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                                RMS 8th Grade Budget Project
       For this assignment, assume that you are age 28 years old, married, and have two pre-school aged
children. Therefore, your budget is based on having to provide for a family of four. You may choose one of the
following two options for your family:
       1. One income choice and your spouse is home with your preschool children while your are at work
                                                       OR
       2. Two income choices and you must document the cost of day care for your preschool children as well
             as have two vehicles
       Whichever option you choose, you will be given financial guidelines as to the amount of money that
must be spent in each budget section (the more you earn; the more you will need to spend in each section). You
will be given a worksheet for calculations of the amounts in these sections.
       This exercise will take a bit of research. Some prices can be found by looking through the classified ads
of your local newspaper or internet (especially prices for houses, apartments, cars). Friends or family members
should be able to supply you with prices for such things as groceries, utilities, and insurance. You must
provide documentation for purchases and services (such as, day care). Paste in sample ads and bills in
spaces provided, or on the back of the page opposite the page where you show the numbers.
       Your budget grade will include neatness, accuracy, punctuality, and documentation. The final budget
copy must be completed in blue or black ink. Crossing out or use of white-out is not
acceptable. Additional worksheets will be available to insure the accuracy and neatness of      your final
product.



                                         GETTING STARTED
       As previously stated, assume that you are age 28 years old, married, and have two pre-school aged
children. In the following section, provide appropriate names, ages, and gender for your children.


Name

       Age

       Sex




                                                        1
                                                     GETTING PAID

         After selecting an occupation(s), determine the approximate amount of tax (federal and state income tax
and Social Security tax) that the employer will deduct from your income for the government. To determine your
taxes (federal and state) go to the link on Mr. Gifford’s web page.



OCCUPATION(S)
                                             ______________________________

ANNUAL INCOME(S)
                                             + ____________________________

TOTAL INCOME                                                                                 Box #1

---------------------------------------------------------------------------------------------------------------------------------------
FEDERAL INCOME TAX

STATE INCOME TAX                             +                                                 (Go to link)


TOTAL STATE & FEDERAL                                                                          Box #2

SOCIAL SECURITY TAX                          +                                                 (Multiply total income,
                                                                                               in box #1 above, by 7.65%)

TOTAL TAXES (S.S. + Box #2)                                                                    Box #3


INCOME AFTER ALL TAXES                       =                                                 (Box #1 – Box #3)

MONTHLY INCOME                                                                                 (Divide INCOME AFTER
                                                                                                  ALL TAXES by 12)



                                  *Enter at (1) in "Your Monthly Budget" on page 12




                                                                   2
                         HOW MUCH SHOULD I SPEND?

Complete this worksheet to determine approximate spending guidelines.

Enter Monthly Income Here:                   Least %      Least $       Most %   Most $

Housing                                          20%                     35%

Utilities                                        4%                      7%

Transportation                                   6%                      20%

Clothing                                         3%                      10%

Food                                             15%                     30%

Entertainment                                    2%                      6%

Furnishings                                      1%                      4%

Health Insurance                                 3%                      10%

Child Care*                                      1%                      20%

Misc (Newspaper, magazines, donations)           1%                      4%

Savings                                          1%                      10%

Emergency Fund                                   5%                      ??



                     NOTE: These are estimates based on averages.
                        Notice they do NOT add up to 100%.
                       Use these numbers as a guideline only.




                                             3
                                                HOUSING
       Housing will probably be your biggest single expense. To help you determine housing costs, let's
compare monthly rental payments and the costs for purchasing a house. Then you can select one or the other.
When selecting housing, whether renting or purchasing, your only requirements are: 1) it must be located
within the Watertown Unified School District, and 2) it must be a minimum of 2 bedrooms.


RENTAL
       Check the "Apartments for Rent" or "Homes for Rent" section of the classified ads in the Watertown
Daily Times or use the internet. Compare features and prices before selecting two you think you would like.
Remember to consult your guidelines worksheet to determine what you can afford.
       On the back of this page, paste the two classified ads offering housing that might be suitable. Circle or
highlight the monthly payment listed.



PURCHASE
       A house of your own is usually more expensive than a rental. However, houses offer many advantages,
such as having a home of your own, tax benefits, and a long-term investment. Check the "Homes for Sale"
section of the classified ads in the Watertown Daily Times or use the internet. Compare features and prices
before selecting two you think you would like. Again, remember to consult your guidelines worksheet to
determine what you can afford. Attach to the back of this page the two classified ads offering housing that
might be suitable. Circle or highlight the monthly payment listed.


