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

2. Objectives Demonstrate the relationship between income and education
Provide realistic insights into the costs of living associated with the spending plan process
Apply financial literacy reasoning in order to make informed, financially responsible decision (MSC for PFLE Standard 1).
Develop skills to plan and manage money effectively by identifying financial goals and developing spending plans (MSC PPFLE Standard 3).

3. Video Clip http://www.moneytalks.ucr.edu/english/intro.html
Video – Making Your Dreams Come True
5 min – load and run at least once before class start

4. What is “Life In…” ? Family finance simulation
Emulates the “real life” constraints households encounter when managing their 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
Simulation is an average community in the United States
25 individuals in 18 households

5. Day 1
Record your choice of a student partner (optional) and the identity of a selected scenario from highlighted options).

6. 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

7. 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

8. What are Spending plans?
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

9. Major expenditure Percentages
Identify the average percent of net income spent in a specific category
Use as a guide when making spending decisions
Percentages should be adjusted to meet individual values, needs and wants
Other includes items such as:
Clothing
Personal care
Entertainment
Donations

10. What to complete Goal of “Life in…” Assignments to complete
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 A1
Guided Spending Plan worksheet A2
Spending Plan Statement A3
Life in…United States Reflection Essay B1

11. Life in… United States

12. Day 2 / 3
Set with your partner, roommate or spouse, and read your paper copy of your selected scenario.
Complete paycheck pretest
Open excel spreadsheet from V drive, and save as instructed to the H.
Open the adobe file - general notebook on the V drive as a reference
Listen to discussion of paycheck main ideas
Follow directions on pg 2 of general notebook to complete rows 9-25 of spreadsheet
Complete paycheck posttest, using clickers
Listen to discussion of saving and investing main ideas
Continue to follow directions on pg 2 of g. ntb to complete rows of spreadsheet.
(Print spread sheet)

13. Education vs. Income Job announcement envelopes
The color your name is printed in on the front of the envelopes represents your obtained level of education
All children are printed in brown
Who is in our community?
Orange: less than 9th grade
Light pink: high school drop out
Green: high school graduate or GED
Sky blue: some college
Red: associate’s degree
Navy: bachelor’s degree
Purple: graduate degree
Black: doctorate degree
How does having individuals with various levels of education benefit a community?

14. Who are you? Review your profile
Remember to consider the family’s values, needs and wants when making decisions
All items printed in red text must be included in the spending plan

15. Setting a financial goal
Set a financial goal
Financial goals provide direction when creating a spending plan
Behind Spending Plan tab, complete each section of a SMART goal
Review profile and consider the families values, needs and wants
Set SMART financial goal
Complete question #2 on the Guided Spending Plan
Don’t forget to include the dollar amount of the goal in the spending plan!

16. Understanding the paycheck
Under the profile tab review the paycheck(s) for your scenario
Review all elements of a paycheck
Gross income
Payroll deductions
Net income
Why do some paychecks have additional withholding for retirement and medical and others do not?

17. Pg 11 & 12 of Notebook

18. Complete the following:
Based upon your paycheck, complete question #3 in the Guided Spending Plan:
Record gross income
Record all paycheck deductions
Calculate net income
For dual-income families, add both paychecks together (show your work on the spreadsheet)

19. Why should families have 3-6 months income saved for emergencies?
Saving
Saving versus Investing
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% of net income
Why should families have 3-6 months income saved for emergencies?

20. Saving Guided Spending Plan question #4
Calculate what 10% of your families net income is
Determine what amount you will be saving or investing and record it
How much, if any, was dedicated to savings and why?

21. Day 4 Paycheck quiz retake and Housing pretest.
Recap and review savings
Housing information
Continue to complete rows as directed on pg 3, and of g. ntb (adobe file on V) Record your decision details in the appropriate row.
Save your work!!! If you are not finished with rows 1-45, ask to borrow a “general notebook, and finish for homework.

22. Housing Housing, on average, is 30% of an households net income
Calculate what 30% of your families net income is
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

23. Housing
Purchase
Rent
Assume a 20% down payment has been made on a 30-year mortgage with a 6% interest rate
Must include all items in red in your spending plan:
Mortgage
Insurance
Property taxes
Repairs and maintenance
Assume a deposit has been made
Must include all items in red in your spending plan
Rent
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!

24. Housing Amenities Required amenities
Power
Water/sewer
Garbage
Some rentals include all or some of the required amenities
Optional amenities
Internet
Cellular phone
Land line in home
Cable/Satellite
Recycling

25. Housing Guided Spending Plan Question #5
Determine whether to rent or buy
Unless indicated in the profile
Select a home and amenities
Record all housing expenses
Identify which housing and amenities options were chosen
Select additional housing expenses
Under the “Average Expenditures” tab
Record cost(s) in the “other” section
Calculate your housing sub-total
Is it approximately 30% of net income?

