Budget + Traditional Lesson Plans. Extension Activities. Overview... 1 Introduction... 3

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1 Budget + Overview... 1 Introduction... 3 Traditional Lesson Plans Lesson One Think Before You Spend... 5 Lesson Two What Is a Budget? Lesson Three Using a Budget Extension Activities Sample Budgets Students practice preparing budgets and making budgeting decisions. They work in teams, pairs, or individually. Personal Budget Through discussion and research, students recognize the need for responsible spending and the benefit of budgeting. Paying for Postsecondary Education Students see that education after high school is an investment in their future. They explore options to pay for higher education.

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3 Budget + Overview Overview Students recognize the importance of spending wisely to achieve financial success and the value of creating and maintaining a budget. Objectives Students will be able to: Categorize spending by needs and wants. Compare teen and adult spending patterns. Determine which categories belong in a budget. Relate the need to save money to meet goals. Prepare a budget using goals and income. Preparation Review and organize the materials for the required lessons and extension activities you plan to teach. Summary and Assessment Use the lesson summaries at the end of each lesson to review concepts. To assess knowledge learned, administer the Budget + Assessment on Pages (Answer Key is on Pages ) Budget + Lesson One Required Lessons Lesson One: Think Before You Spend Lesson Two: What Is a Budget? Lesson Three: Using a Budget Time The required lessons can typically be completed in three 45-minute sessions. Concepts Wants and needs Goal setting Impulse buying Budgets Categorizing Skills Active listening, critical thinking, self-knowledge, self-reflection, math computation, reading, working in pairs and teams, and interpreting and working with data Extension Activities 1. Sample Budgets 2. Personal Budget 3. Paying for Postsecondary Education 1

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5 Budget + Introduction Teacher Introduction A budget plays a dual role: It is a record of income and expenses. But it is also a plan for spending and saving. Helping students grasp the benefit of keeping a budget that leads to financial security is difficult, because they have seldom seen the practice in action. Following a budget and living within your means are essential to keeping your finances healthy, said William Norton III, author of Norton Bankruptcy Law and Practice. Norton considers the credit card to be the largest contributor to people s inability to stick to a budget and often is the cause of bankruptcy. Teaching students to live within their means now and to save for the things they desire will help them accomplish their goals and create a sound financial future. Without a road map to follow, though, young people can easily get lost. Learning how to read a budget, prepare one, and follow it arms teens with crucial skills. Learning to set goals and to budget the funds to achieve those goals gives students an appreciation for the need to spend and save wisely. It also lays the groundwork for financial success. Budget + Lesson One 3

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7 Budget + Lesson One: Think Before You Spend Teacher Introduction All of us, teens especially, have a hard time Lesson Time: determining the difference between needs and 45 minutes wants. Needs are the goods and services that people cannot survive without, such as food, water, clothing, and shelter. Wants are goods and services that make people comfortable or content but that are not necessary to live. Most teens have their basic needs taken care of by their parents or caretakers, so they are more concerned with the things they want. In this lesson, students will grapple with the difference between needs and wants as they examine spending habits and categorize their expenditures money spent on goods and services. The students also will learn about impulse buying and the tactics that sellers use to encourage them to spend money they did not plan on spending. Setting goals can help students determine which things are most important to them. Short-term goals are objectives that can be accomplished in less than a year. Long-term goals are not usually realized for a year or more. Whether it is going to college, buying a car, or planning a trip to Europe, long-term goals keep students focused on the future. Goals might be monetary or personal both should drive saving and spending. For example, buying a daily cup of coffee at a local shop might be a wasteful expenditure for one student. But for another who is trying to develop a friendship with the barista, it is an investment in a relationship. The goal of this lesson is to help students realize that the good financial habits they establish now can stay with them throughout their adult lives. Materials Student Workbooks Computer JA Finance Park Budget + Slides 1-10 Calculators Set of 3 x 5-inch cards Purchase List (optional) Vocabulary Expenditures Money that is spent on goods, services, and bills. Impulse buying Making a purchase based on an immediate want or due to the pressure of advertising. Long-term goals Plans that take a year or more to accomplish. Needs Goods or services that people cannot survive without, such as water, food, shelter, and clothing. Short-term goals Plans that can be accomplished within three months to a year. Wants Goods or services that make people more comfortable or content but which are not necessary for survival. Budget + Lesson One 5

8 JA Finance Park Lesson Preparation Read the Set the Stage talking points. Review the Think Before You Spend: Lesson Steps. Decide whether you will copy the Purchase List on Page 10 and distribute one per group, or have the students list goods and services of their own on the 3 x 5 cards. Review the Student Worksheets Pages Purchase List T Chart Worksheet My Future Goals Worksheet Impulse Buying Worksheet Choose any optional activities that you think will benefit your students understanding. Know your current local and state sales tax rates. Think Before You Spend: Lesson Begins Set the Stage 5 Minutes Spend a few minutes discussing the following questions with the students: How many of you have spent money this week? How many of you have seen your family spend money this week? Have you ever saved money to spend on an item you wanted? Have you ever bought something that you didn t know you wanted until you saw it? 6

