So… You Want to be a Millionaire
Linda Horst & Tony Riehl
&
Will James Middle School
Billings, Montana
So… You Want to be a Millionaire
Teacher Notes:
**Collect classified ads from your area newspaper. I have students bring them in for extra credit. Extra credit varies depending on the newspaper’s date.
Project Timeline outlines the sequence for the project.
*Optional: Have students create a circle graph representing their expenditures.
Notes:
December 9, 2002
Dear Parents,
Your son/daughter will be completing a budget project before Winter Break. The purpose of this project is to provide baseline knowledge of the expenses involved in living alone while working a minimum wage job.
In January and February, the English classes will be working on an investigation of careers. Knowledge of expenses will help students be aware of the impact finances can have on life and how their education can impact their career choices.
In February, the math classes will be developing 4-year Plans. This activity will encourage the students to explore the courses available at the high school setting. Students will then plan an outline of the courses they may take during high school to meet Montana high school graduation requirements.
As a staff, we will discuss the different facets of careers and emphasize that while earnings are important, there are many other aspects of a career that should be investigated before choosing a field of work. Emphasis is also placed on discussions that many things are involved in ‘quality of life’.
We hope these activities in Math and English will prove helpful when beginning to register for high school classes the end of February.
Sincerely,
The 8th Grade Math and English Departments
Will James
Estimating the MONTHLY
COST OF LIVING
Without calculating, quickly estimate how much you think each of the following would be per month.
EXPENSES
1. RENT ______
2. UTILITIES ______
3. CAR EXPENSES ______
4. FOOD ______
5. CLOTHING ______
6. MISCELLANEOUS ______
7. PHONE ______
INCOME
8. GROSS SALARY for 1 month ($5.25/hr) ______
9. DEDUCTIONS ______
(Taxes & FICA)
10.‘NET’ SALARY ______
(Gross minus deductions)
CAN YOU PAY YOUR BILLS?????
11. Add #1 through 7 ______
(Total expenses)
12. ______(#10)
subtract ______(#11)
Balance ______
(Income - expenses)
Estimating the MONTHLY COST OF LIVING
Without calculating, quickly estimate how much you think each of the following would be per month.
EXPENSES
1. RENT ______
2. UTILITIES ______
3. CAR EXPENSES ______
4. FOOD ______
5. CLOTHING ______
6. MISCELLANEOUS ______
7. PHONE ______
INCOME
8. GROSS SALARY for 1 month ($5.25/hr) ______
9. DEDUCTIONS ______
(Taxes & FICA)
10.‘NET’ SALARY ______
(Gross minus deductions)
CAN YOU PAY YOUR BILLS?????
11. Add #1 through 7 ______(Total expenses)
12. ______(#10) subtract ______(#11)
Balance ______
(Income - expenses)
So... You want to be a Millionaire Estimate Page 1 So... You want to be a Millionaire Estimate Page 1
CLOTHING BUDGET WORKSHEET (acquired the last 12 months)
List categories for clothing, make extra sections as necessary on the back of this sheet. List the average cost of each item. Find the total cost for each category. Don’t forget to include accessories, athletic clothing, etc,. When done, have your parents check for accuracy and sign the last square. Encourage your parents to write a note regarding how accurate your worksheet is. This information is considered confidential.
EXAMPLE:6 sweaters @ $35
Total: $210 / Total: / Total:
Total: / Total: / Total:
Total: / Total: / Total:
Total: / Total Clothing Expenditure:
$ ______ / Parent Comments:
Parent Signature: ______
So… You Want to be a Millionaire
Date
Due:
This project will help you to look ahead to the future. None of the information you share will be shared with other individuals. The project will be equivalent to a 100 point test.
Timeline
STEP 1: Please take the letter explaining the project home to your parents. This will help them understand why you will be asking them many and varied questions over the next few days.
