Objectives: Students will demonstrate skills for managing finances. Procedures: This project contains three parts: Personal Money Management, Managing Business Finances, and Preparations for New Business Startup. Each of these lessons is attached. Print the attachments. Discuss personal finances such as budgeting, money management, spending habits, and checking accounts with students. Give each student a copy of activities one and two and have them complete the activities as directed. Give each student a copy of the Managing Business Finances project. Show students how to use each of the formulas and show them examples of how calculate the payroll. Have each student construct and calculate the payroll for their business. (this can be done individually or in groups) Give each student a copy of the Preparations for New Business Startup. Discuss with students the procedures for acquiring financing for a new business and review basic financing concepts. Have students complete the eight assignments related to starting a new business. PERSONAL MONEY MANAGEMENT Objectives: Students will be able to understand the relationship between lifestyle and money management. They will learn suggestions for budgeting, and review how to use a checking account. Materials: worksheets for Activities 1 and 2 Lesson Plan Tell students: "Today we are going to think about something that some people enjoy very much: spending money. How many of you enjoy spending money? I think most people do. But we have to do more than just spend money. We have to plan our spending, or manage our money; as it is called. Whenever you get a job, your income increases, and as you get older, your expenses will too. Detailed planning is required so that you will have enough money to pay your bills and take care of your responsibilities. Different families have different ways of managing money and other assets. Family budgets depend on the family's chosen lifestyle and vice versa. If you live an expensive and lavish lifestyle, you'll need more financial resources to budget. If you live a more modest lifestyle, you'll find it will be easier for you to prepare a sufficient budget and still have some money left over for savings. Many families live beneath their means in order to save generous ly for the future. But families don't always have time to teach family members everything that they need to know about money management. Activity 1: Give each student a Joe's Budget and Monthly Expenses worksheet. Divide the class into groups of three or four students and ask them to share with members of their group how they plan their personal spending. After a few minutes, ask them to review the case study about Joe on the worksheet. Ask them to prepare a budget based on the information provided on the worksheet. When students are finished, ask each group to share their solutions with the class. Next, ask students to work independently and complete the Monthly Expenses section for themselves. Ask students to discuss their answers when they are finished and tell whether they think that the budget would work. Activity 2: Give each student a Tips for a Checking Account worksheet. Ask students whether they have a bank account of their own. Ask how many students have savings accounts and how many have checking accounts. Have them discuss the difference between savings and checking accounts. Ask students o read and discuss the suggestions on the top of the Tips for a Checking Account worksheet. Review the sample check and bank deposit slip, and discuss the features that are noted. Remind students of the responsibility required for maintaining a checking account. In addition, give information to students about electronic banking transfers, automated teller machines, debit cards, account information retrieva l systems by telephone and on- line, and other advances in banking technology. ACTIVITY 1 Read the case study below. Use the information to complete the one month budget. Joe works as a clerk. His take-home salary is $1175 a month. Joe has the following fixed expenses each month. Living Expenses: Rent $450 Electricity 75 Telephone 60 Transportation: Car Payment 205 Gas 100 Total fixed expenses: $890 Joe goes to the movies every weekend. It costs him $10.50 for the movie and popcorn. Joe eats out a lot. He spends about $12.00 a day on fast food. He buys clothes if he has the money. He does not plan for clothing expenses. Joe would like to save some money to buy a DVD player. The DVD player he wants costs $268.00. How would you help Joe budget his money? Us the following form to plan a one-month budget for Joe. Month: Income this month: Item Budget Amount Food Clothes Living costs: Rent Electricity Transportation Personal Items Recreation Savings Total Monthly Expenses Your monthly take-home pay is $1,200. List essential expenses, their percentage of the budget, and the dollar cost of the item. How much do you spend in all? Monthly Pay = $1,200 Expenses Percent Cost in $ (% x $1,200) 1. Housing/rent 25% $300 (25% of $1,200) 2. 3. 4. 5. 6. ____________Total $ Expenses What is your monthly balance? Monthly Balance Pay minus expenses equals balance $1.200 - _____________ = _________________________ Pay Total expenses Balance Do you have enough money to make it through the month? My notes about this lesson: Activity 2 Tips for a Checking Account 1. Treat your checks as you would cash. Keep them as safe and secure as possible. 2. Don’t make changes on the face of a check that’s issued to you. Don’t take a check that looks as if it has been altered. The bank may refuse to honor such checks. 3. Avoid carrying checks made out to “Cash.” If they are lost or stolen, you have no control over who can cash them. 4. For the same reason, never sign your personal check until you have filled in the amount and the payee. 5. Check all deposit slips to be sure they are legible and correct. If you are receiving cash back from the deposit, count your money carefully to see that it is the correct amount. Do both of these things before you leave the bank. 6. Always inspect new check orders for accuracy. Check the spelling of your name, address, and phone number. Also be sure that your account number is properly encoded. Immediately report any errors to the bank. 7. If you do not understand a checking procedure, ask someone who works at your bank to explain it to you. MANAGING BUSINESS FINANCES OBJECTIVES After completing this project, you will be able to do the following: 1. Compute gross pay for hourly and salaried workers 2. Calculate gross pay for regular and overtime wages 3. Calculate net pay, fringe benefits and commission 4. Evaluate the difference between net pay and gross pay INSTRUCTIONS 1. Read the following definitions and formulas. 