9 Think Before You Spend: Lesson Steps 35 Minutes 1. Distribute up to five 3 x 5 cards to each student. Ask the students to write down their past week s expenditures (the purchases they have made), one item per card. They should record both the item purchased and the price paid (or a ballpark figure). An optional Purchase List is available on Page 10 if you have students who do not want to reveal this information or who have not spent money recently. Students do not need to put their names on the expenditure cards. 2. Separate students into groups of four or five. Ask the groups to sort their collection of expenditure cards into two categories: needs and wants. Have the students remain in these groups for further instruction. Making It Real Have students calculate the total amount they spent on the items they listed. Then, using local tax information, ask them to calculate how much sales tax was paid on each of their purchases (or the total). Budget + Lesson One 3. Present the introduction slide and Slides 1 and 2. Briefly define the terms on Slide 2. Have students highlight the terms on Page 67 in their Workbooks. 4. Present Slide 3. Discuss the definition of needs with your class. Ask for suggestions of some items that would satisfy needs. Present Slide 4 and discuss wants. Use Slide 5 to lead a discussion about wants and needs. Encourage students to discuss the difference between needs and wants and explore the often fine line between them. 7

10 JA Finance Park Optional Activity To check for understanding, have students turn to the T Chart Worksheet on Page 68 of their workbook. Randomly choose students to call out an item from their expenditure cards, which the group will then list on the T Chart in either the Wants or Needs column. Continue until you are satisfied that the students understand the difference between wants and needs. 5. Present Slide 6 and stop for student comments after each question. Remind students of earlier lessons about planning for the future. Explain that goals can be monetary something you want to buy or need to pay for, like a car or college. Goals also can be personal, such as forming a band, meeting new people, or getting into a club or on a team. Often, personal goals have some cost attached, such as club fees, uniforms, or lessons. 6. As you present Slide 7, have students name some goals that could be accomplished in less than a year. These are short-term goals. Longterm goals are those that take at least a year to accomplish. Ask for examples of long-term goals. Record the suggestions on the board. Give students 3 5 minutes to complete the My Future Goals Worksheet on Page 69 in their workbook before sharing goals with their group. The suggestions on the board may help them with this task. Tell students that if they limit the things they spend their money on today, they will have more money to save to meet their future goals. 7. Read through Slides 8 and 9 and encourage class comments and discussion. 8

11 8. Present Slide 10 and read about the tactics used by stores to increase their sales. Ask students to turn to the Impulse Buying Worksheet on Page 70 in their workbooks and list some different methods under each tactic heading that store managers and product retailers use to get people to buy things they don t need. 9. Give students time to reorganize their 3 x 5 cards, sorting their expenditures once again into needs and wants. You may want to have them add a third category, impulse purchases. Have them discuss which of the purchases might have been made on impulse and how they might avoid those in the future. Note: Collect the note cards. You will need them in the next lesson. Summary and Review 5 Minutes Examining spending patterns helped students see if they are spending their money wisely. They categorized their spending by needs and wants, reasoning abstractly and quantitatively. They then related how they could use their money to help them achieve their goals. Budget + Lesson One To wrap up this lesson, lead a short discussion using any or all of the following questions: Did anyone discover they are spending more than they thought on certain items? Did anyone already have a savings or spending plan? Before this lesson, had you ever thought about limiting your spending to have money for some goal? Now that you know you can make your money work to meet your goals, what might you do differently? 9

12 JA Finance Park Purchase List Use this list to identify three or four items you have purchased recently or would like to purchase. Record one item and its price on each 3 x 5 card provided by your teacher. Strawberry smoothie $4.69 Car wash $7.50 Shampoo $7.89 Library fines $5.00 Hair shine $12.00 Book for English class $9.99 Monthly dues at the gym $24.00 Cheerleader outfit $ Cell phone bill $30.00 Football jersey $40.00 Movie and popcorn $17.00 New novel $12.99 Field trip fees $12.50 Nail polish $7.50 Take-out pizza $8.49 Lunch at the snack bar $4.85 Gym socks $6.99 Large chai latte $5.40 Music download $1.29 Monthly bus pass $15.00 Chocolate shake and fries $6.00 Twinkle Toe shoes $24.99 Ticket to home game $10.00 Nachos at the game $5.00 Mall parking $4.00 Haircut $ K registration $20.00 New bike lock $

13 T Chart Budget + Lesson One Student Worksheet, Page 68 Budget + Lesson One 11

14 JA Finance Park My Future Goals Budget + Lesson One Student Worksheet, Page 69 12

15 Impulse Buying Budget + Lesson One Student Worksheet, Page 70 Budget + Lesson One 13

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17 Budget + Lesson Two: What Is a Budget? Teacher Introduction Now that students are aware of the need to spend wisely, they are ready to learn about using a budget a record of income and expenses and a plan for managing money. They will establish categories for a budget that will allow them to track their spending, and they will practice adapting a budget to their own needs. Lesson Time: 45 minutes The first step in creating a budget is to determine how much money is available. In a monthly budget, this is accomplished by figuring net monthly income (NMI) and adding it to any other sources of income. The next critical step is to define spending categories and priorities. Money is first allocated to a savings account and to essential goods and services, such as housing, food, and clothing. The remaining amount can then be apportioned to categories of goods and services that are desired but not essential, such as furniture, personal grooming, and entertainment. Discretionary income is the money available after monthly bills are paid and basic living needs are met. Things that are desirable, such as television, trendy clothes, and snack foods, can be purchased with these funds. If there is money remaining once a budget has been planned, that can be added to current categories, added to savings, or used to make a special purchase. Vocabulary Budget A record of income and spending and a plan for managing money. Discretionary income Money available to spend on goods and services that are not essential. Income Budget + Lesson One Two The primary rational for a budget is to track spending, prevent overspending and relying on credit, and encourage saving for future goals. Students can be introduced to the process of budgeting with an optional exercise that shows them how to budget their time. Time is a scarce resource for everyone. As teens enter the demanding academic arenas of high school and college, they will have to learn to manage their time efficiently. Managing their time, students will learn, is much like managing their money. Materials Student Workbooks 3 x 5-inch cards from previous lesson Computer JA Finance Park Budget + Slides Sticky notes or scratch paper (optional) 15