26. Housing Reflection
How does the housing selected fit with the family’s values, needs and wants?
Will utility bills be higher during different seasons of the year?
Did you choose to rent or purchase a home and why?
What might influence a family to spend more or less than 30% of net income for housing?
Was renter’s insurance selected? Why or why not?

27. Day 5 Complete transportation pretest.
Correct housing pretest.
Discuss transportation slides
Continue to complete rows as directed on pg 3, and of g. ntb (adobe file on V) Record your decision details in the appropriate row.
Save your work!!! If you have not finished up to row 51, borrow a general notebook to finish for homework.

28. Transportation
Transportation, on average, is 20% of a households net income
Calculate what 20% of your households net income is
The information sheet describes basic terminology, new vs. used, automobile financing, how to determine insurance costs and various types of insurance
Review this to make the best spending plan decision

29. Online resources for real life

30. Some profiles indicate transportation choices the family has made
Transportation options:
Things to know:
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 locations
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

31. Transportation Guided Spending Plan Question #6
Determine new, used, or alternative options
Unless indicated in the profile
If a family already owns a vehicle, only insurance, fuel, and repairs and maintenance must be included
Select transportation
Identify which transportation option(s) was chosen
Record all transportation expenses
Calculate your transportation sub-total
Is it approximately 20% of net income?

32. Transportation Reflection
How does the transportation selected fit with the family’s values, needs and wants?
Did you choose new, used, or alternative options and why?
What might influence a family to spend more or less than 20% of net income for transportation?
What are ways a family can reduce their transportation expenses?

33. Insurance – Protecting What You Have
What do you have that you could not replace without great sacrifice?

34. What do you have that you could not replace without great sacrifice?

35. How to Insure that it is Protected
Don’t leave it lying around, unprotected.
Put your savings in a bank that is FDIC insured.
Cost = Free

36. How to Insure that it is Protected
Drive safely, and don’t loan your car to friends.
Car Insurance- Cost factors:
Grades - Honor roll discount
Type of car - Choose car carefully
Marital Status - Single people pay more than married
Individual or Family member – will your parents let you join the family plan?
Amount of mileage per year
Credit history matters
Driving Record
Deductibles and coverage
Previous claims – it may be better to pay the repair yourself if it is small
Choice of company – shop around
Location – Compare zip codes and rates
Cost - $70-__________ per month

37. How to Insure that it is Protected
Lead a healthy lifestyle
Decisions regarding drugs, alcohol, tobacco, nutrition, sexuality, peers, sports, weight management, etc
Health Insurance
If your parents have it, you can stay on their plan if and while you are a full time student until you turn 23.
Choose a career / job that offers group health insurance – more affordable
If you are a non tobacco using healthy adult, you can shop around for a policy. Cost approximately $250 a month.
If you have health problems, contact advocacy groups for the health problem for some advice.
Cost - $ 250-________________per month

38. How to Insure that it is Protected
Keep your possessions locked and fire protected.
Homeowner or Renter Insurance will cover the cost or the replacement cost of your possessions – if you can prove you owned them and they were stolen or destroyed by fire.
Keep receipts and photos in a safe place
Shop around for the best price with the best terms.
Cost - $10-__________ per month

39. How to Insure that it is Protected
Protect your social security # and your mail
Request a free credit report every year
Identity Theft Insurance will protect you to some degree. Shop around for the best identity theft insurance terms
Cost - $10-__________ per month

40. For all of your insurances…
Remember to set the money aside for your deductible in case you have to spend it.
Example
If my house is hit by lightning and catches on fire, my share of the bill will still be $1, (my deductible), so I would still need to have that amount in savings, in addition to paying my premium for the policy every month.

41. In the Future….
Life Insurance will help protect your family if you die and can no longer earn money to take care of them.
Don’t wait too long to get life insurance, because the older you are, the more it costs.
Shop around

42. Insurance Insurance, on average, is 7% of a households net income
Calculate what 7% of your households net income is
The information sheet describes basic terminology, how to determine insurance costs and various types of insurance
Review this to make the best spending plan decision

43. My be provided by the employer
Insurance
Health
Disability
Life
What is it?
Provides financial protection for injury and illness
Replaces a portion of income if unable to work because of injury or illness
Provides a specific sum of money to beneficiaries if an individual dies
When is it needed?
Always!
Almost always
If others depend upon an individual for financial support
(families with children)
My be provided by the employer

44. Health Insurance If so:
Identify the age of the oldest individual being covered
Review the appropriate plan
1 individual = single
2 individuals = single + dependent
More than 2 = family plan
Select from the row of the appropriate age and column of the appropriate plan
Determine if health insurance is provided by employer
If provided, analyze what family members are protected
If not provided, determine if it will be purchased separately