FINANCING
           Houses are very expensive items today. You will need to borrow most of the money from a financial
institution to make a purchase. This loan is called a mortgage. You will also need a down payment. This is
usually about ten percent of the purchase price which you must save for in advance. The bank will pay the
seller the full price of the house, minus the down payment. You in turn must pay the bank monthly for a period
of years. It often takes 30 years for a house loan to be repaid. The bank will charge you a fee known as interest
for lending you its money. The bank does not calculate mortgage payments using simple interest, but a method
called amortization. The following amortization rates will be used for this project.
Rate of Interest         Amount paid per $1,000         Rate of Interest           Amount paid per $1,000
       6%                 $5.75 for each $1,000             7-1/4%                 $6.70 for each $1,000
       6-1/4%             $5.94 for each $1,000             7-1/2%                 $6.89 for each $1,000
       6-1/2%             $6.13 for each $1,000             7-3/4%                 $7.08 for each $1,000
       6-3/4%             $6.32 for each $1,000             8%                     $7.27 for each $1,000
       7%                 $6.51 for each $1,000

                                                        4
MORTGAGE CALCULATION (Enter your spending range: __________ to __________)

                           MORTGAGE PAYMENT                                    Enter Data Here
  1     Enter the purchase Price of House
  2     Down Payment (10% of price)
  3     Amount of Loan (line 1 minus line 2)
  4     Amount of Loan in thousands (line 3 divided by 1000)
  5     Amortization Rate (from list on previous page)
  6     MONTHLY PAYMENT (line 4 times line 5)

PROPERTY TAX CALCULATION
       Every state collects property taxes from homeowners. Property tax is based on the assessed value of the
property. Assessed value refers to the amount the state thinks your house is worth. Since you will not know
what the assessed value of the house is, use the purchase price to estimate your property taxes.


                               PROPERTY TAX                                     Enter Data Here
  1     Enter the Purchase Price of House
  2     Price of House (in thousands - line 1 divided by 1000)
  3     Tax Rate (by County - given by teacher)
  4     Yearly Tax (line 2 times line 3)
  5     MONTHLY PROPERTY TAX (line 4 divided by 12)

PERSONAL PROPERTY INSURANCE CALCULATION
        When you get a home loan, the bank will require you to have homeowner's insurance.

                       HOMEOWNER'S INSURANCE                                    Enter Data Here
  1     Enter the purchase Price of House
  2     Enter Total Annual Income (page 2)
  3     Total Amount Insured (line 1 plus line 2)
  4     Yearly Insurance Premium (line 3 times .00293)
  5     MONTHLY PREMIUM (line 4 divided by 12)


                          RENTER'S INSURANCE                                    Enter Data Here
  6     Enter Total Annual Income (page 2)
  7     Yearly Insurance Premium (line 6 times .00293)
  8     MONTHLY PREMIUM (line 7 divided by 12)

                                                      5
OTHER HOUSING EXPENSES (Utilities)
    If you choose to buy a house, or if the ad for the apartment you chose did not say "utilities included,"
add the utilities listed below. You will need to get the actual monthly bills from your parent/guardian.


                         HOUSEHOLD UTILITIES                            Enter Data Here
   1      Gas (WE – Wisconsin Electric)
   2      Electricity (WE – Wisconsin Electric)
   3      Water & Sewer (from the city of Watertown)
   4      Telephone (can be cell or landline)
   5      Cable (or dish)
   6      * Internet (optional)
   7      TOTAL UTILITIES (add lines 1+2+3+4+5+6)


TOTAL MONTHLY HOUSING EXPENSES


        HOUSING & UTILITY EXPENSES (Purchase)                               Enter Data Here
   1    Monthly Payment (page 5, first chart, line 6)
   2    Monthly Property Tax (page 5, second chart, line 5)
   3    Insurance Premium (page 5, third chart, line 5)
   4    Total Utilities (line 7 above)
        TOTAL HOUSING EXPENSES (add lines 1+2+3+4)



        HOUSING & UTILITY EXPENSES (Rental)                                 Enter Data Here
   1    Monthly Payment (from Ad)
   2    Insurance Premium (page 5, third chart, line 8)
   3    Total Utilities (line 7 above)
        TOTAL HOUSING EXPENSES (add lines 1+2+3)

* Which ever you choose to do, enter this total on line (2) in "Your Monthly Budget" on page 12,
                             after it has corrected and approved by your teacher.
On a separate page, explain whether you will choose to purchase a home or rent an apartment or house. Be sure
to include specific reasons for your choice, which must include the following: price, equity, size, location, and
benefits. (minimum of five (5) complete sentences)


                                                        6
                                       TRANSPORTATION
           Cars are also very expensive items today. Like your home, you will need to borrow most of the
money from a financial institution to make a purchase. You will again need a down payment of ten percent and
the bank will again charge you interest.
       Check the "Automobiles for Sale” section of the classified ads in the Watertown Daily Times or use the
internet. Compare features and prices before selecting two you think you would like, keeping in mind you are a
family of four. Also, if you have selected two incomes, you must purchase two different vehicles. Remember
to consult your guidelines worksheet to determine what you can afford.
       On the back of this page, paste the two classified ads offering vehicles that might be suitable. Circle or
highlight the price.


