Budget Project

Lesson Standards
BMA-IBT-9
Develop effective money management strategies and understand the role and functions
of financial institutions.
9.1 Develop a budget including all essential elements for personal and business use.
9.2 Compare and contrast the types of financial institutions, both depository and nondepository including the functions and purpose.
a. Commercial banks, savings and loan associations, credit unions, investment banks,
financial services companies, and insurance companies.
9.3 Examine the principles of banking transactions and the various services of a bank.
a. Item processing, collection functions, procedures, bookkeeping, loans, investments,
and trust operations.
9.4 Apply mathematical operations and processes as well as financial planning strategies
to commonly occurring situations in the workplace to accomplish job objectives and
enhance workplace performance.
9.5 Examine the features and effects of online banking including mobile banking for the
business and the consumer.
9.6 Explore a personal credit report and the impact of credit on business and personal
life.
Description
In this project the students will pick their career and budget out the lifestyles that their
careers will afford them. The students are to pick their future careers and find their
average yearly salaries. They will convert that yearly salary to a monthly paycheck to try
for one month to budget their future earnings after paying for the necessities of life.
Calculators are allowed for this project, and the help of parents, guardians, neighbors, or
anyone with real world experience is welcomed.

Step 1 Future Career and Salary

1. After the student has picked their career (not parent picked career, but scholar
picked) go the website www.salary.com
2. On the top of the site there will be a salary wizard box, the students needs to
enter their job title and zip code (they need to enter the zip code of where they
plan to live and work after college). If the scholar has not decided they can pick
something that they may be interested in, and a general job title (i.e. doctor,
lawyer, scientist) will work and they can pick the closest option.
3. Once they have completed their choice they will be given career descriptions. (If
you chose scientist, choices would be scientist 1 biotech, scientist 3 Biotech)
Pick the description that resembles the students career choice. Click on the (Free
Salary Data then View Results)
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4. The salary that the students use will be the average of the 25th and 75th
percentiles all answers are to be rounded to the nearest dollar for the project)
5. Divide the students yearly salary by 12, to find their monthly paycheck and we
can begin.

Step 2 Government Taxes

To make this project as close to being accurate as possible we are going to show them
how their paycheck gets divided.
1. If the students salary is less than or equal to $40,000 yearly they will pay 15% in
taxes.
2. If the students salary is more than $40,000 and less than $80,000 yearly, they will
pay 20% in taxes.
3. If the students salary is more than $80,000 yearly than the scholar will pay 32% in
taxes.
The taxes are to be taken from the students monthly paycheck before they spend any
money. (Government takes their money first)

Step 3 Saving
The students job is offering a 401k through the company. (401k is a saving account) So
your company will match your contributions as long as you put 6% of your after tax
dollars into the account. This offer is to good to pass up; so all students must
contribute. The students must find 6% of there after tax dollars and subtract it from
their monthly paycheck.

Step 4 Sallie Mae

To truly demonstrate the importance of working hard enough to go to a top notch college
on a scholarship we will have the students paying a student loan. This loan will be based
on the students college of choice and will be a lenient example because I will not charge
them interest. To determine their monthly student loan the student needs to go to their
desired colleges website and find the following information: A) The tuition of the
undergraduate program B) the room and board and any undergraduate fees for the
institution. (Regardless if the school is in state for the purpose of the project the student
must live on campus and pay room and board) To compute their student loan bill add all
of the undergraduate fees together (tuition, room and board and any fees) and multiply
it times four. (To represent their four year degree) Once they have their four year
undergraduate total they are to divide that by 360 to get their monthly bill. (The
students are paying their student loan on a 30 yr plan. So there are 12 monthly
payments times 30 years to give us 360 payments)
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Step 5 - Independent Students

The students have graduated from school and have secured a paying career. (Yes!) Now
they must leave the nest and purchase their own house. (For the purposes of the project
you cannot rent and must have a 30-year mortgage.)
The students are to look at remax.com and decide what type of house that they want
and how much they are going to spend.
Once they have purchased their new home divide the total price by 360. (The students
are buying their home on a 30 yr mortgage. So there are 12 monthly payments * 30
years to give us 360 payments. Our students have excellent credit, so our interest rate
for our mortgage is going to be 5%. To add the interest to their payment, the students
need to find 5% of their monthly mortgage payment. Once they find the interest they
need to add that to their payment.

Step 6 Transportation
The students have a job so now they need to find reliable transportation to commute
back and forth. The students are to go on edmunds.com and (in the new car section)
type in the type of make, model and zip code of their choice. (For the purpose of the
project the student is only allowed to buy a new car) We are going to pay for our car in 4
years, so the students need to divide their total price by 48 months. Our interest rate for
the car will be 6% so we need to add our interest payment into the car note.

Step 7 Insurance
The students are well on their way to becoming independent young adults. So now they
must purchase a car and health insurance so that they can be responsible as well. Our
car insurance premiums are as follows For cars that have a total price under $25,000 $200 per month, for cars between 25,001 - $40,000 -$300 per month, for cars over
$40,000 - $450 per month. (Students must purchase car insurance)
Our health insurance premiums are a great deal. Regardless of pre-existing conditions or
any other factors everyone pays $200 per month. (Students must purchase health
insurance)

Step 8 House Bills

We have purchased a house and now need to keep all of the utilities on. Utilities bill are
as followsElectric Bill Houses under $200,000 - $125 per month, Houses over $200,000 $275 per
month
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Water Bill houses under $200,000 - $75 per month, Houses over $200,000 $125 per
month
Gas Bill Houses under $200,00 - $120 per month, Houses over $200,000 $200 per
month
Cable Bill (Optional for Students) $150 per month

Step 9 Personal Bills

The house bills are taken care of, now our personal bills.
Cell Phone (All Students must purchase) $120
Gas Money (For your car- all students must have) $200 per month
Entertainment Fund (Going out to eat, movies, plays, sporting events, hobbies) $100 $500 per month (students option must pick price in the range)
Groceries $ 200 - $600 per month (students option must pick in the range)
Clothes $100 - $500 per month (students option must pick in the range)

Step 10- Furniture

The students have finally finished paying their bills and want to furnish their newly
purchased house. The students are to go to roomstogo.com and purchase a living
room, bedroom, and dining room set. Once they are finish subtract this from their
monthly total.

Step 11 Recap
Organize your work into a budget format. (You have the freedom to decide what that
looks like) The work should clearly display the amount that you are spending for each
step of the project. Then type three paragraphs (at least 5 sentences each) about how
you spent your money and answer the following questions. Is it worth it to work hard now
to avoid having to pay a bill for student loans? Is having a budget what you thought it
would be, do you still think paying bills is easy? Will every months budget duplicate this
first month, why or why not?