1. Life in…the United States
…A Family Finance Simulation
Developed by: Family Economics & Financial Education Project

2. What is “Life In…”? You will become a Financial Planner for a family
Manage the “real life” challenges households face when handling finances
All costs are national averages
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

3. What are Spending Plans?
Spending Plan: (also called a budget)
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
Flexible Expenses – vary month to month, can be decreased or eliminated

4. Life in the United States…
Go through the Power Point taking notes on the main points Used as a guide when making spending decisions
Percentages should be adjusted to meet individual values, needs and wants
Average percent of net income spent
Housing: 30%
Transportation 20%
Food: 15 %
Insurance 7%
Savings 10%
Other 18% (clothing, personal care, entertainment, donations)

5. Review your profile - Day 1
You will need to consider your family’s values, needs & wants when making decisions
All items printed in RED text must be included in the spending plan
Create a Family Profile, include careers, housing & transportation needs, children, values/interest

6. SMART Goals - Day 2 SETTING A FINANCIAL GOAL
Financial goals provide direction when creating a spending plan
Complete Task 9.1 (using your family’s profile as a guide)
When finished, transfer your SMART goal to the Guided Spending Plan

7. Guided Spending Plan – Tk9.2 Paychecks
Review your family’s paycheck(s)
Record gross income
Record all paycheck deductions (taxes, retirement, etc)
Calculate net income
For duel-income families, add both paychecks together
Why do some paychecks have additional withholdings for retirement and medical and others do not?

8. Why should families have 3-6 months income saved for emergencies?
Savings & Investing
Recommended: each family should
save 10% of net income -net income x .10
If your profile indicates any monthly savings or investments, record it
Otherwise, determine an appropriate amount to be saved and/or invested
Why should families have 3-6 months income saved for emergencies?

9. Housing is the largest expense for most families
Housing - Day 3
Recommended: 30% of a household’s net income.
CALCULATE 30% OF YOUR Family’s NET INCOME= $_______
The information sheet describes basic terminology: renting vs. buying, mortgages and how to determine insurance costs and various types of insurance.
Review this to make the best spending plan decision for your family
Determine whether to rent or buy (unless indicated in the profile)
Housing is the largest expense for most families

10. Housing
Purchase
Assume a 20% down payment has been made on a 30-year mortgage with 6% interest rate
Must include all items in RED in your spending plan:
Mortgage
Insurance
Property taxes
Repairs and maintenance
Rent
Assume a deposit has been made
Must include al items in RED in your spending plan
Laundromat (when applicable)
If you have a pet, your rental unit must allow for them and applicable fees must be paid
Renter’s insurance is not required, but recommended
$15.83/mo. For $25,000 coverage
Only choose a house available for the type of location in which you live!

11. Housing After reading the information…
choose the best housing for your family
HOUSING AMENIITIES:
Required amenities
Power, water/sewer, garbage
Some rentals include all or some of the required amenities
Optional amenities
Internet, cell phone, land line, cable, recycling
Average Expenditures
Housekeeping supplies
Furniture
Appliances & housewares

12. Your family must have some form of transportation
Recommended: 20% of a household’s net income.
CALCULATE 20% OF YOUR Family’s NET INCOME=$________
The information sheet describes basic terminology: new vs. used, automobile financing, how to determine insurance costs and various types of insurance.
Use this to make the best possible spending decisions for your family
Your family must have some form of transportation

13. Some profiles indicate transportation choices the family has made
Transportation Options:
Purchasing new:
Not pre-owned, warranty, wide selection
Purchasing used:
Costs less, lower insurance rates, depreciates more slowly
Alternative options:
Less expensive than a vehicle
Availability is limited in some location
Things to know
Assume down payment, license, registration and other fees have been paid
All items in RED must be included in the spending plan
Payment
Insurance
Fuel costs
Repairs and maintenance
If an alternative option is chosen, it must be appropriate for the location
Some profiles indicate transportation choices the family has made

14. Transportation Determine new, used or alternative options
Unless already indicated in the profile
If a family already owns a vehicle, only insurance, fuel and repairs/maintenance must be included
Record all transportation expenses
Calculate your transportation sub-total
Is it approximately 20% of net income?