FINANCING                                  (Enter your spending range: _____________ to _____________)

                      Model Year                                     Interest Rate                Years
 New Vehicles - 2010, 2011                                               6.00%                      3
 New Vehicles - 2010, 2011                                               6.50%                      5
 2008, 2009                                                              7.00%                      4
 2006, 2007                                                              7.50%                      3
 2004, 2005                                                              8.00%                       3
 2002, 2003                                                              8.50%                       3


        AUTOMOBILE LOAN CALCULATION                               Enter Data Here #1       Enter Data Here #2
  1     Enter purchase Price of Vehicle
  2     Enter the year of each vehicle
  3     Down Payment (10% of price)
  4     Amount of Loan (line 1 minus line 3)
  5     Enter Length of Loan in Years (from chart above)
  6     Enter Interest Rate (from chart above)
  7     Amortization Rate (.5)
  8     Total Interest Amount (multiply lines 4x5x6x7)
  9     TOTAL LOAN (add lines 4+8))
 10     Length of Loan in Months (multiply line 5 x 12)
        MONTHLY LOAN PAYMENT
 11     (divide line 9 by line 10)




                                                        7
OTHER VEHICLE EXPENSES
Maintenance
Every car needs tune-ups, oil and filter changes, and a certain amount of regular maintenance. Tires wear out,
and the life of a battery is about three to five years. All these things add to the cost of driving a car. Such costs
vary with the size and the complexity of the car. Nevertheless, you can get a rough average by knowing how
many cylinders a car's engine has. Choose a monthly average for your car from the list that follows:
4 cylinder engine = $25/ month, 6 cylinder engine = $30/ month, 8 cylinder engine = $35/ month
Cost per month: Car #1                            Car #2


Insurance
Yearly car expenses also include insurance. Some internet sites to aid completion of this section are:
        http://www.esurance.com             http://www.geico.com          http://www.progressive.com
Cost per month: Car #1                              Car #2


License Fee
To find your annual automobile license fee, go to:
http://www.dot.wisconsin.gov/drivers/vehicles/veh-fees.htm Divide this cost by 12 to get the
cost per month: Car #1                             Car #2

Fuel Costs
To find your vehicle’s fuel efficiency (mpg), go to:
       http://www.fueleconomy.gov

                            Fuel Cost                              Enter Data Here #1        Enter Data Here #2
 1    Miles Driven per month (average)                                    1000                       1000
 2    Find your car on web site and enter MPG
 3    Total gallons of gas/month (divide line 1 by line 2)
 4    Average price/gallon of gas (given to you)
 5    Monthly Fuel Cost (multiply line 3X4)


TOTAL MONTHLY TRANSPORTATION EXPENSES


              TOTAL TRANSPORTATION COSTS                            Enter Data Here #1       Enter Data Here #2
  1    Loan (page 7, line 11)
  2    Maintenance (above)
  3    Insurance (above)
  4    License (above)
  5    Fuel (line 5, above)
  6    Monthly Total (add lines 1+2+3+4+5)
       TOTAL TRANSPORTATION (all vehicles)

                                                          8
                              *Enter at (3) in "Your Monthly Budget" on page 12

                                              CLOTHING
You're probably already familiar with the cost of clothes--at least for yourself. At age 28, however, your
wardrobe will have to suit your job. If your work demands it, you may need to buy suits instead of blue jeans
and dress shoes instead of tennis shoes. And, if you choose to have children, they will need clothes too.
Assume, for the purpose of this exercise, that you already have a basic wardrobe, you only need to replace items
or purchase new clothes that you want. Remember to consult your guidelines worksheet on page 3 to determine
what you can afford. You must spend the minimum amount.

