Paycheck Information Annual Salary Taxes (Federal, State, Social Security, Medicare, Etc.) Retirement (as a %) Insurance (Health, Dental, Vision, Disability as a %) Total Annual Deductions (%) Total Annual Deductions ($) Monthly Take Home Pay Monthly Budget Rent Utilities (Power, Phone, Cable, Internet) Auto Payment Auto Expenses (Insurance, Maint, Gas) Debt (Credit Card, Student Loan, Etc) Food (Grocery Store Only) Entertainment (Eating Out, Movies, Etc) Shopping (Wal-Mart, Mall, Best Buy, Etc) Savings (plan to save 10% a month for emergency fund) Other (Medication, Home Furnishings, Donations, Etc) Monthly Total Difference from Pay
25.0% 6.0% 2.0% 33.0% -
Loan Information Principal (Loan Amount) Term (Years) Interest Rate Monthly Payment Total Interest Paid Total Paid for Item
Instructions for Faculty
1) Divide students into groups of 4-5. Have them list things they currently spend money on. Try to encourage them to categorize these (entertainment, food, bills, etc). Bring students together and list items on the board as a class. Ask them how their expenses might change after graduation. What additional expenses might they have (rent, car, student loans, etc). List these on the board also. 2) Work through the top part of the Paycheck Info worksheet. Discuss taxes, insurance, retirement. Use a salary in the mid-high twenties. Break them back up into their groups and have them budget the expenses you wrote on the board in step 1 using the new Paycheck info.
3) Bring the class back together and come to a consensus about a class budget (there will be much dissent here, emphasize these are generalities). You can use the Budget under Paycheck Information, it will do the basic math for you as you add numbers. Feel free to change these as often as you want, the formulas will recalculate automatically. Talk about decision making. For example: Do you need a roommate? Can you afford to eat out so much? Do you need a brand new car? Are you realistic about car expenses (which are often $200+ a month)? AreMoveaccounting for all the little stuff thatDiscuss theThis isbasic a good time to discuss that they should 4) you onto the Loan Information page. adds up? three also parts to any loan (principal, interest, term). Discuss what students can do to effect how much interest they will pay for loans (i.e.,.............). Emphasize responsible credit card use and loan payment schedules. Estimate a car loan (5 year loan at 6% for $20,000 dollars works well). Then estimate the same loan with double the interest rate. Notice monthly changes and changes in total interest. Now try a home loan (30 year mortgage, 6%, 150k works well). Now double the interest rate. The change over the life of the loan will be drastic. Drive homefor many of the students in the class. 5) Conclude by discussing how these are generalizations, but will hold true the point of good credit!!! Provide information but avoid giving advice. Tell them to discuss these things with a family member or someone they feel is knowledgeable with financial issues. Be sure they understand that their credit decisions now will affect them for a long time to come. Personal examples work very well to make this point.