18 JA Finance Park Lesson Preparation Review the Set the Stage talking points. Review the What Is a Budget? Lesson Steps. Review the Student Worksheets on Pages Budget Categories Worksheet Caleb s Budget Worksheet Budget Your Time Worksheet Review the 3 x 5 cards from the previous lesson. Divide them so you can distribute to groups of four to five students each. Be sure that each group will have items representing various categories of expenses (not all food or clothing, for example). You may want to create more expenditure cards to fill out some of the categories. As an alternative, copy and distribute the Purchase List (from Lesson One) on Page 10. What Is a Budget? Lesson Begins Set the Stage 5 Minutes Spend a few minutes discussing the following questions with the students: What does it mean when someone says they are living paycheck to paycheck? More than 75 percent of Americans don t have enough money saved to pay their bills for six months should they lose their job, according to a 2013 survey by financial services company Bankrate. More than 25 percent have no cash savings in case of an emergency. If these people lost their jobs, what are some of the possible consequences? 16

19 What Is a Budget? Lesson Steps 35 Minutes 1. Ask for a few volunteers to share their goals from Lesson One. Explain that to achieve goals, people need to invest in them. 2. Discuss steps that can be taken to fulfill goals. For instance, if your goal is to form a band, you need to practice your instrument, write some music, and recruit other band members. Ask for other ideas. 3. Emphasize that a budget is an important tool to track saving and spending so a person can reach a goal. A budget is a record of income and spending and a plan for managing money. Budgets have categories into which spending can be recorded or estimated to help manage money. 4. Present Slides 11 and 12 and lead students in a discussion of what they think a budget is and what it might be used for. Have students highlight the terms on Page 71 of their Workbooks. Budget + Lesson One Two 5. Separate the class into groups of four to five students each. Distribute the 3 x 5 cards, giving each group an equal number of cards, or give each group the Purchase List (from Lesson One) on Page Instruct the students to sort the cards (or items from the list) into categories based on similarities. They should create a title or heading for each group of items (sticky notes or scratch paper may be helpful for this). For example, food might be one category and hygiene items another. Answers will be somewhat subjective. 7. Present Slide 13 and have the students turn to the Budget Categories Worksheet on Page 72 in their workbooks. Tell students they should now consider expense categories for which a typical family may need to budget. 17

20 JA Finance Park 8. Lead the students through the first example, filling in a category heading in the inner circle and having them suggest detailed items for that category in the adjacent outer circle. Additional categories may include: savings, housing, utilities, food (at home and away from home), health care, entertainment, philanthropy, home and car insurance, education, appliances and furnishings, child care, maintenance and repair (home and auto), and miscellaneous. 9. Instruct students to finish the page, working in their groups or individually. 10. Share with students that although the family budget presented on Slide 14 is average, it may not be typical. The numbers presented there represent national averages and are based on information from very different situations, such as high income families, single income families, and families with many children or only one child. Online Option. Have students go online to research the national average household income. The Bureau of Labor Statistics (www. bls.gov) is an excellent resource. 11. Tell the students that because everyone s life situation is different, budgets are going to be different. One person may be single with no children, while someone else may be a single parent with three children, and another may be married with one child. Most families have expenses in the categories shown on the pie chart but not necessarily at the same percentage of spending and perhaps not every month. Companies, organizations, and governments also keep their finances in order by doing detailed budgets. 12. Present slide 15 and go over the steps for creating a budget. Discuss the following points: Ask for student volunteers to remind the class how NMI is calculated. Ask for examples of expense categories (see step 8 for a detailed list). 18

21 Explain that a dollar amount will be given to each of the categories in the budget. Define discretionary income as the amount available after monthly bills are paid and basic living needs are met. Making It Real America s national average household income* in the second quarter of 2012 was $65,132. But the average household income varies by region. In the Northeast, it was $72,358; in the Midwest, $63,768; in the South, $59,546; and in the West, $69,825. Have students research average household income for their state, region, or metropolitan area. How does the average in your location compare to the national average? Remind students that incomes for the same occupation can vary widely. *Source: Bureau of Labor Statistics, March Tell students that when preparing a budget, it is important to consider needs before wants. The first categories that should be budgeted are those that provide for needs such as housing and groceries. Also plan to Pay Yourself First (PYF), which is a concept that calls for automatically saving a portion of income for future use. Budget + Lesson One Two 14. Have students turn to Page 73 in their workbooks. Individually or in pairs, have students read the case study and answer the questions about Caleb s budget. (Answer key on Page 22.) Or, turn to Page 20 for an optional activity that teaches students to budget their time. 19

22 JA Finance Park Optional Activity If your students seem overwhelmed by the financial budget discussion, consider this activity as an alternative: Share with students that you want to show them how budgeting works with something other than money. Time is another thing that can be budgeted. Everyone has 24 hours in the day, and depending on how you use that time, you can accomplish a lot or a little. Time, like money, also can be used to achieve goals. Present Slide 16 and ask what kind of an expense school represents. At their age, school is like taxes for an adult mandatory. Those seven hours must be deducted from the total before time can be budgeted for other things. The remaining hours are the net hours, which is akin to the NMI. How many hours remain? (17) What kinds of activities fill up the remaining hours? (Sleep, chores, etc.) Remember to budget the hours needed for necessary tasks first (homework, sports practice, cooking, and eating). After these time requirements are met, how would we define the remaining hours that are available for activities of your choice? (discretionary) Have students turn to the Budget Your Time Worksheet, Page 74. They will list additional time categories and note the time allotted for each on the pie chart and the budget chart. Categories might include work, eating, personal care, sports, or club activities. Any free time would also be discretionary hours in their budget. These are hours they can use at their discretion. Summary and Review 5 Minutes Budgets come in many types and are used by a variety of people. Ask the students: What are the main purposes of a budget? (Answer: track spending, prevent overspending, allow for saving to achieve goals.) What amount of money should be used to calculate a budget? (Answer: net monthly income, not gross income.) When you have allotted money for all your bills and needs and paid yourself first by putting money aside, you might have a little money left over. What is this money called? (Answer: discretionary income.) What can you do with discretionary income? (Possible answers: go on a date, buy something you want, contribute to a charity.) 20

