Family Economics & Financial Education G 1 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 G 1 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 G 1 Snapshot Ben’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 G 1 Snapshot Ben’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 G 1 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 G 1 Snapshot West 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 G 1 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 G 1 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 G 1 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 G 1 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 G 1 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 G 1 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 G 1 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 G 1 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 G 1 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 G 1 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 G 1 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 G 1 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 G 1 Ben’s Paycheck Federal Insurance Contribution Act – includes Social Security and Medicare FICA

© 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 G 1 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 G 1 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 G 1 Setting Education and Financial Goals Short Term – less than one year Long Term – more than one year SMART Goal S pecific State exactly what is to be done. M easurable Include how the goal can be measured. A ttainable Determine steps to reach the goal. R ealistic Do not set the goal for something unrealistic. T ime B ound State 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 G 1 West’s Major Expenditures Housing 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 G 1 West’s Major Expenditures Transportation 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 G 1 West’s Major Expenditures Major 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 G 1 Ben’s Spending Plan Payroll 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 G 1 Ben’s Spending Plan Savings 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 G 1 Ben’s Spending Plan Others 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 G 1 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 G 1 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 G 1 Reflection Questions Once the difference equals zero…. –Answer questions on pages 15 and 16 –Answer questions on page 18