45. Disability Insurance
Determine if disability insurance is provided by employer
If not provided, determine if it will be purchased separately
If so:
Monthly net income x .02 = monthly cost

46. Life Insurance Select the amount of coverage
$100,000
$250,000
$350,000
Determine if your scenario uses tobacco or not
Determine the monthly cost
Determine if life insurance is provided by employer
If not provided, determine if it will be purchased separately
If so:
Identify who will be insured
Must be purchased for each individual being insured separately

47. Insurance Guided Spending Plan Question #8
Determine if insurance is provided by employer or will be purchased
If necessary, select insurance options
Record all insurance expenses
Calculate your insurance sub-total
Is it approximately 7% of net income?

48. Insurance Reflection
What factors influenced the choice whether or not to purchase insurance?
If life insurance was selected, how was the coverage amount chosen?
If disability insurance was not chosen, what would happen if an individual was injured and could not work for 6 months?
If insurance was not provided by the employer, how did insurance costs impact the spending plan?

49. Food Food, on average, is 15% of a households net income
Calculate what 15% of your households net income is

50. Types of Food Plans Thrifty Moderate-cost Low-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

51. Food Guided Spending Plan Question #7
If the profile indicates the amount spent on food, record it
Food tab is for adults only
Cost of food at home for adults chart:
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 adult(s)
Record the food plan selected and amount

52. Food Cost of eating out Cost of food for children
Go to the Average Expenditures tab
Analyze the average costs based upon 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?

53. Food Reflection
Will the cost of food vary depending on where an individual lives? Why or why not?
What impact does eating out have on a spending plan?
How was the cost of food at home plan selected?

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

55. Cost of Raising Children
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
Record total on the Guided Spending Plan #9
Will child care costs vary depending on where an individual lives? Why or why not?

56. Credit card statements
America’s Debt
A 2007 survey of college students said that one-third of students reported having two credit cards or more, while 12% had three or more credit cards.
Many students believe they will make much more money after college than they will actually earn. Students take on debt because they expect to be able to repay it.
College students carry an average of $1,035 of credit card debt (this does not include college loans).
Source: Buffalo State College, Financial Literacy Key to Prevent College Student Credit Card Debt, October 2007,
Why do so many young people have credit card debt?

57. Credit card statements
Congratulations!
Your monthly credit card bill has arrived
Guided Spending Plan Question #10
Identify how much debt, if any, was received
Need to include at least the minimum payment
How will credit card debt impact other spending plan decisions?
How long do you estimate it will take to pay off your debt?

58. Personal Profile 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
Incorporate any expenses not already included in the Average Expenditures section of the Guided Spending Plan question 11

59. Average Expenditures Guided Spending Plan Question # 11
Review the average expenditures for:
Entertainment
Personal Care
Health Care
Apparel & Services
Contributions
Education and Reading
Based upon your scenarios income level select expenses
These are flexible expenses based upon averages
Therefore, you may choose to allocate more or less money to each category
Record expenses and total them
Remember to allocate enough money to cover all members of the family!

60. Average Expenditures Reflection
How do the expenses and amounts selected reflect your family’s values, needs, and wants?
What average expenditures were selected and why?
If an individual is insured, why would they still have health care expenses?
Did you chose to allocate more or less money in a certain category and why?

61. Chance cards Each day brings new surprises…
Why a spending plan is a “plan” for how to allocate your money
Spending plans are always evaluated and adjusted based upon life's events
Guided Spending Plan Question #12
Identify what chance card was received
Incorporate that chance card into your spending plan

62. Chance Cards Reflection
Are you financially prepared for unexpected events?
What impact does the chance card have on your spending plan?
If received, how was extra money allocated and why?
Would insurance have protected against the risk?

63. Balancing the spending plan
Guided Spending Plan Question #13
Transfer all income and expense subtotals throughout the worksheet onto this chart
Subtract the total expenses from the total income
Your 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, identify what changes may be made?
Identify decisions made to have the spending plan balance

64. Evaluating your goal Were you able to reach your SMART goal?
Why or why not?
Re-write your goal to reflect what your spending plan indicates
Guided Spending Plan Question #14
How did setting a goal before creating the spending plan help you make financial decisions?

65. Creating the Spending Plan Statement
Write your revised goal on the Spending Plan Statement
Transfer all income and expense information to the Spending Plan Statement
Identify the percentage of net income spent on each category

66. Discussion

67. Reflection If there was a net gain, how was the money allocated?
How does this process emulate real life?
How did working with a partner and discussing options influence decisions? Was it hard, easy?
If there was a net loss, what changes were made to the spending plan?
How does your percent allocation in categories compare with the national average?