STEP 2: Prepare your clothing budget based on the clothing you received or purchased since last Christmas. List each category of clothing, an average cost for each category and then determine a total amount spent on your clothing for the past year. Discuss the clothing sheet with your parent(s). If they have suggestions, make changes. Have your parent sign that they agree with your clothing sheet estimate. Encourage them to write a comment. (5 points)
STEP 3: Read the “So… You Want to be a Millionaire” directions carefully. Next, write a one to two paragraph summary of the instructions. Last, write three questions you would like answered before beginning the project. (5 points)
STEP 4: In class, prepare a quick estimate of living expenses for one month if you were earning minimum wage. Use the worksheet provided. (2 points)
STEP 5: Using the worksheet provided, discuss with your parent(s) the amount you would spend on each budget item. This is only to be a quick estimate and should take no longer than 5 – 10 minutes. Your final balance should be zero. (This will be of immense help.) (3 points)
STEP 6: Complete the formal budget. Follow the instructions that you have been given and already read. It is important to reread each step as you complete it. (55 points)
STEP 7: Write an essay summarizing the project. You will have a handout to use to help you with ideas of what to include. (20 points)
STEP 8: Create a cover sheet for the project. (5 points)
Monthly payment on a 3-year loan at 9% interest.Amount / Payment / Amount / Payment
$ 1,000 / $ 31.80 / $ 4,100 / $ 130.38
$ 1,100 / $ 34.98 / $ 4,200 / $ 133.56
$ 1,200 / $ 38.16 / $ 4,300 / $ 136.74
$ 1,300 / $ 41.34 / $ 4,400 / $ 139.92
$ 1,400 / $ 44.52 / $ 4,500 / $ 143.10
$ 1,500 / $ 47.70 / $ 4,600 / $ 146.28
$ 1,600 / $ 50.88 / $ 4,700 / $ 149.46
$ 1,700 / $ 54.06 / $ 4,800 / $ 152.64
$ 1,800 / $ 57.24 / $ 4,900 / $ 155.82
$ 1,900 / $ 60.42 / $ 5,000 / $ 159.00
$ 2,000 / $ 63.60 / $ 5,100 / $ 162.18
$ 2,100 / $ 66.78 / $ 5,200 / $ 165.36
$ 2,200 / $ 69.96 / $ 5,300 / $ 168.54
$ 2,300 / $ 73.14 / $ 5,400 / $ 171.72
$ 2,400 / $ 76.32 / $ 5,500 / $ 174.90
$ 2,500 / $ 79.50 / $ 5,600 / $ 178.08
$ 2,600 / $ 82.68 / $ 5,700 / $ 181.26
$ 2,700 / $ 85.86 / $ 5,800 / $ 184.44
$ 2,800 / $ 89.04 / $ 5,900 / $ 187.62
$ 2,900 / $ 92.22 / $ 6,000 / $ 190.80
$ 3,000 / $ 95.40 / $ 6,100 / $ 193.98
$ 3,100 / $ 98.58 / $ 6,200 / $ 197.16
$ 3,200 / $ 101.76 / $ 6,300 / $ 200.34
$ 3,300 / $ 104.94 / $ 6,400 / $ 203.52
$ 3,400 / $ 108.12 / $ 6,500 / $ 206.70
$ 3,500 / $ 111.30 / $ 6,600 / $ 209.88
$ 3,600 / $ 114.48 / $ 6,700 / $ 213.06
$ 3,700 / $ 117.66 / $ 6,800 / $ 216.24
$ 3,800 / $ 120.84 / $ 6,900 / $ 219.42
$ 3,900 / $ 124.02 / $ 7,000 / $ 222.60
$ 4,000 / $ 127.20
So…. You Want to be a Millionaire
Instructions: Read carefully
You have completed your education and are out on your own in the world. Your friends have moved to other cities or already have a roommate so you will be living on your own. Due to circumstances beyond your control, you are only able to secure a minimum wage job.
Your family has given you the basic items needed to begin apartment life. Your parents have extended a standing invitation to you for Sunday dinner because they enjoy your company and want you to have at least one healthy and nutritious meal every week. However, they believe that you need to be responsible for your own expenses and will not contribute money toward your living expenses or let you move back home.
Being a responsible individual, you have decided to make a budget so that you can plan wisely how to spend your earnings. The instructions below will help you. Read carefully, talk to your parents, older siblings, grandparents, teachers and other adults for their wisdom on budgeting.
It would be wise to use a pencil since you will probably need to adjust the amounts in order to balance your budget. You will want to write lightly or use scratch paper since you may need to adjust your amounts several times.