23 Budget Categories Budget + Lesson Two Student Worksheet, Page 72 Budget + Lesson One Two 21

24 JA Finance Park Caleb s Budget Budget + Lesson Two Student Worksheet, Page 73 Answer Key $ $ $ Buying an e-reader, a trip to Six Flags, and saving for Christmas Saving for college $ Answers will vary. $50.00 $ $ $65.00 $30.00 $50.00 $80.00 $ $ $

25 Budget Your Time What Is a Budget? Lesson Two Student Worksheet, Page 74 Budget + Lesson One Two 23

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27 Budget + Lesson Three: Using a Budget Teacher Introduction We all make choices every day. In previous lessons, students learned that choices have costs and benefits. Those costs and benefits must be analyzed as students decide whether the advantages of a particular action are likely to outweigh its disadvantages. People are essentially seeking to understand the opportunity cost of their decision, the next best alternative given up when a choice is made. Learning to make those choices wisely will go a long way to securing a sound financial future. In this lesson, students create a budget to demonstrate how the concept of scarcity forces them to make choices. Scarcity, the economic condition in which people can t have everything they want because of limited resources, is the reason we must make those decisions. Although scarcity can involve limited time or other resources, this lesson focuses on how students have seemingly unlimited needs and wants but only a limited amount of money. Materials Lesson Time: 45 minutes Vocabulary Opportunity cost The next best alternative given up when making a financial choice. Scarcity The economic condition of limited resources that prevents people from having everything they want. Budget Income + + Lesson One Three Two Student Workbooks Computer JA Finance Park Budget + Slides Summer Job Classifieds, Page 30 Goals Cards, Pages High School Life Scenarios, Pages Lesson Preparation Review the Set the Stage talking points. Review the Using a Budget: Lesson Steps. Optional: Make copies of the Budget + Assessment, Pages 37-38, one for each student. They will take the assessment at the conclusion of this lesson. 25

28 JA Finance Park Choose which scenarios might be best suited for your class: The Summer Job Classifieds, Page 30, and Goals Cards, Pages 31-32, relate more to middle school students; the High School Life Scenarios, Pages 33-35, are more suited to high school students. Make a copy of either the Goals Cards or the High School Life Scenarios for each student, and cut apart as indicated. You can post or display the classified ads or copy one for each row or table. Review the Student Worksheet for this lesson on Page 36. Summer Job Classifieds High School Life Scenarios Goals Cards Life Scenario Monthly Budget Worksheet Using a Budget: Lesson Begins Set the Stage 5 Minutes Spend a few minutes discussing the following questions with the students: Do you have everything you want? Do you think anyone has everything he or she wants? Have you had to make any hard choices because you can t have everything you want? How would life be different if you had all the time and money you needed? Likely, you would not have to keep close track of what you spend or save to reach your goals. Until that unlikely day, budgeting is a good tool to use. 26

29 Using a Budget: Lesson Steps 35 Minutes 1. Present vocabulary Slide 17. Have students highlight the terms on Page 75. Scarcity is the condition of not having everything you want because resources are limited. Opportunity cost is the next best alternative given up when making a financial choice. If scarcity did not exist, there would be no need to make choices or create budgets. But because we cannot have everything we want, using a budget helps people pay their bills, save to meet future goals, and buy the things they want. Present Slide 18. Point out the different expense categories. Ask students which expenses show this person is working toward a goal? (PYF, rock climbing gear, gym fees, trip to Joshua Tree) 2. Without a budget to follow, it is easy to spend more money than you should on things you don t need. Present Slide 19. a. Discuss how the two pie charts are similar. (Both show 100 percent of income being used; both show expense categories.) How are they different? (The adult chart has fewer, bigger sections. The teen chart has more categories; the teen chart has a large slice of money spent on clothing while that slice is small for adults.) b. Which categories are included in the adult budget that are not in the student spending chart? (housing, transportation, medical/ dental, philanthropy, insurance) c. Which categories are in the student spending pie chart that are not in the family budget? (video, music and movies, electronics, concerts) d. Looking at these charts, what would you say is the biggest difference between teen spending and adult spending? (Teens spend more on goods that are wants ; adults spend more on goods and services that fill needs.) Budget Income + + Lesson One Three Two 3. Announce that to help them prepare for the JA Finance Park experience and for their future, students will learn how to create a budget. Distribute the Goals Cards, one per student. (Or, to make the exercise more relevant, have them use their own goals from previous lessons.) 27

