The REAL Game of Life
In this real life simulation, you will create a monthly budget, showing income earned from an imaginary job versus estimated monthly expenses (such as food, rent, transportation, etc.). If your expenses exceed your income, you will need to determine where to cut back your monthly expenses in order to “make ends meet.” You may even “encounter” unexpected monthly expenses that will force you to adjust your monthly budget.
Step 1—Your gross income
First, you must decide what type of job you will have.
1. Assume that you are at least one year out of high school, community college, or college, which ever is the highest level of education you intend to obtain.
2. Decide which career you will choose. (Remember, for example, if you plan to be a doctor, you will be in your first year of residency, and your income will be significantly lower than when you have your own practice.)
3. Go to the following website, and research the beginning salary/wages for your career:
http://www.bls.gov/oco/home.htm
4. Click on the search button in the right hand corner of the website. For example, if you want to be a teacher, you would proceed as follows:
a. Click on OOH/Search.
b. In the next screen, type in “teacher” in the search box.
c. Choose #3 on the next screen.
d. At the top of the next screen, click on “Earnings.”
e. In the paragraph, you will learn that the average salary for a starting teacher in the U.S. is $30,719. (This is probably a little high for N.C. teachers.)
f. Write a brief paragraph about your career—why you chose it, etc.
5. Find the starting salary/wages for the career you have chosen.
a. My career choice:
b. My starting salary:
Step 2—Taxes
In our previous unit on taxes, we learned that we do not take home our gross pay. The next step is to calculate your federal, state, and FICA/Medicare taxes.
1. federal income tax Go to the following website to determine how much you will take home.
a. http://www.paycheckcity.com/netpaycalc/netpaycalculator.asp
2. Enter in 2008 and North Carolina at the top (if that is where you plan on living). Enter in the annual gross pay from step 1, select annually and select annually again for pay frequency to avoid further calculation. Assume that you are single, and claim yourself as an allowance. Scroll down to the bottom and click “calculate”. Record the results below
a. My federal (withholding) income tax :
b. My Social Security tax is:
c. My Medicare tax is:
d. My state (North Carolina or the state you think you will be living in) income tax:
e. My Annual Net Pay:
Step 3—Find a Place to Live!
Now that you are on your own, you must find a place to live! More than likely, since this is the first time you are really on your own, you will rent an apartment.
1. Assume, for purposes of this project, that you will live and work in the Triangle.
2. Go to the following websites and search for an apartment. (If you think you will have a roommate, divide the monthly cost accordingly.)
a. http://www.triangle.com/rentals/
Click on the specific models to see its included amenities.
b. My apartment cost=Monthly rental/# of renters=
3. Are utilities included in the rental rate? If so, which ones:
______Electricity
______Water
______Trash Pickup
______Cable/Satellite
______Internet
a. Add the following (per person) for every item not included in rent:
Electricity: $50
Water: $15
Trash: $10
Cable: $25 (increase to $40 for premiums)
Internet: $20 (assume high speed)
Phone $20
b. My monthly utility cost:
a. You will certainly want renter’s insurance to cover your personal apartment contents. Assume $15/month for premiums.
b. Estimated renters insurance=$15 mo x 12 =
step 4—find transportation
You will need a car to get you to work. New or used—expensive or economical—it’s up to you! Just make sure it fits into your budget. Remember, the price of gas is continuing to go up, so that may be a consideration also!
1. Use the following website to find your ride:
a. http://www.cars.com/go/index.jsp?aff=national
Click on the car you like and then select the Specs & Reviews tab at the top to find out its fuel economy for “d.” Use a number in between the highest city and the lowest highway miles number.
b. My car choice (make and model):
c. ______New ______Used (Year)
d. Average mpg (miles per gallon): ______
(needed for gas budget)
4. How much will your monthly payment be? On the above website, under the RESEARCH tab at the top, scroll down to “Car Shopping Tools” at the bottom, and then select “Auto Loan Rates and Calculators” to determine your monthly payment.
a. Your down payment:
b. Use 7.5% sales tax:
c. Interest rate (depends on whether the car is new or used):
d. Loan term (#years of loan you want x 12):
e. My monthly car payment:
5. Because auto insurance values vary so much depending on type of vehicle, we will use averages.
a. The average annual auto insurance premium for one car in the Triangle is $1,000. Use this for a new car.
b. If you have had accidents, or tickets, increase this to $2,000.
c. If you purchased a used car more than 3 years old, reduce this amount to $750-1500, depending on the number of tickets/accidents you have had.
