Personal+Finance+Assessment

**GETTING STARTED**
For this simulation, you will assume your job is in the Cedar Rapids area and that you are single. You will need to provide proof of all cost you inlcude. Copy and past the information or urls into either a Word or Google document to be submitted with your project.

Each page gives suggestions for a particular area of your budget. The pages include links to calculators and website that may be helful as you build your budget. You are not limited to these pages. Be sure to read each page as you work.

To complete the project, you can either build your presentation as you go or collect your information and then design your final presentation. If you wish to collect first, a template for a worksheet is provided below. Use this word document to keep track of your information. It also includes some questions to guide your decision-making and show you what you should include in your project.

[|BUDGET WORKSHEET]

**1.** ** I Need . . . Income **
Choose the career that most interests you. You must find currect salary/wage information for your job in this area. You may use an ad for the job as proof or refer to statistics in the Linn county area using the following link []

Next, select a business in the area where you could be hired for that job. You will need a business address for other parts of this project.

30% of your earnings go to taxes. Yearly earning x .7 = yearly take-home pay Yearly take-home/12 = monthly disposable income
 * Don't forget . . .**

**2.** ** How Much for What???? **
How much should I spend on things? Good question. Remember, budgets are personal spending plans, so only you know the answer to the question. After looking at your income and your spending habits, you have to decide how much you will spend in various areas. The numbers below represents some percents you may want to use as a guideline:


 * BUDGET GUIDELINES**
 * Housing ........................................................... 30%
 * Transporation ................................................... 20%
 * Food ................................................................15%
 * Insurance ...........................................................7%
 * Other ................................................................18%
 * Savings ........................................................... 10%

**3. PYF (Pay Yourself First) [[image:cyberwarriors/pig.jpg width="175" height="145"]] **
Keep in mind that budgets are "living things that change as your financial goals change. Based on your salary/wage information what goal will you have for "PYF"? At the minimum, you will need to save 10% of your take home pay. Remember, this money will pay for "incidental" items that may pop up. What if you lose your job? Savings should be able to cover your expenses for 3 - 6 months. Your savings is what will tide you over until you find other employment.

The amount you decide to save should be include in your presentation. Also include an explanation of how you decided on that amount.

**4. A Place to Live **
No matter how cozy it is, a cardboard box on the corner is not an option in this project, even if it has shingles and vinyl windows! You will need to find an advertisement for an apartment or a house to rent. The property description should include a description of utilities that are included as well as the cost of rent. You will also need to insure the cost of your personal possessions in the apartment. Tenants (Renters) insurance runs $150 per year for $25,000 in coverage. You may use any online web site to help you find a suitable rental or try this link: [|Gazette Online]

Of course, you will also want things like heat/air, electricity, water, garbage collection and possibly a land line. You will need to see if these items are included in your rental cost or not by analyzing the ad. If they are not included, you will need to find the cost of the item. (If you are not sure, please ask for assistnace.) Not covering one of these costs will cause a loss of points. The link below will estimate your bill for electricity based on the items you have in your home.

[|Electricity calculator]


 * Housekeeping Supplies:** Laundry, cleaning, lawn, garden and stationery supplies. If you have an apartment, lawn care will not be your responsibility so you may deduct one third of the cost in the category you use.

Low .................... $24 Median .............. $83 High .................. $142


 * Furniture:** Living room, dining room, bedroom, and any other furniture. Outside furniture if you have a deck or yard.

Low ................... $10 Median ............. $83 High ................. $155


 * Appliances and Housewares:** Microwaves, vacuum, cleaners, dinnerware, cookware, etc.

Low ................... $12 Median ............. $40 High ................. $68 ==

==

**5. Transportation **
You realize you need another car to replace the one you currently have. There's no use in trying to repair the old one - it'll cost more than it is currently worth. So, although you may think you want a sporty car, realize you should pick the car you need. Your choice must fit your budget. So what can you afford? Remember, you must include a number of items in this area. In addition to your car payment, insurance, gas, repairs and maintenance, registration and licensing fall into this area. If you take a bus to work or park your car in a public lot, those costs would also be included in this category.

Cost of the car: You will need to buy the car first. As you choose a vehicle, think about the maintenance that will go with the vehicle. You can choose something really old and cheap, but there is a good chance the vehicle will have multiple repair bills, which will need to be reflected in your budget. You may assume that you have $1,000 for a down payment on your vehicle.
 * CAR**

The link below will help you in choosing a vehicle. You are not limited to these vehicles. [|VEHICLES]

The link below will take you to a site that will calculate your monthly payment for a vehicle. The tax rate is 7%. The interest rate of the loan depends on the age of the vehicle and the amount of time over which you will finance the vehicle.

