family economics & financial education life of….. ben west “a teenager’s spending plan”...

Family Economics & Financial Education

Life Of…..

Ben West“A Teenager’s Spending Plan”

Funded by a grant from Take Charge America, Inc.

Get ready to Take Charge of Your Finances

Snapshot – Ben West

• Sneak peak into the life of Ben and his family– Ben– James– Brenda– Anna

SnapshotBen’s Income and Expenses

• Ben’s Income– Lou’s Logging Service

•$13.00/hour•15 hours a week

SnapshotBen’s Income and Expenses

• Ben’s Expenses– Social activities with Maria

• $75

– Cellular Phone• Monthly budget is $50, however Ben often uses

more minutes than the plan allows and sends numerous text messages thus increasing his bill

• Spends $90

– Saving• $200

– Other Items

Spending Plan

• The goal is to create a spending plan that balances Ben’s expenses with his income.

• He can not have more expenses than income.

• Spending Plan– Financial statement– Tracks income and expenses– Used to assist with money management and help

individuals reach financial goals– An individual’s perception of needs, wants and

values will affect decisions made when creating a spending plan

SnapshotWest Family Expenses

• Ben’s Expenses• Housing

– Monthly Payment– Utilities– Others – television,

internet and telephone• Transportation

– Vehicle for Ben and Brenda

– Monthly payment and fuel• Insurance

– Homeowners, disability, life, auto, and health

• Food– Groceries– Pack daily lunches with

leftovers• Credit Card Balance

– Currently have $6,500 in credit card debt

– Monthly minimum payment is $160

– They often do not have enough to pay more than the minimum balance

Housing

• Monthly Payment– Housing

payment– Insurance– Property taxes– Repairs– Maintenance

• Utilities– Heat– Electricity– Water– Sewer– Garbage

• Local Antenna

• Satellite Dish

• Digital Cable

• Telephone

• Internet

Housing Others

Transportation

• Monthly Payment– Car payment– Maintenance

• Fuel– An average is listed– This cost may

increase/decrease depending on the cost of fuel

• West Family– Pay for Ben and

Brenda’s vehicle monthly payment and fuel costs

Others

• Dirt bike tools and upgrades

• Snowboarding • Electronics• Hunting• Entertainment• Create Your Own

Goal:To Create A Balance Spending Plan

• Make all choices for the West family and Ben

• Complete a Major Expenditures Summary for the West family

• Complete a Spending Plan for Ben• Answer reflection questions• Write a summary essay

Quick Review

• West Family– Ben, James, Brenda, Anna

• Create a Major Expenditures Summary for the West’s– Housing– Transportation

• Create a Spending Plan for Ben– Social Activities– Cellular Phone– Savings– Others

Snapshot Reflection

• Review Ben’s Snapshot on pages 2-4• Answer questions 1-5 on page 10

Ben’s Paycheck

Personal Information

State the employee’s name, address, and social security number.

Ben’s Paycheck

Pay Period

The length of time which an employee’s wages are calculated.

Ben’s Paycheck

The total amount of money earned during the pay period before payroll withholdings.

Gross Pay

Ben’s Paycheck

The amount of money subtracted from the gross pay for taxes.Payroll Withholdings

Ben’s Paycheck

The amount required by law for employer to withhold from earned wages to pay taxes.Withholding Tax

Ben’s Paycheck

Federal Insurance Contribution Act – includes Social Security and MedicareFICA

Ben’s Paycheck

Net Pay

The amount of money remaining after all payroll withholdings have been removed from gross pay.

Ben’s PaycheckTotals of the deductions which have been withheld from an individual’s paycheck from January 1 to the last day of the pay period indicated on the paycheck stub.

Year-to-Date

Setting Education and Financial Goals

•Short Term – less than one year

•Long Term – more than one year

SMART Goal

SpecificState exactly what is to be

done.

MeasurableInclude how the goal can

be measured.

AttainableDetermine

steps to reach the goal.

RealisticDo not set the

goal for something unrealistic.

Time BoundState when the

goal will be met.

West’s Major ExpendituresHousing

• Choose a house and housing others for the West family

• Refer to the Snapshot on pages 2-4• Remember

– Family size– Lifestyle– Other family dynamics

West’s Major ExpendituresTransportation

• Choose a vehicle for the Ben and Brenda

• Refer to the Snapshot on pages 2-4• Remember

– Ben and Brenda will share the vehicle

West’s Major ExpendituresMajor Expenditures Summary

• Transfer numbers to complete the summary– Total housing cost– Total transportation cost– Insurance– Food– Credit Card Balance

• West family usually only pays the minimum monthly payment

• If they continue this habit, their $6,500 debt will cost $9,120 • It will take 4.75 years to pay in full if only the minimum

payment is paid each month

Ben’s Spending PlanPayroll Withholdings

• Review Ben’s paycheck on page 11– State Withholding Tax– Federal Withholding Tax– FICA

Ben’s Spending PlanSavings

• Review Ben’s Snapshot on pages 2-4– Identify his needs, wants, values

• Review the short term and long term goals set for Ben on page 12

Ben’s Spending PlanOthers

• Social activities with Maria• Cellular phone

– How could Ben decrease the amount spent on his cell phone each month?

• Choose which “others” items Ben would like– Dirt bike tools and upgrades– Snowboarding– Electronics– Hunting– Entertainment– Create Your Own

• Draw an item and identify the cost in the space provided

Ben’s Spending Plan Summary

• Gross Income• Expenses

• Calculate the Difference

• If the difference is a negative number, go back and adjust some of Ben’s expenses.

Negative or Positive Difference?

• If the number on QQ is positive, adjust Ben’s expenses.– Saving additional money for unexpected emergencies or

expenses may be a good idea.

• If the number on QQ is negative, go back and make adjustments to Ben’s expenses.– Changes need to be made consistently throughout the

simulation.– Keep in mind Ben’s needs, wants, values and goals when

making changes.

• If the number on QQ is zero, congratulations! You have balanced Ben’s Spending Plan!

Reflection Questions

• Once the difference equals zero….– Answer questions 17-22 on pages 15 and

16– Answer questions 23-27 on page 18