30 JA Finance Park Have students turn to the Life Scenario Monthly Budget Worksheet on Page 76 in their workbook and write down their pay and their short- and long-term goals. In most cases, they will have to decide how much to save toward their goals. 4. Project or display Summer Job Classifieds, Page 30 (or distribute copies you have made ahead of time), and Goals Cards, Pages If you will be using the High School Life Scenarios, turn to Pages and follow the lesson steps for the Optional Activity for High School Students. Have students choose a summer job. Some may choose the same job. 5. Direct students to fill in their own spending categories on the budget worksheet. (If a student lacks ideas here, suggest things such as personal care, food, entertainment, and clothing. Or show Slide 19 again to provide some ideas.) The first categories that should be budgeted are those that have the highest priority. Distribute funds to needs and obligations first (including paying yourself first). Any money remaining is discretionary income. This is a monthly budget, so if income is stated by hour or week, monthly income must be calculated using that information. The money budgeted must not exceed the NMI. Every category will not necessarily be filled in with an amount. In many cases, a choice must be made. Optional Activity Think-Pair-Share Raven, a high school freshman, is looking forward to a three-day field trip to the financial district in New York City. The cost for the round-trip bus ride and hotel in Times Square is $825. Raven s parents will pay the cost of transportation and hotel, but she will have to earn the money for meals, shopping, and a Broadway show. Raven has to make a decision about her needs and wants. She does not have any savings and has only three months before the trip. Raven needs your advice to help her decide. How can she earn the money? How can she save on food expenses? How much should she consider for shopping? Are there other expenses Raven should consider? 28

31 Optional Activity for High School Students 1. Randomly assign one High School Life Scenario card to each student or group. Inform students that during this lesson, they are the student described in the scenario. Each scenario describes the current income of the student and provides some information about future goals the student has. It will be up to each individual student (or small group) to develop a budget for the scenario. 2. Direct students to turn to the Life Scenario Monthly Budget Worksheet on Page 76 in their workbooks. They will prepare a monthly budget based on the financial information provided on the life scenario cards. If specific cost estimates for some line items are not specified, students can use their best guess. Not all budget line items listed on the worksheet will be used for all life scenarios. There is space for adding extra budget categories if students wish. Summary and Review 5 Minutes Debrief the budget activity with your students by asking the following questions about the life scenarios: Was it difficult to meet the stated life goals and still have enough income for the entertainment, clothing, and food you wanted to buy? Do you have ideas for ways to create a better spending plan for your scenario? Are you willing to create and follow a budget? (Encourage your students to try it for at least a month or two.) Have you ever had a conversation with your parents or guardians about their budgets? What if you have no real goals? Do you still need to save? (Answer: Yes! You might have goals someday.) Budget Income + + Lesson One Three Two Optional: Distribute the Budget + Assessment sheets and have students complete them. The answer key is on Pages

32 JA Finance Park Summer Job Classifieds Lifeguard Supervise swimmers, clean pool area, and teach lessons. $9 an hour, four-hour shifts, four days a week. Dog Walker Dog E Daycare seeks energetic animal lovers to walk, groom, and feed dogs for our clients. $25 weekly, plus commission for signing on new clients. Camp Counselor Mentor younger children and help them gain outdoor skills. Must reside at camp for the summer. $335 per week. Meals deducted from pay $40 week. Math Tutor Work with elementary school students to improve their math skills. $15 an hour, four hours a week. Selling Vegetables Load and unload truck and sell produce at the local farmers market. $20 each market, Wednesdays and Saturdays. Farmworker Help with growing, harvesting, and weeding crops; also feed and care for animals. $10 per hour, 20 hours a week. Babysitter wanted Take care of two children in our home, 7 a.m.-2 p.m., 3 days a week. $25 day. Sandwich Shop Employee Prepare and serve sandwiches, cashier, and clean. $8.50 an hour, shifts negotiable, usually six hours, three to four days a week. Grocery Store Bagger Bag groceries at Quickie Mart. $8 an hour, three-hour shifts, five days a week. Computer Store Stocker Stock shelves and assists customers. $300 per month. Barista Prepare and serve coffee and other beverages. $7.25 an hour, 20 hours a week. Pool Maintenance Establish your own business cleaning, filling, and maintaining neighborhood pools. Charge $40 a month per client. You have four clients. Dishwasher Learn valuable life and team-building skills working in a restaurant. $7.50 an hour, four hours a day, four days a week. Golf Caddy Carry golf bags for players; requires physical endurance and an understanding of the game. $10 an hour, six hours a week. Lawn Care Work on your own time using your own equipment. You will receive up to four clients weekly and receive $12 per lawn mowed. Housekeeping Light housekeeping and simple meal preparation for elderly lady. $80 per week, two hours a day, weekdays. Bicycle Courier Transport documents and small packages within city limits; must have bike. $100 per week. Office Intern Filing and other office work for research chemist. $50 per week. Office Intern Cleaning, filing, and some reception work for architect. $65 per week. Computer Tutor Senior center looking to hire someone with sharp computer skills and lots of patience to teach a weekly computer class. $250 month. 30

33 Goals Cards Copy, separate, and distribute goals, one per student, for the summer job budget activity. Short-term goal: New clothes for the dance, $100 Long-term goal: Dance lessons, $500 Short-term goal: New shoes, $75 Long-term goal: New cell phone, $700 Short-term goal: Replace mom s blender, $65 Long-term goal: Summer camp, $550 Short-term goal: Buy a yearbook, $32 Long-term goal: Saving to go to Stanford University, $200 monthly Short-term goal: Buy seeds, $35 Long-term goal: Help build a community garden; start-up costs, $1,200 Short-term goal: Driving lessons, $500 Long-term goal: Saving for a car, $200 monthly Short-term goal: Buy a yearbook, $32 Long-term goal: Saving for college, $125 monthly Short-term goal: New pair of basketball shoes, $129 Long-term goal: Basketball camp, $550 Short-term goal: Buy a camera, $69 Long-term goal: Travel to New York City, $100 monthly Short-term goal: Trip to theme park, $60 Long-term goal: Saving for college, $100 monthly Short-term goal: Take a babysitting and first aid class, $200 Long-term goal: Open a child care business; initial start-up costs, $1,500 Short-term goal: New cell phone, $700 Long-term goal: Payment plan for phone, $65 monthly