d. My monthly car insurance amount (annual cost/12)=
6. Now—the cost of gas! Gas prices are not expected to decline any time soon.
a. Go to the following website to check the most current gas prices. You can search an area (for example F-V)—Just click on “Search Gas Prices” on the left side of the website: http://www.raleighgasprices.com/
b. Price of gas per gallon:______
c. How many miles will you drive? Assume a minimum of 12,000/year, although you may use more if you take a lot of “road trips.” ______
d. Use the following formula to determine your monthly gas budget:
[(#miles you drive per yr./12) / MPG(from 1d above)] x Price/gallon of gas:
STEP 5-GROCERIES
You will now be responsible for your own food! While eating out is great, it is also very expensive, and you will soon find out that your local grocer is your friend.
1. You will make a grocery list for one week and shop for your items.
a. Using the following table, make your weekly menus, and list the ingredients you will need for each meal. For any meals you plan to eat out, write “Dining Out” in the appropriate place on your list.
Breakfast / Lunch / Dinner / SnacksSunday
Monday
Tuesday
WednesdayThursday
Friday
Saturday
2. Now, make your shopping list using the following form.
a. You may go shopping using the following link to Lowe’s Foods in Holly Springs:
http://store.mywebgrocer.com/store.asp?storeid=EF86330&TROR=1
Item / Price / Item / PriceTotal grocery cost / Total grocery cost
b. My monthly grocery cost = my weekly grocery cost x 4=
c. Add $10 for each time you have written “Dine Out” x 4=
d. Your total for food and groceries (add b and c) =
STEP 6- Your Final Budget/Excel Spreadsheet
1. You will go to http://blackboard.wcpss.net.
a. Click on red tab “Course Sites”
b. Click on High Schools.
c. Click on Fuquay-Varina
d. Scroll down to the second “Principles of Business” – mal-yousuf and click.
e. Go to Assignments.
f. Right click on the budget spreadhseet and click on “Save target as.” YOU MUST SAVE THE SPREADSHEET TO YOUR PERSON DIRECTORY. CLICK ON THE DROP DOWN BOX, AND SEARCH FOR YOUR NAME, AND MAKE SURE IT IS IN THE BOX.
i. After the document is saved, click “close” on the dialog box.
2. You can now go the spreadsheet that is saved under your name.
3. Type your name in the appropriate place at the top of the document.
4. SKIP THE RESULTS SECTION AT THIS TIME!
5. Insert your annual net income in the box at C21. The spreadsheet will automatically divide it by 12 to get your monthly income.
6. Continue filling in the yellow boxes using your worksheets, and adding in new numbers as called for.
7. PROPERTY TAXES AND RENTERS INSURANCE ARE ANNUAL NUMBERS, SO ADD THE ANNUAL AMOUNT TO THE YELLOW BOX. The spreadsheet will automatically calculate the monthly number.
8. If you expect no expenses in a particular category, type a “0” in the yellow blank.
9. You should think strongly about the savings section.
a. 401K’s are wonderful savings tools. Click on the link provided, and add your age (assume age 24-25) and the appropriate % of your salary (up to 10%.) Click on “View Report” to see how much you may be worth at age 65!
b. Ditto above; however, the most your can contribute is $3000/yr.
c. YOU MUST ADD SOMETHING IN THE GENERAL SAVINGS FUND!
10. WHEN YOU HAVE FINISHED, LOOK AT THE TOP. YOUR GOAL IS TO HAVE A POSITIVE NUMBER—THAT MEANS YOUR INCOME EXCEEDS YOUR SPENDING. IDEALLY, YOU SHOULD TAKE ANY “EXTRA” AND ADD IT TO ONE OF THE SAVINGS CATEGORIES.
11. IF YOU HAVE A NEGATIVE NUMBER AT THE TOP, YOU HAVE SPENT MORE THAN YOU MADE. YOU MUST ADJUST YOUR BUDGET, STARTING WITH YOUR DISCRETIONAY BUDGET, AND DISCRETIONARY SAVINGS SUCH AS 401k OR ROTH IRA. YOU MAY HAVE TO SEARCH FOR A NEW APARTMENT, OR A CHEAPER CAR, BUT YOU MUST AT LEAST BALANCE YOUR BUDGET!
12. Put your name on it and print to turn in. Be prepared to discuss your results.
13. Reflection:
a. Write a one page letter to your parents about what you learned during this project. What were your expectations when you started; how did they change during the process?
b. Did you have to make any changes to your desired lifestyle to balance your budget? What were they?