Grade: 12 Lesson #15

What financial and opportunity costs are associated with supporting oneself?

SS.912.FL.2.1 Compare consumer decisions as they are influenced by the price of a good or service, the price of alternatives, and the consumer’s income as well as his or her preferences.

SS.912.FL.1.7 Discuss how people’s sources of income, amount of income, as well as the amount and type of spending affect the types and amounts of taxes paid.

Correlated Literacy Standards:

LAFS.1112.RH1.2

Determine the central ideas or information of a primary or secondary source; provide an accurate summary that makes clear the relationships among the key details and ideas.

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SS.912.FL.2.1 Compare consumer decisions as they are influenced by the price of a good or service, the price of alternatives, and the consumer’s income as well as his or her preferences.

SS.912.FL.1.7 Discuss how people’s sources of income, amount of income, as well as the amount and type of spending affect the types and amounts of taxes paid.

Creating A Personal Budget

Lesson Number 15

Correlated Florida Standards (See Full Text on Cover Page)

  • LAFS.1112.RH1.2

Essential Questions

  • What will I need to pay for to live the lifestyle I envision for myself?
  • What financial and opportunity costs are associated with my decisions?
  • Why is it essential to create a budget?

Learning Goals/Objectives

Students will be able to:

  • Construct a hypothetical monthly budget
  • Analyze impact of decisions on disposable income and savings and investments
  • Differentiate between income tax, real estate tax and sales tax
  • Distinguish between economic needs and wants

Overview

  • Students will be able to construct a hypothetical monthly budget for his/her future life as a young adult. Students will be able to distinguish between needs and wants and assess the opportunity costs ofhis/her decisions.

Materials

  • Promethean Board or White/Chalk Board
  • Marker/Chalk
  • Paper/Pen, Calculator
  • Internet Access, if available

Time

  • 50 minutes

Activity Sequence

INTRODUCTION/HOOK

  • Close your eyes for just a minute and picture yourself ten years from now. Picture the house you live in, the car you drive, the clothes you're wearing and the job you have. Picture yourself successful in your chosen field. (2 minutes)

ACTIVITY

1. After lesson lead-in, tell students they will be doing a think-pair-share activity where they will be

creating a budget based on the lifestyle they envision for themselves.

2. First, they should take out a piece of paper and pen or pencil. Ask them to fold the paper lengthwise in

half.

3. On one side of the paper they should list all of the things they need to pay for on a monthly basis to

have this lifestyle. Tell them they will be living alone and must support themselves. They should list

everything - from utilities and car payments to manicures and gym membership.

4. On the other side of the paper, in today's dollars, they should estimate how much it would cost to pay

for the items. (3 minutes for steps 1 - 4)

5. Give students about 5 minutes to work alone.

6. Then, ask them to pair up and brainstorm together.

7. Walk around the room and talk with students and comment on their ideas as they work together.

8. After 10 minutes, tell students that we will be creating a "master budget" on the board with the

low and high of each category. For example, one student may say rent is $800 for an apartment in their

neighborhood and another is planning on having a mortgage of $3,000. The board would say:

Rent/Mortgage: $800 - $3,000. Students may make changes to their original ideas during the whole groupdiscussion.

9. After listing and discussing the monthly expenses, ask students to take out a calculator and add up

their monthly totals and then multiply by 12.

10. Meanwhile, have one student add up all the low numbers for each item and another add up the high

numbers. This will give a class range of monthly expenses. Multiply each by 12 and write on the board to

show the annual total.

11. Explain to students that these numbers don't include the taxes they will also have to pay. Discuss income tax, real estate tax and sales tax.

12. Compare totals to the annual pay for a minimum wage worker who works full-time.

13. Discuss how this relates to needs and wants as defined in their textbook. Ask them to relate the

lesson to what they have learned in previous lessons about opportunity costs and tradeoffs.

14. Ask for their ideas about how to make choices that will allow them to live the lifestyle of their choice. (25 minutes for steps 8 - 14)

CLOSURE

  • Explain to students that this budget activity is important to do for a variety of reasons. First, it deals with basic and important economic concepts: needs, wants and opportunity costs and makes these concepts real for them in their lives. It makes them appreciate how expensive it is to support oneself in today’s society. And perhaps most importantly, it shows them how important it is to stay in school and develop the skills that are marketable in the real world so they can actually live the life they envision for themselves. (5 minutes)

OPTIONAL EXTENSION SUGGESTION/HOME LEARNING

  • Students will take their budgets home with them to discuss with a parent/guardian. Teacher should make note of who has completed Budget Activity prior to whole group discussion of budget to ensure proper credit. Revised budgets will be collected the next school day.

Sources/Bibliographic Information that contributed to this lesson:

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