34 Goals Cards Copy, separate, and distribute goals, one per student, for the summer job budget activity. Short-term goal: Take a watercolor class, $125 Long-term goal: Saving to paint in Italy, $60 monthly Short-term goal: Visit Washington, D.C., $600 Long-term goal: Support a child through a charitable organization, $30 monthly Short-term goal: Buy concert tickets, $60 Long-term goal: Buy new guitar, $1,800 Short-term goal: Go on a date, buy concert tickets, $70 Long-term goal: Save to hire a limo for the prom, $50 monthly Short-term goal: Join a gym, $40 monthly Long-term goal: Make the football team; team fees, $300 Short-term goal: Buy an e-reader, $269 Long-term goal: Participate in student-exchange program to Sweden, $15,200 Short-term goal: Repay loan from dad, $55 remaining Long-term goal: Save for college, $60 monthly Short-term goal: Adopt a puppy from the shelter, $125 Long-term goal: Save for pet food and vet expenses, $950 year. Short-term goal: Learn to sew; class costs $35 Long-term goal: Provide 10 baby blankets to local children s hospital; cost for materials, $20 per blanket Short-term goal: Paint bedroom, $35 Long-term goal: Remodel bedroom with new furniture, $1,200 Short-term goal: Attend woodworking class, $135 Long-term goal: Build shelves for community center, $500 Short-term goal: Run a 10K; entry fee, $30 Long-term goal: Buy new laptop, $1,199

35 High School Life Scenarios Scenario One Jett is a junior at a suburban high school and is active in several sports. His dad bought a new truck recently and gave his old one to Jett. His parents cover the insurance cost, but Jett has to pay for his own gasoline. He typically fills his 17-gallon gas tank once a month for his drive to school, work, and sports practices. He works 20 hours a week year-round at a local grocery store and makes $8.50 per hour. In addition to his gas, he is responsible for his portion of the family cell phone bill ($35 a month), as well as his own clothing and entertainment expenses. Jett plans to attend community college after graduation, so he will live at home while going to school. His parents will pay tuition, but he will be responsible for his books and other expenses. Scenario Two Ava is a sophomore at a metro-area high school and rides the bus to school or gets a ride from her older brother. Her parents shared the cost of a car with her brother, and they plan to do the same for Ava, so she is saving to buy a used car before she graduates. During the summer, Ava works 32 hours each week as a hostess in a local restaurant; she is paid $7.50 per hour. Ava also babysits on the weekends and typically earns $50. She is responsible for paying for her cell phone plan, which is $80 a month. Ava s goal is to earn a degree in landscape architecture, and she wants to attend an outof-state college. Her parents will cover the tuition cost, but she must pay for room and board. She estimates her financial responsibility will be about $9,000 a year.

36 High School Life Scenarios Scenario Three Joaquin is a senior in high school. He recently bought a car from family friends and is paying them $150 a month. He also must buy his gas and pay his parents $35 a month toward his insurance. Joaquin works 20 hours a week at a nearby pizza parlor. He earns $5 per hour and averages $100 a week in tips. Joaquin s parents pay for his cell phone, but he is responsible for all his entertainment expenses. His best friend has a serious illness and Joaquin has made a commitment of $10 a week to support cancer research. After graduation, Joaquin plans to attend trade school to learn automotive body repair. He will be able to live at home but will be responsible for tuition, books, and fees. He estimates school expenses will be $4,200 a year. Scenario Four Linda is a senior at a rural high school and is active in drama and dance. Her mom bought a new car recently and gave her old one to Linda. The car is paid for, but Linda has to pay for the gasoline. Her parents pay for the insurance. Because her schedule after school is so busy, she is only able to work weekends. She helps teach dance to young children at a local studio. Linda typically works eight hours a week and earns $8.50 an hour. Every other weekend, she also babysits for an aunt and earns $30. Her parents give her an allowance of $100 a month and expect her to buy her own clothes and pay for her school lunches and entertainment. She typically drives 14 miles each day to and from school and another 20 miles on the weekend for her dance studio job. She plans to attend a dance school after graduation and needs to contribute $200 each month to her savings account to afford it.

37 High School Life Scenarios Scenario Five Matt is a junior in high school. He works 25 hours a week at a retail store and earns $7.75 an hour. A good friend of his picks him up for school each morning, and he either uses one of his parents cars to get to work each day or his parents drop him off. He agreed to put $50 of gasoline in the family car each month to help pay his share. He is looking forward to prom in three months; tickets will cost $50. He also is saving money to rent a tuxedo and buy flowers and a dinner out for his girlfriend, Stephanie. Matt plans to buy a car after graduation, so he is saving for that goal. He intends to go to college and thinks his parents will pay for the tuition, but he will be responsible for other college expenses. Scenario Six Morgan is a high school junior. He owns a used car and is responsible for his own gasoline and maintenance costs. Morgan works as a stocker at a local department store. He earns $7.75 an hour and works 20 hours per week. Morgan usually drives 200 miles a week. His car is in need of new tires soon; he plans to replace them in three months and needs $350 for that expense. Morgan also has a cell phone as part of his parents family plan, and his parents pay the bill. He is responsible for his entertainment expenses. Morgan hasn t yet decided what he wants to do after graduation, but he knows he should be saving for the future. He needs a nest egg to help him get started, whether it will be for college or moving out on his own.