To find your monthly clothing costs, complete the chart.
(Enter your spending range: __________ to __________)

      CLOTHING EXPENSE CALCULATION                                  ITEM                          COST
  1   Yourself
  2   Spouse
  3   Child #1
  4   Child #2
  5   Other
  6   Other
  7   Other
      TOTAL CLOTHING EXPENSE
      (add all items above)

                              *Enter at (4) in "Your Monthly Budget" on page 12


                                                   FOOD
(Enter your spending range: __________ to __________)

      GROCERY EXPENSES                                                     Enter Data Here
  1   Total Food Bill (from grocery list)
  2   Food Stamps (qualifying families only)
      TOTAL GROCERY EXPENSES (line 1 minus line 2)


                              *Enter at (5) in "Your Monthly Budget" on page 12




                                                        9
                                          ENTERTAINMENT
Life would be dull if you could only spend money on things that are absolutely necessary. In this section you
are to select activities or hobbies that you would like to do for FUN. Remember to consult your guidelines
worksheet on page 3 to determine what you can afford. You must spend the minimum amount.
(Enter your spending range: __________ to __________)

              ENTERTAINMENT EXPENSES                                               Enter Data Here
      1       Movies or Concerts, etc.
      2       Family/Children’s Membership
      3       Hobbies
      4       Restaurants
      5       Vacation
      6       Other
              TOTAL ENTERTAINMENT EXPENSES
      7       (add lines 1+2+3+4+5+6)

                               *Enter at (6) in "Your Monthly Budget" on page 12



                                             FURNISHINGS
          You will probably need to buy some items for your apartment, house, or yard. Assume for this
exercise that you already have some basic furniture and furnishings. This budget category should also carry
some emergency funds to cover unexpected repairs. Remember to consult your guidelines worksheet on
page 3 to determine what you can afford. You must spend the minimum amount.
(Enter your spending range: __________ to __________)


                          FURNISHING EXPENSES                                      Enter Data Here
  1       Monthly Income
  2       5% of Monthly Income for Emergencies (line 1X.05 or go to page 3)
  3       Cost of Household Item
  4       TOTAL FURNISHING EXPENSES (add line 2 + 3)


                               *Enter at (7) in "Your Monthly Budget" on page 12



                                                         10
                                            HEALTH CARE
       Most health care costs are paid by employers as benefits, or "extras", above and beyond wages.
However there are still things left you'll have to pay for yourself. If health benefits are provided by your
employer, provide documentation.
(Enter your spending range: __________ to __________)

                            HEALTH CARE EXPENSES                                      Enter Data Here
   1     Enter Premium Payment (per month)
   2     Yearly Premium (multiply line 1X12)
   3     Enter Deductible (per year)
   4     Enter Co-Pay (per visit)
   5     Yearly Co-Payment (multiply line 4X4)
   6     Total Yearly Costs (add lines 2 + 3 + 5))
         TOTAL HEALTH CARE EXPENSE (divide line 6 by 12)
                             *Enter at (8) in "Your Monthly Budget" on page 12


                                              CHILD CARE
       If you and your spouse work and have any pre-school age children, they will need child care. You will
also need to estimate the cost of babysitters for times when you would like to go out alone. Such times should
be added to your total child care costs. To make your estimate, you can check with local daycare facilities to get
sample costs. Be sure to include documentation.
(Enter your spending range: __________ to __________)

                      CHILD CARE EXPENSES                              Enter Data Here
  1     Enter Number of Daycare Hours (per month)                            160
        Name of day care center:
  2     Cost per hour (remember, you have 2 kids)
  3     Daycare Cost (per month)
  4     Enter Number of Babysitting Hours (per month)
  5     Cost per hour                                                       $5.00
  6     Babysitting Cost (per month)
  7     TOTAL CHILDCARE EXPENSE (add line3+line 6)
                             *Enter at (9) in "Your Monthly Budget" on page 12

                                                         11
                             YOUR MONTHLY BUDGET
       To determine your total monthly expenses, use the lines you see here to record the amount you arrived at
for each preceding numbered section. Adding up all these figures will give you the total amount you can
expect to spend in a month, according to your budget.

     MONTHLY TOTALS                                                                   Enter Data Here
 1   Income (page 2)
 2   Housing Expenses (page 6)
 3   Transportation Expenses (page 8)
 4   Clothing Expenses (page 9)
 5   Food Expenses (page 9)
 6   Entertainment Expenses (page 10)
 7   Furnishing Expenses (page 10)
 8   Health Insurance Expense (page 11)
 9   Child Care* (required only if two incomes – page 11)
10   Misc. (Newspaper, magazines, donation to charity)
11   TOTAL MONTHLY EXPENSES (add lines 2+3+4+5+6+7+8+9+10)
12   Savings (subtract line 1 minus line 11, minimum of 1% of line 1)             *


                CHECKING ACCOUNT RECORD
 Check                  Description of Transaction                Debt
Number Date               (to whom or for what)                 Payment         Deposit           Balance




                                                                                              *

                                                      12
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