DO THIS NOW… Sit in assigned groups Then, discuss the following: “What are the items and services that you think you need to pay for every month as a financially independent adult? Brainstorm a list of things with your group.” Be prepared to share with the class

What factors do we need to keep in mind when designing a budget?

What’s a Budget? A way of keeping track of your finances A list of your expected monthly income A list of your expected monthly expenses Keeping track of where all your money is going

What Are the Basics of Budgeting? Fixed costs: Costs you have no control over whatsoever You are generally at the mercy of what is being charged Variable costs: Costs you CAN control You still have to spend, but you can determine how much you spend Savings: What you are setting aside for emergencies or big item purchases

Fixed vs Variable Expenses? Fixed costs: Rent Renter’s insurance Internet bill Loan payments Car insurance Health insurance Variable costs: Gas Groceries Personal care Entertainment Dining out Memberships

How to Budget? Determine monthly income Set aside 20% for savings Take home pay NOT gross pay Set aside 20% for savings Determine fixed expenses Subtract fixed expenses from income Determine variable expenses Subtract variable expenses from remaining income Put all the rest into savings

What factors do we need to keep in mind when designing a budget?

Budgeting Worksheet You’ll each be given a budget worksheet with 17 steps Individually complete the steps using your phone as a resource You have 20 minutes I’ll be around to help you out

Budgeting Game We will now play a budgeting game so you can see how your budget will change on a monthly basis in response to unplanned expenses During each round, a new scenario will crop up, forcing you to adjust your budget To adjust your budget, you can pull from savings or eliminate expenses your previously chose to pay The one benefit here is that each round is a new month, meaning you get to add to your savings each month because you are all smart and set aside the same amount in savings each month

Some Budgeting Game Basics For monthly expenses you CANNOT make changes to the following: rent, renter’s insurance, electricity/gas bill, transportation costs, car insurance, and health insurance. Everything else can be changed if you so choose. How to calculate new monthly expense for each round of game: Determine if you made changes to monthly expenses to help pay for new expense. Add up total price of changes made to monthly expense. Subtract total from previous monthly expense. How to calculate savings for each round of game:  Determine if you used any savings to pay for new expense. Subtract amount taken from savings from previous savings figure. Then, add number from Step Sixteen from budget planning worksheet. This figure will be how much you have in savings for the next month. If you cannot pay for the new expenses in any way, you are out of the game

Round 1 Month 1 SERIOUSLY? You were driving on the freeway and an 18-wheeler dusted up some rocks that cracked your windshield to the point you have no visibility. If you have a car, you have to pay $400 to replace the windshield. If you are a bus rider, you don’t have to pay anything.

Round 2 Month 2 Your best friend is getting married (sucks to be them) out of state and you have been asked to be the Best Man or the Maid of Honor. For the wedding weekend, you will have to pay for airfare, food, and a hotel. In total, your weekend trip will cost you $900. The price hurts, but bask in the knowledge that you’ll avoid the marriage trap at all costs.

Round 3 Month 3 OH SNAP. You broke your leg when you fell down some stairs and you had to go to the emergency room for six hours. If you have full coverage medical insurance, you are responsible for $1400 of the $12,000 bill. If you have catastrophic medical insurance, you are responsible for $3800 of the $12,000 bill.

Round 4 Month 4 You’re so smart. You have decided that you need to go back to college to further your career. You are going to go to UNR however. So no worries, one semester is only $4,100. College isn’t a scam at all…

Round 5 Month 5 You hear those wedding bells? Men, you’ve decided to propose to your girlfriend (YOU FOOLS) and you need to buy an engagement ring. Cough up $5,500 for extreme happiness followed by abject misery. Ladies, sit back and watch the men squirm.

Round 6 Month 6 The Grim Reaper has struck again and a parent has died of natural causes or old age or whatever pleasant thing you need to hear to not be triggered and upset with me. Luckily for you the average funeral in the United States only costs $7,000. Fork it over because disposing of human remains on your own is illegal.

Reflection Turn budget sheet over and answer the reflection questions in full and complete sentences You have 10 minutes

Discussion What important lessons have you learned about budgeting? In other words, what do you want to keep in mind in the future?

Unit task overview

Remainder of class to complete reflection journal entry

Complete reflection journal entry Reminders Complete reflection journal entry  Have a great day