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					 TITLE:                           Introduction to Income vs. Expenses
 UNIT:                            7.5 - Income vs. Expenses
 GRADE LEVEL(S):                  7
 DURATION:                        50 minutes
 PILLAR/LEVEL:                    Career/Financial Readiness – Understand
                                                                                            ramp-up to
                                                                                     READINESS               TM




Goal:
   Students understand that succeeding in a high-skill career is often the only path to a middle or upper-
   income lifestyle and the basics of budgeting and borrowing.

Learning Objectives:
    Students will learn the keys to financial success
    Students will understand how education level affects annual income
    Students will know the importance of strategic budgeting
    Students will be able to compare income vs. expenses

Resources for this Lesson:
    Pre and Post-Test
    Power Point: 7th Income vs. Expenses 1

Procedures:
   Opening:
      1. Slide 1: Opening
             a. Explain that we are starting a unit which will help students understand the importance of
                 matching income based on education level and expenses, as well as the keys to borrowing
                 and budgeting.
      2. Slide 2: Pre-Test
             a. Students record their answers to the pre-test questions on their own paper.
      3. Screen #3, Share objectives:
             a. Explain the objectives of this lesson
             b. Students will learn the keys to financial success
             c. We will review how education level affects annual income
             d. Students will be introduced to the importance of strategic budgeting
             e. We will compare income vs. expenses

   Lesson:
       1. Slide 4: Good Annual Income
              a. Explain that education is the top determiner of your income
              b. Discuss how the average American changes careers 5 times
              c. Describe that when you have a good education you
                      i. Become more marketable when changing careers
                     ii. Have a better chance for promotion, which increases your income
              d. Stress to the students that they should know
                      i. Income by education level statistics
2. Slide 5: Income by Education Level
       a. Point out the how income rises when a person obtains more education
                 i. Stress the income levels for an Associate’s, Bachelor’s and Master’s degree
3. Slide 6: Strategic Budgeting
       a. Emphasize again that many people spend more money than they earn
       b. Describe how a budget helps you live within your income
       c. Discuss how financial problems are often a major factor in
                 i. High levels of stress
                ii. Marital and family problems
               iii. Disease and illness
       d. Explain that students will learn the keys to a budget based on
                 i. Income vs. Expenses
4. Slide 7: Avg. Expenses: Necessities
       a. Describe how this chart maps out the expenses for the necessities for a family of four
                 i. The lowest average expenses is in Casper, Wyoming at $2,600 a month and $31,200
                    a year
                ii. The highest average expenses is in Boston, Massachusetts at $5,500 a month and
                    $66,000 a year
               iii. The average expenses are $4,700 a month in Minneapolis and $56,400 a year
5. Slide 8: Income vs. Expenses
       a. Explain how the two charts on the screen compare income vs. expenses
       b. Review how the chart on the left shows how income increases by education level
       c. Review how the chart on the right details expenses for a family of four
6. Slide 9: Income vs. Expenses
       a. Emphasize that the average costs are only for necessities
                 i. Explain that the necessities costs are $4,700 a month and $56,400 a year for a family
                    of four in Minneapolis
       b. Explain how this includes expenses for
                 i. House payments, medical insurance, car payments, food
                ii. Heating, air conditioning, electricity, water, school supplies
       c. Explain how this does not include expenses for
                 i. Cable TV, restaurants, internet, sports activities
                ii. Movie tickets, cell phones, music downloads, etc.
7. Slide 10: Income vs. Expenses
       a. Ask students to work individually on the bullets on this screen
       b. What annual income does a family of four need?
                 i. The students can calculate $4,700 * 12 = $56,400 a year
       c. If only one parent works
                 i. How much education will they need to cover expenses?
                        1. A Master’s degree: $67,300 a year
8. Slide 11: Metro Area: Child Care Costs
       a. Explain that this chart shows the average annual cost for child care in a metro area
                 i. The annual cost for an infant is $8,150
                ii. The annual cost for a pre-school aged child is $6,500
               iii. The annual cost for a school-aged child is $5,100
9. Slide 12: Child Care vs. Income
       a. Explain that child care costs often take up much of the salary of a high school graduate
       b. Ask students to calculate the following problems individually
           c. What would be the annual cost for child care if a family has an infant and a pre-school age
               child?
                     i. $8,150 + $6,500 = $14,650
           d. If a high school graduate earns $30,000 a year, how much would they pay in taxes at a 20%
               rate? (explain that this tax rate includes income and sales tax)
                     i. $30,000 * .20 = $6,000
           e. What is the difference between the child care cost and high school graduate income after
               taxes?
                     i. $24,000 - $14,650 = $9,350
           f. Discuss how a net income of $9,350 is problematic for a single parent or two parents with
               just a high school degree.
   10. Slide 13: Postsecondary Plan
           a. Explain that the sample student has selected “Auto Mechanic” as one of their careers of
               interest.
                     i. The average annual salary for a registered nurse is $56,000
           b. The education required for an auto mechanic is an associate’s degree
                     i. The sample student selected Anoka Technical College as their best postsecondary
                        option for a registered nurse
           c. Emphasize how this salary more closely corresponds with the costs associated with a family
               of four.
   11. Slide 14: Pick a Partner
           a. Ask students to pick a partner to discuss the following questions
                     i. What type of family do you envision yourself having as an adult?
                    ii. What type of education do you plan on obtaining?
                   iii. How will your education level help you meet your financial needs?
   12. Slide 15: Classroom Discussion
           a. Lead a classroom discussion for the following questions
                     i. What type of a family do you envision yourself having as an adult?
                    ii. What type of education do you plan on obtaining?
                   iii. How will your education level help you meet your financial needs?
   13. Slide 16: Post-Test
           a. Ask the students to turn over the paper with their pre-test answers.
           b. Have the student write answers for the three post-test questions.

Closing:
    1. Slide 17: Review
           a. Instruct students that what we want them to remember from today is
                    i. The two keys to financial success
                           1. Make a good annual income
                           2. Strategic budgeting
                   ii. What is the average annual income for a high school dropout?
                           1. $19,300
                  iii. For a family of four in Minneapolis, what are the average annual costs for their
                       necessities?
                           1. $56,400
  Assessment
 What are the two keys to financial success?
 What is the average annual income for a high school dropout?
      For a family of four in Minneapolis, what are the average costs for their necessities?

Family/Community Connections
    Students share their answers from the post-test with their parents.
    Parents share what they think are the keys to financial success.

Differentiation
     Students that have expertise about income vs. expenses
           o Can explore budgeting websites on the internet individually
                    Students will provide a written report on how they use budgeting as a teenager.
           o The counselor or teacher will work one-on-one or in groups to review the major points of the
               lessons.

Supplemental Resources
    Website – “Education.com” http://www.education.com/reference/article/post-secondary-options-
      career-advice/
    Website – “Mapping Your Future” http://mappingyourfuture.org/
    Book – Bowles, R. (2008). “What Color Is Your Parachute for Teens, 2nd Edition: Discovering Yourself,
      Defining Your Future”

				
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