BE SURE TO READ ALL INSTRUCTIONS BEFORE BEGINNING.
NOTE: Excessive whining will reduce your monthly income by $5.00 per whine.
You CAN live on minimum wage.
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Line Item Instructions: The line before each paragraph is for you to check-off when you have completed each line of your budget form.
______Think of an occupation where the beginning salary is minimum wage and you would be willing to work at this job for a substantial period of time. Remember, some careers begin with minimum wage and progress to much higher paying jobs.
______Compute Annual Income (This is your Gross Salary; the amount you earn before any taxes, automatic deductions, etc. have been deducted from the total amount you will earn in one year.) You work 40 hours per week for $5.15 per hour for 51 weeks. Unfortunately, most minimum wage jobs do not pay you when you take time off or provide a paid vacation; therefore, it is wise to only plan on 51 weeks of earnings. Your job does not allow overtime or tips.
______Compute Gross Monthly Salary (Divide your yearly salary by twelve.)
______Determine your ‘Net’ salary. First, calculate each payroll deduction listed. You will need to take your gross monthly salary and multiply it by the listed percentage. Find the total deductions that your employer will deduct from your paycheck. Subtract the total deducted amount from your gross monthly salary; this is your ‘net’ salary. Your ‘Net’ monthly salary is your spendable income.
______Rent: Find your ‘dream’ apartment from the newspaper ads, cut it out, and tape or glue it in the space provided next to the rent line on your Budget Worksheet. Remember to keep cost, location, safety, and size in mind when making your choice.
______Next, determine the cost of utilities. ‘Utilities’ for this project include: electricity, natural gas, and water. Be sure to discuss this cost with an adult. Your parents will be able to help you determine a reasonable amount. Some apartments have some of the utilities included in your monthly rent payment. If your apartment has a utility included, write “Paid in rent” on the line for the appropriate utilities. Note: Telephone and Cable TV are not considered utilities.
______Determine the cost of your telephone service. Check an old statement from the telephone company for basic service fee, your parents probably have a statement available for you to use as a research tool. Additional charges apply for call forwarding, caller ID, call waiting, etc. If you plan to use these services you will need to include them in your budgeted telephone amount. A cell phone is an option but remember every minute you go over your ‘allowed minutes’ will be very expensive. You may want to discuss the pros and cons of cell phones versus traditional land line phone service with your parents
______If you want Cable or Direct TV, research the cost and include it in your budget. This is an optional expense. Many families choose not to have Cable TV.
______Find a source of transportation. For this project, it is assumed that you do not currently own a car. Since the vast majority of Americans own a car, it is assumed you will also own one
However, if you cannot afford a car, you may choose to use public transportation. If you choose to use public transportation, you will need to budget funds for a monthly bus pass and also taxi expenses. You will not longer be a student so the student rate for the MET bus will not apply. Since Billings does not have the transit system 24 hours a day, 7 days a week, you will need to have money set aside in case you need to call a taxi for an emergency situation. If you are depending on public transportation for most of your transportation, you should also plan to use walking and bicycling as a means of transportation. Therefore, include money in your budget for bike repairs, tires, chains, etc.
If you are not using a car for transportation, cross out the Car Expense section and create a new section to it’s right. Be specific as to your alternative transportation expenses.
If you can afford a car for transportation, use your budget information and the car payment sheet provided (on your work table) to determine how large a payment you can afford. Your payment is based on a 9% loan for 3 years.
Once you have determined how much you can spend on a car, use the Classified Advertising section of the paper to find your vehicle. Cut the ad for your car out and tape or glue it onto your budget sheet in the appropriate location. Write your payment amount on the budget line
If you have maintained a 3.0 or higher GPA during your school years, your wealthy grandparents…the ones you’ve always dreamed of… gave you a car (maximum cost of $7000) upon graduating from high school to celebrate your hard work. Use last quarter’s GPA to determine if you qualify for your grandparents’ gift. If you qualify, congratulations! Your hard work studying paid off. To show that your grandparents gave you money for the car, neatly draw a line through your calculated payment and write your GPA next to the crossed out payment. Do not include the payment in your expense total since you won’t need to make car payments. You must include a clipping of the car your grandparents bought for you.