2. Memorize them and make sure you know how to make the calculations. HOURLY PAY For some jobs, you are paid a fixed amount of money for each hour you work. Your hourly rate is the amount of money you earn per hour. Straight-Time pay is the total amount of money you earn for a pay period at the hourly rate. Straight-Time Pay = Hourly Rate X Hours Worked OVERTIME PAY When you work more than your regular hours, you may receive overtime pay. The overtime rate may be 1 ½ times your regular hourly rate. This is called time and a half. You may receive double time, 2 times your regular hourly rate, for overtime on Sundays or holidays. Overtime Pay = (Overtime Rate X Hourly Rate) X Overtime Hours Worked Total Pay = Straight-Time Pay + Overtime Pay SALARY A salary is a fixed amount of money that you earn on a regular basis. Your salary may be paid weekly, biweekly, semi monthly or monthly. Your annual salary is the total salary you earn during a year. There are 52 weekly, 26 biweekly, 24 semimonthly, and 12 monthly pay periods per year. Salary per Pay Period = Annual Salary / Number of Periods per Year COMMISSION A commission is an amount of money that you are paid for selling a product or service. Your commission rate may be a specified amount of money for each sale or it may be a percent of the total value of your sales. If the commission is the only pay you receive, you work on straight commission. Commission = Total Sales X Commission Rate Gross Pay = Salary + Commission NET INCOME Gross pay is the total amount of money you earn. Out of your gross pay employers withhold money for federal, state social security, and Medicare taxes. These deductions from your gross pay result in your net pay. Net Income = Gross Pay – Deductions EMPLOYEE BENEFITS Your business may offer several fringe benefits. Fringe benefits include health and dental insurance, life insurance, pensions, paid vacations, and holidays, unemployment insurance and sick leave. To compute the value of the benefits, first calculate the pay per week. INSTRUCTIONS CONTINUED: 1. You are employed in the payroll department at Hampton Computer, Inc. This is a company that sells microcomputers and related equipment and supplies. Your present job title is microcomputer specialist. Your immediate supervisor is Mona Jackson, accounting manager. Lavonne Barnes, a payroll clerk, asks you to develop a spreadsheet and formulas needed to compute the payroll. 2. Using Microsoft Excel, create a payroll spreadsheet using at least ten employee names, give each employee an ID number, hours worked, and pay rate (make up this information). Write a formula that will calculate gross pay for each employee. Label the cells appropriately. 3. After computing the gross pay, calculate Social Security withholdings at 6%, Medicare at 1.5% and Insurance at 3.6%. Write a formula that will calculate net pay. 4. Choose three employees who worked 5 hours over time. Insert 2 columns into the spreadsheet for overtime hours and overtime pay. The company rate for overtime is 1.5. After inserting columns you may need to edit some formulas. 5. Print the spreadsheet with the formulas showing. 6. Compare the following jobs. Using an Excel spreadsheet calculate which job has the best benefit package and which job has the most attractive pay with the benefits included. Annual salary is $30, 680, 2 weeks paid vacation, and health insurance paid by the company is 3.6%. Annual salary is $31,500, 2 weeks paid vacation, the company pays part of the health insurance and the employee pays a premium of $800.00 per year. PREPARATONS FOR NEW BUSINESS STARTUP Objectives: The student will improve decision-making skills in Business Financing. Procedures: Discuss the overall procedures with the students to give them a global understanding of the assignment: students are to select a business they would like to start; apply for a business loan to finance their business startup; and complete other assignments related to business startup. Review basic financing concepts with students. Provide students with several interest rates and mortgage terms. Have students develop a presentation to give in front of the class in which they describe the business they want to finance and the financing package they would like to get from the bank. OR The banker (the teacher) can interview the students using standard questions to determine the financing options. Review the basis upon which banks award loans. Have the students complete the awarding assignment. Give them a definite amount of available bank money so that they will be able to award four or five loans. Use the additional assignments to have students complete other future business startup-related activities. Assignment 1: FINANCING YOUR OWN BUSINESS The bank has several loan types that you may be able to use to benefit the payment schedule that will serve your purpose: A 15 year loan with a fixed interest rate of 13% for the life of the loan. A variable rate loan for the first 5 years at 8% and renegotiate during the 5 th year. A balloon payment calculated over a 20-year period. The interest rate is 10%. Set your monthly payments low, as you are starting with an unsure monthly payment. The balance due on the loan will all be due the last payment. Plan on borrowing $100,000. Calculate your monthly payment with each of these options. Choose the option you want and be prepared to defend your decision. Assignment 2: DEVELOP A BUSINESS LOGO Prepare a logo for your business. You will use this graphic design on your letterhead. You will also need to develop a slogan for your business. Start designing your letterhead. Consider what information should be on a letterhead to be an effective piece to represent your business. Assignment 3: NEWSPAPER AD Keep in mind that you will be hiring employees soon. Develop an ad for the newspaper to hire the people you need for your business. Assignment 4: EMPLOYMENT INTERVIEW Make a list of all the questions you will ask during your interview with potential employees. Assignment 5: PLANT LAYOUT Design a plant layout of your business showing how you will place your business inside the building, traffic patterns in and out of your major areas, location of your cash registers, your display counters, your inventory, etc. Assignment 6: FOOD INDUSTRY ASSIGNMENT Those of you in the food industry, develop a menu of your food items. The menu must go to the printer and be back by opening day of the business. Set I your prices, design the pages, and come up with an attractive arrangement for your menus. Assignment 7: RETAILING ASSIGNMENT Those of you who are selling items, prepare a price list of all your products. Develop an invoice that will have your logo/slogans, etc.
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