38 JA Finance Park Life Scenario Monthly Budget Budget + Lesson Three Student Worksheet, Page 76 36

39 Budget + Assessment Choose the best answer for each question. Write the letter that corresponds with your answer on the line provided. For questions that require explanation, use the space below the questions. 1. Short-term goals are: a) hard to reach b) accomplished in less than a year c) personal d) categorized by wants and needs 2. The amount of earnings made over one month, after deductions, is known as: a) Total annual income b) Net monthly income c) Gross monthly income d) Gross annual income 3. A record of income and expenditures for a given period of time is called a/an: a) Credit b) Investment c) Budget d) Interest Budget + + Lesson Three Two 4. When budgeting, the first categories to consider are those that meet your: a) Wants b) Needs c) Discretionary funds d) Important expenses 5. In what area category of a typical family budget do people spend most of their money? a) Food b) Housing c) Transportation d) Entertainment

40 Budget + Assessment 6. Jason went to the grocery store to buy a gallon of milk for his mother. While waiting in the checkout line, he saw a display for a new chocolate-caramel candy bar, so he bought it, too. The candy bar purchase is an example of a/an: a) Special treat b) Impulse buy c) Need d) Payment for running an errand for his mom 7. What is the difference between a short-term goal and a long-term goal? 8. What is the difference between NMI and discretionary income? 9. What does it mean to follow a budget? 10. What is PYF?

41 Budget + Assessment Answer Key Choose the best answer for each question. Write the letter that corresponds with your answer on the line provided. For questions that require explanation, use the space below the questions. 1. b Short-term goals are: a) hard to reach b) accomplished in less than a year c) personal d) categorized by wants and needs 2. b The amount of earnings made over one month, after deductions, is known as: a) Total annual income b) Net monthly income c) Gross monthly income d) Gross annual income 3. c A record of income and expenditures for a given period of time is called a/an: a) Credit b) Investment c) Budget d) Interest Budget Income + + Lesson One Three Two 4. b When budgeting, the first categories to consider are those that meet your: a) Wants b) Needs c) Discretionary funds d) Important expenses 5. b In what category of a typical family budget do people spend most of their money? a) Food b) Housing c) Transportation d) Entertainment 39

42 JA Finance Park Budget + Assessment Answer Key 6. b Jason went to the grocery store to buy a gallon of milk for his mother. While waiting in the checkout line, he saw a display for a new chocolate-caramel candy bar, so he bought it, too. The candy bar purchase is an example of a/an: a) Special treat b) Impulse buy c) Need d) Payment for running an errand for his mom 7. What is the difference between a short-term goal and a long-term goal? A short-term goal can be accomplished in as little as three months to a year. A long-term goal takes one year or more to realize. 8. What is the difference between NMI and discretionary funds? Net monthly income is the amount of money available for spending after taxes are deducted. Discretionary income is the money available after monthly bills are paid and basic living needs are met. 9. What does it mean to follow a budget? Answers will vary but should reflect that a budget means following a spending plan. The plan helps a person manage expenses and work towards both short-term and long-term goals through regular saving. 10. What is PYF? Pay Yourself First is the concept of automatically putting away money every month for future use. 40

43 Budget + Extension Activities Sample Budgets...43 Students practice preparing budgets and making budgeting decisions. They work in teams, pairs, or individually. Personal Budget...47 Through discussion and research, students recognize the need for responsible spending and the benefit of budgeting. Paying for Postsecondary Education...53 Students see that education after high school is an investment in their future. They explore options to pay for higher education. Budget + Extension Activities 41

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45 Sample Budgets 1Extension Activity Overview Students practice preparing budgets. They make budgeting decisions while working in teams, pairs, or individually. Teacher Introduction With practice, students will gain confidence in their newfound budgeting skills. In this activity, they will compare the budgets of three young adults. You may choose to have the students work in teams, pairs, or individually. The budget examples will demonstrate to students that individual preferences affect budget planning. Materials and Preparation Activity Time: 15 minutes Review the Evaluating Sample Budgets Worksheet, Page 45, which will be projected or displayed using an interactive board. Budget + Extension Activity 1 Evaluating Sample Budgets Worksheet 43

46 JA Finance Park Sample Budgets: Activity Steps 1. Introduce students to the idea of evaluating a sample budget by projecting Evaluating Sample Budgets, Page 45. (Page 77 in the Student Workbook.) Point out that the three young adults have the same net monthly income but have chosen to spend their money in different ways. 2. Review the questions that follow the budget comparison, engaging the students in determining the answers. Summary and Review Ask students if they understand there is no one right answer when it comes to planning a budget. Each person s (or family s) budget will reflect his or her own short- and long-term goals and reveal what he or she values in life. Some people choose to spend less on housing so they can spend more on a car. Some prefer to spend more on clothes and entertainment and less on a new or fancy car. The important point to recognize is the benefit of having and following a budget. 44

47 Evaluating Sample Budgets Budget + Extension Activity Student Worksheet, Page 77 Budget + Extension Activity 1 45

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49 2 Extension Overview Through research and discussion, students will recognize the need for responsible spending and the benefit of budgeting as they prepare for the future. Teacher Introduction Personal Budget Activity Students will create budget projections for a four-month period that illustrate the costs associated with being an adult and living on their own. Students will need to research and identify job opportunities that they qualify for as high school graduates. Based on the income they can reasonably earn, they will build a budget, basing their expected expenditures on averages that a typical family might spend in each category. They will then research the appropriate housing, food, transportation, and other living expenses, making choices that keep their expenses less than their income. Materials and Preparation Activity Time: 40 minutes + homework Access to computers and the Internet Review Student Worksheets on Pages Optional: Student access to a spreadsheet program or online budget calculator Budget + Extension Activity 2 Personal Budget Worksheets 47

