1. Income and Expenses
Jan 14th

2. Monthly Income
You can convert income to a monthly amount using the following formulae:
Semi-monthly income x 2 = monthly income
Bi-weekly income x 2.17 = monthly income (the 2.17 comes from 26÷12)
Quarterly income ÷ 3 = monthly income
Yearly income ÷ 12 = monthly income
How would you calculate annual income?

3. Individually
List your own income from various sources (gifts, part-time jobs, allowance, etc.)
Total your income
Project your income to determine an anticipated income after deductions over a month and a year.

4. Story Time Rio’s Expenses
How much do you think Rio’s, or a celebrity’s, expenses might add up to?
Here’s a summary of the recent monthly expenses reported in a divorce settlement for one celebrity: $102,000 on entertainment, gifts and vacations; $49,267 on mortgage payments; $16,000 on clothes; $4,758 on eating out; $2,500 on phone bills
That’s a spending of $174, 525 in one month. If this was consistent spending, that = $2, 094, 300 annually. That is not including taxes, agent fees etc.

5. Story Time
What kinds of expenses could Rio expenses could Rio expect to have, or what kinds of expenses do you think a sports figure, model or entertainer might have?
Taxes (in BC, combined federal and provincial taxes range up to 43.7% of employment income)
If Rio made 2 million, up to $874,000 could come off in tax
Agents’ fees (often 10 to 15 per cent of total income)
For Rio, at 2 mill, this could range from 200 to 300 thousand
Fees for other professional advisers (lawyers, business managers, accountants, public relations and medial consultants, etc.)
Just with tax and agent fees alone, Rio is left with 1 million….

6. Story Time cont.
iv) Studio and recording fees, technicians, back-up performers, etc. v) Travelling and touring expenses vi) clothing, costumes and personal expenses vii) Cost of one or more houses and vehicles viii) Security and domestic staff

7. Story Time
Why do you think some people spend more money than they have?
They don’t know what their expenses add up to
They don’t know exactly how much they have
They think they have so much money that they won’t spend it all
They are focusing on their immediate wants and not their long-term goals

8. “Consumption Function”
The consumption function says that the amount people spend depends on their income, and that as income increases so does consumption.
Even if you have very high income, high expenses can exceed available money

9. “Consumption Function”
This has led to bankruptcy in the case of some high-profile stars:
Elton John
Willie Nelson
Walt Disney
Donald Trump
Mike Tyson

10. Character Expenses Records
Get into your groups
Complete Character Expenses Handout

11. Fixed VS Variable Expenses
What are some examples of expenses?
What do you think is a fixed expense?
Expenses that do not generally change from month to month (eg. Rent, most utilities, and car payments)
What do you think is a variable expense?
Expenses that easily change, like the amounts spent on food, entertainment, and clothing
It’s useful to divide expenses into fixed and variable categories, because is makes it easier to decide what can be changed if expenses exceed income

12. Teen Monthly Expenses Worksheet
What do you think the average expenses of a Grand Forks teenager are?
Fill out your monthly expense sheet
Identify each expense as a need or a want (N/W)
Once finished, discuss with a partner and be prepared to share

13. Savings Who here is actively contributing to savings?
Savings are not really an expense, but it is healthy to view savings as a regular monthly obligation

14. Quick Quiz