[|Car loan calculator]

Use the chart below to determine the interest rate to use in the calculator : __**Age/Time of Loan**__............................... __**Interest Rate**__ 36 months new ....................................... 6.08% 36 months used ..................................... 6.49% 48 months new ....................................... 6.16% 48 months used ..................................... 6.28%

Now here's where you crunch some numbers. You need to calculate the amount of gas it will take to get you from the place you are renting to work and back. You can use Google Maps to calculate the distance based on the address for the business you chose on the Income page and the place you are renting. Google a similar car to find out the estimated miles per gallon rating. We will assume that the price of gas is $2.15/gallon. Your budget should reflect the amount needed per month for travel to work as well as travel for shopping, entertainment, etc. Gas = 26 miles per vehicle; 17 miles for a truck.
 * GAS and MAINTENANCE**

[|Fuel Calculator]

You may not have maintenance costs every month, but you need to plan for it. Oil changes, new tires down the road, etc. need to come out of this part of the budget. Big items like tires should be saved for in advance so you have the money when needed.

In this project, you are purchasing a vehicle so you will be required to carry full coverage on your vehicle by the the lender. If you decided to purchase a vehicle from the above VEHICLE link, the monthly insurance is already calculated for you. If you decided to purchase a vehicle not listed on the VEHICLE page, use the link below to obtain an insurance quote. For either option you choose, build the cost for one month's insurance into your budget. [|http://www.progressive.com]
 * INSURANCE**

**6. Food **
So what are you going to eat? You could eat nothing but peanut butter and banana sandwiches, but that will get a little old after a bit. It also may cause some health problems down the road.

You will plan a menu for one week showing what you will eat for 3 meals each day, as well as any snacks you plan to have (that includes the pop and candy bar from the convenience store). To encourage a healthy diet and keep doctor bills under control, you must meet the dietary requirements given below.

After you set your menu for the week, create a shopping list. You may assume you have things like ketchup and mustard in the frig. However, be sure to include peanut butter and jelly on your list. If you have questions about what you do and don't have, ask me.

Also included in this area are soaps (dish and hand), paper towels, napkins, etc. Be sure to include them on your shopping list.

Servings per day || **Eating Out** || **Groceries** || (yogurt, 1/2 cup cottage cheese, milk)
 * **Daily Requirements**
 * **3 dairy**

(only one can be a glass of juice)
 * 2 fruits**

(ketchup on a sandwich does not count)
 * 2 veggies**


 * 2 protein**

If you do eat out, follow these guidelines: Fast food--$5-$7 Buffet---$10 Mexican, low end--$10-$15 Steakhouse/restaurant-$15-$25 || You will need to show what you purchase and the total spent for the week. To price your groceries, check out the store ads online for Hy-Vee, Fareway, Wal-Mart. Remember, this is a monthly budget. Your **weekly** bill should reflect **1/4th** of your food budget amount. You should limit this to 15% of your take home pay for the month. ||
 * 2 bread/grain** || Eating out is fun and convenient, as well as more costly. You should limit yourself to no more than once a week here. That meal may be lunch or dinner. Plan on brown-bagging it for most lunches.


 * [|MENU TEMPLATE]**

Your shopping list needs to include each item, quantity of each item, price of item, and total cost. [|SHOPPING LIST TEMPLATE]

**7. Insurance - Protect What You Have **
You should have already allowed for car insurance as part of your transportation and personal insurance with your choice of a place to live. That leaves health insurance and life insurance as other options. Although you can choose not to have health insurance, you will be required to purchase it for this project.

Life insurance will be optional, depending on your goals and amount of disposable income.

Option 1 includes a $500 deductible and 20% co-insurance. That means the client pays for all medical services up to $500. After the deductible has been met, the client pays 20% (co-insurance) and the insurance company pays 80% for medical services. The co-insurance maximum a client pays is $1,500 for single coverage.
 * Single Coverage Health Insurance **

You can keep your premium down by choosing a higher deductible. Option 2 of the policy assumes you are paying the first $1,500 for all medical services before the co-insurance clause would start paying.

non-smoking male || $176 || $145 || smoking male || $199 || $165 || non-smoking female || $293 || $241 || smoking female || $336 || $276 ||
 * **Individual** || **Option 1** || **Option 2** ||
 * 19 - 22 yr old
 * 19 - 22 yr old
 * 19 - 22 yr old
 * 19 - 22 yr old

