1. In your Interactive Notebook: Unit.Day 5.4 Budgeting: Wants & Needs
ON YOUR DESK: 1)
2) Interactive NB
3) (Completed) Study guide
WARM UP
DEAR
Today’s Agenda
DEAR
Cosby Clip
Budgeting Simulation
Lecture/Discussion
Wants vs. Needs
Friday Quiz
Today’s OBJECTIVE(S): WRITE DOWN:
I can distinguish between wants and needs
I can distinguish between fixed and variable expenses in a household budget

2. Updates & Deadlines: (use assignment log!!!)
Daily: Study Guide Completion
12/10: Opportunity Cost Scenarios
12/11: Factors of Production Cartoon/Diagram
12/12: Break Even Point Worksheet
12/13: Personal Budget activity (mini-project grade)
12/13: ACES Parapraph:
What does it mean to be financially responsible?
12/13: Quiz
12/16: ACES Paragraph:
What effect does educational achievement have on career choice and income?
12/17: ACES Paragraph: How do credit scores affect interest rates?

3. Economic WANTS & NEEDS:
Wants -- Things we would like to have
iPod
Chewing gum
Nice clothes
Super Bowl tickets
A good education
Needs – things we must have to survive
Food
Shelter
Clothing

4. Budget Blast Today you will make a personal budget.
Use page 1 to select:
Your Career: What do you think you wan to do?
Your home: where do you want to live?
Your vehicle: how will you get around?
Your life choices:
will you be single or married?
Will you have kids?

5. Budgeting 101
Turn to Page 2
Look at the screen to find the salary for the job you have chosen
Calculate your taxes
Calculate your tax based on your tax bracket
Subtract the taxes you owe from your salary
Go to Page 3:
Fill out your expenses based on the Budgeting instructions
Add up each category

6. Disposable Income
Amount of money available to a family AFTER taxes have been deducted
After-tax income of all wage earners added up
$41, Durham Median Family Income
Half of Durham families make more; half make less
That’s about $32,850 after taxes

7. Budgeting 101 Putting it all together Go back to Page 2
Multiply your monthly expenses by 12 to get your annual expenses
Subtract your annual expenses from your after-tax income
Surplus or Deficit?
Surplus – income is greater than expenses (YAY!!!)
Deficit – expenses are greater than income (UH OH – you’re in debt!!!!)

8. Wants v. Needs Complete the reading and fill it in.
Then indicate whether each of your expenses on your budget sheet is a W (want) or a N (need)

9. Discretionary Income Income spent on leisure or luxury items
Movies, eating out, jewelry, etc.
“discretionary” income goes to wants, rather than needs

10. Typical Household Expenses
Fixed
Variable
Mortgage/Rent
Property Taxes
Income Tax
Health Insurance (if no benefits)
Car Payments (if car is financed)
Car insurance
Child Care (pre-school/early morning/extended day)
Utilities
Food (groceries
Food (eating out)
Gasoline/transportation

11. Largest Expenses
Housing is largest single expense – should not exceed 30-35%
Health Insurance (if not provided)
Student Loan debt
Credit card payment
Food
Transportation

13. FRIDAY QUIZ!!!!

15. Household Budgets Income Expenses After Tax Income Disposable Income
Discretionary Income
Taxes
Utilities
Rent/Mortgage
Insurance: Home/Auto/Life

16. April 15th – TAX DAY
Income Tax due April 15
File form 1040 EZ

17. Payroll Deductions
Most people have taxes deducted from every paycheck so they don’t have to pay them all at once at the end of the year
Workers fill out W-2 form when they are hired
W2 tells sets up how much to deduct in taxes

18. Federal Income Tax Brackets

19. Social Security & Medicare Tax (FICA)
7.6% of pre-tax income

20. Savings
401(K) – special retirement account that gives tax breaks if you save money for retirement
Roth IRA – retirement account that lets you put in up to $5000/year
When you take money out after retirement, it is tax free

21. Health Insurance
$19, Average cost of health insurance for a family of 4 in 2011
EMPLOYERS usually pay at least 50% or more of this cost
Even if workers only pay 30%, that means an average worker would pay $485 per month