15. Food Food, on average, is 15% of a household’s net income.
CALCULATE 15% OF YOUR Family’s NET INCOME = $_________

16. Types of Food Plans Thrifty Low-cost Moderate-cost Liberal
Generic brands
Canned fruits and vegetables
No junk food
Chicken and hamburger
Low-cost
Some fresh fruit and vegetables
Chicken, hamburger, turkey, ham
Moderate-cost
Mostly fresh fruit and vegetables
Both name brand and generic
Variety of meats
Liberal
Organic
Name brands
Fresh fruit and vegetables
Variety of meats including steak and lobster

17. Food If your profile indicates the amount spent on food, record it
Food tab is for adults only
Determine if you are allocating food for an individual or 2 adults
Identify which food plan is affordable and fits with your scenario
Identify the age of the adults(s)
Record the food plan selected and amount

18. Food Cost of eating out Cost of food for children
Got to the Average Expenditures tab
Analyze the average costs based on income level
Determine and record the amount
Cost of food for children
Go to the Cost of Raising Children document behind the cost of raising children tab
Select the appropriate table based upon single or two-parent families and income
Record the proper amount in the “food at home” category
Calculate your food sub-total
Is it approximately 15 % of net income?

19. Everyone needs health insurance
Insurance, on average, is 7% of a households net income. CALCULATE WHAT 7% OF YOUR HOUSEHOLD NET INCOME IS.
The information sheet describes basic terminology, how to determine insurance costs and various types of insurance.
Everyone needs health insurance

20. Insurance
Determine if health, disability and/or life insurance is provided by employer (it would be on your paycheck page)
If necessary, select insurance options
Record all insurance expenses
Calculate your insurance sub-total
Is it approximately 7% of your net income?

21. Cost of Raising Children
If you have children, go to the Cost of Raising Children tab
1. Select the appropriate table based upon single or two-parent families and income
2. Find the row for the oldest child
3. Add together the cost of:
Clothing + Healthcare (could be reduced if insured) + Childcare + Education + Miscellaneous = TOTAL COST

22. Cost of Raising Children Cont.
Total cost is based on families with 2 children
If there are not two children:
Single parent family
1 child = total cost x 1.35
3 or more children= total cost x .72
Two-parent family
1 child = total cost x 1.24
3 or more children = total cost x .77

23. Credit Card Statements
Congratulations!
Your monthly credit card bill has arrived! (see teacher to receive yours)
Identify how much debt, if any, was received
Need to include at least the minimum payment

24. Average Expenditures-Day 4
Review Personal Profile page
Record all the expenses printed in red that haven’t been accounted for elsewhere
Hobbies, activities, medical expenses, pets, charity donations, extra bills, habits, etc.
Go to the Average Expenditures tab
Record the following expenses (based on your income level)
Entertainment
Personal Care
Health Care
Apparel & Services
Contributions
Education & Reading
Remember to allocate enough money to cover all members of your family!

25. Chance Cards Each day brings new surprises!
Spending plans are always evaluated and adjusted based on life’s events
Choose a Chance Card (from teacher)
Incorporate that chance card into your spending plan (go back and put it somewhere in the previous sections/adjust subtotal)

26. Reaching Zero
Transfer all income and expense subtotals throughout the worksheet onto this chart
Subtract the total expenses from the total income
Do you have money left over (net gain)?
Where will the extra money be allotted?
Are you in debt (net loss)?
What changes will be made?
Identify what decisions you had to make in order for your spending plan to balance (reach zero)

27. Evaluating Your Goal
Were you able to reach your SMART goal? Why or why not?
Re-write your goal to reflect what your spending indicates.

28. Final Statement
Write your revised SMART goal on the Spending Plan Statement
Transfer all FINAL income and expense information to the Spending Plan Statement (reflecting the changes you made to balance your budget)
Identify the percentage of net income spent on each category.

29. YOU’RE DONE! CONGRATULATIONS!
Reflection
Complete the pie chart – reflecting the percentages you spent in each budget category.
Answer the reflection questions
Turn-in this project to moodle – Tk 9.2
YOU’RE DONE! CONGRATULATIONS!