50 JA Finance Park Personal Budget: Activity Steps 1. Ask students how easy or difficult they think it will be to maintain their current lifestyle once they are living on their own. According to the Junior Achievement 2013 Teens and Personal Finance Survey, 75 percent of teens believe they will be able to support themselves financially without the help of a parent or guardian by the time they are 18 to 24 years of age. 2. Tell the students they will complete a project that will help them determine whether they are ready to support themselves after high school and what kind of lifestyle they might expect to have. 3. The students first assignment is to find a job they could realistically be hired for with a high school diploma. They can read through classified ads in the newspaper, conduct online job searches, or use the chart below. They may only take a job if their education and previous job experience meet the job posting requirements. Alternatively, you can assign jobs and salaries to students. The job can be located anywhere in the state in which they currently live. The following jobs are common for high school graduates; wages represent national averages. Occupation Hourly Wage Occupation Hourly Wage Fast-food worker $9.00 Waiter/Waitress $9.95 Coffee shop attendant $9.34 Dishwasher $9.10 Host/hostess $9.41 Housekeeping $10.49 Office cleaning $11.95 Animal care $11.02 Usher, ticket taker $9.77 Recreation attendant $9.63 Bar porter, bellhop $11.10 Retail sales worker $11.35 Cashier $9.79 Production assembly $13.74 Food-processing worker $12.39 Driver/sales worker $10.90 Light truck/delivery services $14.13 Parking lot attendant $9.39 Child care worker $9.38 Home health aide $10.01 Health care orderly $11.53 Teller $11.99 File clerk $12.59 Receptionist $12.30 Warehouse worker $

51 Making It Real The mid-2014 unemployment rate for recent high school graduates was 22.9 percent.* Have students research the unemployment rate in their state and county. Also, have them look up the average earnings of a high school graduate and the minimum wage paid in their state.* According to the Bureau of Labor Statistics, workers ages 16 to 24 had median weekly earnings of $177 (women) to $189 (men) in the second quarter of *Source: Economic Policy Institute, 4. After students have identified a job and wage, they will forecast expenses. Their initial budget plan should include: savings, housing, renter s insurance, utilities, food, transportation, phone, medical, clothing, entertainment, household goods, and grooming supplies. 5. Students may add other categories. They will need to research expenses not expressly noted on the budget worksheet, including cell phone, parking fees for work, furnishings for their apartment, or personal hygiene expenses, for example. Students should not include debt as part of their budget. The Personal Budget Worksheet 1, on Page 78, gives students an outline of the average percentage spent in each category. (Averages are based on average expenditures reported by the Bureau of Labor Statistics, Consumer Expenditure Survey, for persons under 25 years of age.) In the budgeting process, they should allocate 100 percent of their income to budget categories. A discretionary income category may be used to help balance the budget to 100 percent if income exceeds expenses. Budget + Extension Activity 2 6. After completing the Personal Budget Worksheet 1, students should form pairs or small groups to discuss their plans and give and receive feedback on the reasonableness of their budget plan and job choice, given each person s background and interests. The classroom teacher will have final approval over each student s job choice and budget plan. Following approval, students begin quantifying the expense phase of their budget. Using the Internet or newspaper ads, students will research realistic housing and transportation options in the community where they will work. 49

52 JA Finance Park Students may choose to have a roommate to help with housing expenses, but they should be given parameters. Sharing an apartment with another person, for example, means renting a more expensive two-bedroom space, and roommates must share equally in rent, utility, and insurance payments. Each roommate will budget for his or her own food and other expenses. 7. If students find that actual expenses are more (or less) than originally budgeted, they will record that amount in the Revised column of the budget on the Personal Budget Worksheet 2 (Page 79). Students may use the template to record their monthly expenses, or they may find it easier to build their budget on a spreadsheet or some other tool you recommend. 8. To add a level of complexity, students should make assumptions about what may happen over the course of four months for example, buying furniture or being involved in a car accident. You may want to suggest some life events that would affect their budget, such as getting a raise, receiving an inheritance, or incurring medical bills because of an accident. 9. The level of detail to be included in the budget, the timeline for completion, and grading are determined based on teacher preference. Summary and Review Ask students what the biggest surprise was as they researched actual costs associated with living on their own. Do they see a benefit to having a budget to help them reach their goals? Has this exercise changed the way they plan to manage their money in the future? 50

53 Personal Budget Budget + Extension Activity Student Worksheet 1, Page 78 Budget + Extension Activity 2 51

54 JA Finance Park Personal Budget Budget + Extension Activity Student Worksheet 2, Page 79 52

55 3 Overview Students see that education after high school is an investment in their future. They explore options for paying for higher education. Teacher Introduction Paying for Postsecondary Education Extension Activity According to the Junior Achievement 2013 Teens and Personal Finance Survey, 52 percent of teens think students are borrowing too much money for college, and 48 percent don t know or aren t sure how much they themselves will need to borrow. This activity will help provide some insight into the true costs associated with higher education and give students information about their options. Materials and Preparation Access to computers and the Internet Make one copy of Life Scenarios 1 6, Pages Review Student Worksheet on Page 56 Activity Time: 30 minutes Budget + Extension Activity 3 Financial Aid Options Worksheet 53