Life Insurance pays a beneficiary a specific sum on the insured's death. Life insurance is not necessary if a person is single with no dependents. However, some people buy life insurance because some policies also have an investment piece built in. the younger you purchase your life insurance, the lower the premium you will pay because of the time value of money.
 * LIFE INSURANCE**


 * ** //Policy Amount// ** || **Male, non-tobacco** || //**Male, tobbaco**// || **Female, non-tobacco** || //**Female, tobacco**// ||
 * $100,000 || $13.36 || $22,23 || $11.22 || $17,63 ||
 * $250,000 || $23.00 || $43.33 || $18.69 || $32.35 ||
 * $500,000 || $39.87 || $80.76 || $31.67 || $59.23 ||

**8.** ** Other **
So everything you haven't yet covered falls into this area and should be approximately 18% of your take-home pay. Your cell phone, internet access, clothing, personal care, educational expenses (loans), pet care, gifts,entertainment, charitable donations, and any other credit cost (credit cards) are included here. Some of these are very hard to estimate, so charts are provided to help you come up with an amount. As you use the charts, keep in mind that you should probably have some expenses in all areas and that the costs of some areas may also partly be covered in another area.

Based on the type of schooling needed to earn your degree, you will have to repay debt. The amount of debt you have will vary depending on the school you attend and the amount you work during school to pay for tuition. Below are average debt amounts for various schools. That means some students will graduate with much less debt than this and others will have much more. Start saving now so you can be in the "much less" category.
 * EDUCATION**

If you attended a **4-year state** school (Iowa, Iowa State, UNI), your debt is $26,199. If you attended a **4-year private** school (Coe, Loras, Central, etc), your debt is $29,000. If you attended a **2-year program** (Kirkwood, Hawkeye Tech, AIB, DMACC, etc.), your debt is $10,000.

Use the calculator below to figure your payment. [|Student Loan Calculator]

This is an amount **you must pay**, so you have to allow for it in your budget. You can change the number of payments in order to pay off the debt quicker.

The information below represents the average spending for families with various income levels. As a single individual, you may pay a little less, but these figures should be close to yours.
 * FLEXIBLE EXPENSES**


 * Low = $30,000 per year or less
 * Median = $30,000/ year to $80,000/year
 * High = $80,000 per year or more


 * APPAREL and SERVICES**
 * Clothing:**
 * Men: Low = $8
 * Men: Median - $54
 * Men: High - $99


 * Women: Low - $22
 * Women: Median - $89
 * Women: High - $155


 * Shoes: Low - $12
 * Shoes: Median - $43
 * Shoes: High - $173

Personal care products and services (soap, hair products, shaving needs, cosmetics, bath products, etc.)
 * Personal Care:**
 * Low - $24
 * Median - $69
 * High - $113

Cash gifts to persons outside immediate family, contributions to charitable organizations
 * Contributions:**
 * Low - $60
 * Median - $324
 * High - $589

Fees and admissions for sporting events, movies, concerts, etc.
 * Entertainment:**
 * Low - $90
 * Median - $124
 * High - $239

You will need to find an offer from a local provider for these services. You must have your own cell phone account and it should reflect the way you use your cell phone. Example: if you don't limit your texting, you need an unlimited plan. Keep in mind that some companies may let you bundle these items which will decrease your cost. Include the url for the website in your support documentation.
 * Cell Phone, Cable, and Internet Services:**

Your budget should be submitted as a Google presentation. Include a slide with a pie chart showing how your pay is divided among the various budget categories. Create slides for each area of the budget showing how much you are spending in that area and for what. Also include the information that answers the questions from the Word document for each area. Remember, this presentation is to share information, not for a group presentation. That means you can use a smaller font (no smaller than 10 point) and put more on a slide than normal. However, you still need it to appear neat and to be readable, which may cause you to use more than one slide for a category.
 * HOW TO SUBMIT YOUR WORK **

//Suggested// pages would include: Title Page that includes a pie chart of your planned spending in each of the budget areas Job/Income Savings Household Transportation Food including your menu and shopping list - probably need more than one slide for this Insurance Other (again, probably more than one slide so you can talk about all the areas) Summary Slide including a paragraph of each of these: Sources telling where you found the information if you used links other than ones given on the site. Your housing, car, etc. shoud be refernced here. Please include a screen print of the information for housing and vehicle if not on this site.
 * What did you learn from this project?
 * In which areas were you not allowed to allocate as much money as you might like?
 * What changes migh you make in career choice or other independent living choices after completing this project?

The rubric for evaluation is linked below. You should use this as a final check before submitting your work. [|PERSONAL FINANCE BUDGET RUBRIC]