1. Life in…United States Welcome to …a Family Finance Simulation
Developed by
Family Economics & Financial Education Project
University of Arizona
Funded by a grant from Take Charge America, Inc.

2. 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

3. 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

4. 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

5. 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

6. Occupational Outlook Handbook guides
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.

7. 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

8. Income - money earned or received Expenses - money spent
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

9. 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

10. Major Expenditures Housing – 30% Transportation – 20% Food – 5%
Insurance – 7%
Other – 28%
Saving
Clothing
Personal care
Entertainment
Donations

11. 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

12. 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?

13. How will you get from here to there?
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

14. 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

15. 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

16. 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

17. 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

18. Final Goal of “Life in…”
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

19. Life in… United States

20. 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

21. 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

22. 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

23. 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

24. Saving Saving versus Investing Saving Complete:
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

25. 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

26. 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

27. 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

28. 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

29. 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 and decide whether or not to purchase
Answer question 8 and complete the chart on the Guided Spending Plan Worksheet (pages 8 and 9)

30. 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

31. Credit Card Statements
America’s Debt
A 2004 study found that 10% of teens 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:

32. 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

33. Review personal profile and record all expenses printed in red
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

34. Go to the Average Expenditures section Estimate flexible expenses
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

35. 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

36. Each day brings new surprises… How will this impact your finances?
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

37. 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

38. Were you able to reach your SMART goal?
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

39. Discussion

40. 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?