Plan
worksheet
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 31Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Credit Card Statements
America’s Debt– A 2004 study found that 10% of teens 12-19 have
their own credit card– The average revolving balance, among individuals
with at least one credit card, is $3,815 in 2004, with households in the $75,000 to $100,000 income bracket carrying the heaviest load of nearly of $8,000 per person.
– 45% of college students are in credit card debt, with the average debt over $3,000
? Why do so many young people have credit card debt?
Source: www.jumpstart.org
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 32Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Credit Card Statements
Your monthly credit card bill has arrived… how will it affect your finances?– Total debt should be less than 20% of gross
income (excluding mortgage payments)– Need to include at least the minimum payment
Complete:– Question 10 and the chart (if necessary) on
the Guided Spending Plan worksheet
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 33Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Other Expenses
Review personal profile and record all expenses printed in red– Hobbies, activities, medical expenses, pets,
charity donations, extra bills, habits, etc. Expenses identified in red are valued or
necessary and can not be eliminated Record all other expenses in the chart on
the Guided Spending Plan worksheet
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 34Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Other Expenses
Go to the Average Expenditures section– Based on annual gross income
Estimate flexible expenses– Food Away From Home, Apparel and
Services, Entertainment, Education/Reading, Contributions, Personal Care
Complete:– Question 11 and the chart on the Guided
Spending Plan worksheet
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 35Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Costs of Raising Children
If you have children, turn to page 32– The charts are estimated monthly costs for
raising a child in 2002 from USDA– Each chart is dependent upon parental marital
status and income level
? Will child care costs vary depending on where an individual lives? Why or why not?
Complete:– Question 12 and the chart on the Guided
Spending Plan worksheet
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 36Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Chance Cards
Each day brings new surprises… How will this impact your finances?
– Are you financially prepared for unexpected events?
– Would insurance have protected against the risk?
– What was done with any extra money? Answer question 13 on the Guided
Spending Plan worksheet
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 37Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Balancing the Spending Plan
Calculate the net loss or net gain– Transfer all income and expense subtotals to the
chart on the Guided Spending Plan worksheet– Subtract the total expenses from the total income
Balance must equal zero– Make changes as necessary
• If there is a net gain, where will the extra money be allocated?
• If there is a net loss, go back and make different spending plan decisions to reduce expenses.
• What will be cut?
Answer question 14 on the Guided Spending Plan worksheet
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 38Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Evaluating Your Goal
Were you able to reach your SMART goal?– Why or why not?
How did setting a goal before creating the spending plan help you make financial decisions?
Answer question 15 on the Guided Spending Plan worksheet
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 39Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Discussion
© Family Economics & Financial Education – Revised April 2007 – Life in…Simulation page 40Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Life In…United States
3.18.3.G1
Discussion
What was learned by completing Life in… United States?
What were the most difficult decisions? How was it to work with a partner? What was challenging about balancing the
spending plan? What impact did the credit card statements and chance cards have on the spending plan?