TWENTY-SOMETHING SIMULATION PROJECT
Name:
Roommate:
You are twenty-something and it is time to move out of your parent’s home. You work 40 hours per week and your wage is $11.15 per hour gross income. You will be required to calculate your net income and hypothetical rental accommodation, buy a car, food, clothing, etc. The purpose of this project is to help you learn how to budget and manage financial resources effectively. You may choose to live with a roommate and share rent, but you must each complete and hand in a separate booklet with a separate budget. Good Luck!
DUE:
PAYCHEQUE DEFINITIONS
Gross Income
(Pay/Earnings)
Net Income
(Pay/Earnings)
Canada Pension Plan
(CPP)
Employment Insurance
(EI)
Income Tax ( - Income Tax Rates)
LTD
Union Dues
Bonds
Advance Earnings
Overtime Earnings
Now calculate your net monthly income:
$11.15 per hour X 8 hours per day X 21 days per month = Gross Income $ ______
Gross Income $______X 25% = Income Tax Deduction $ ______
Gross Income $ ______X 4.95% = CPP (Canada Pension Plan) $ ______
Gross Income $______X 1.73% = EI (Employment Insurance) $ ______
Gross Income $______X 1% = Union Dues $ ______
Income Tax + CPP + EI + Union Dues = Paycheque Deductions $ ______
Gross Income $ ______- Paycheque Deductions $ ______= Net Income $ ______What is your Yearly Gross Income? (Gross Income X 12) $ ______
What is your Yearly Net Income? (Net Income X 12) $ ______
TO HAVE A ROOMMATE ... OR NOT?
Determine the advantage and disadvantages of living on your own or having a roommate. For the purposes of this project, you may only choose one roommate.
Advantages / DisadvantagesLIVE ON MY OWN
LIVE WITH A ROOMMATE
My decision is to:
I believe this is the best choice because:
What characteristics would be essential in a roommate?
ACCOMMODATION OPTIONS
Type of Rental Accommodation / Advantages / Disadvantages / Rental CostsTownhouse or Duplex
Apartment
Single Detached House
DECISIONS FOR CONSUMERS
For each of the following situations, decide which kind of housing would be the best. Give reasons for your decision.
Retired couple with no children who don’t want to cut grass or do maintenance.
Middle aged couple with two small children desire room for children and friends who visit.
A couple with a small child.
Young, single person, travels frequently for job.
RENTAL ACCOMMODATION
What type of home or apartment do you picture yourself in when you decide to move out?
For the purposes of this stimulation you will consider rental properties only. Find a place to rent by looking in the “For Rent” section of the newspaper or rental guide and locate an ad for a suitable apartment, townhouse or house. Call to find out the monthly rental charge without being committed to a long-term lease agreement. Paste or tape the ad in the following space:
MONTHLY COST OF RENTING HOUSE / APARTMENT $ ______OTHER RENTAL EXPENSES
Tenant Insurance
When you rent a home or apartment you must also have tenant insurance in case of fire, theft, flooding or natural disaster. Your landlord will have insurance on the building, but not on your personal possessions. On the following chart, find the cost per year that is closest to the replacement value of what you hope to own when you are 27. Besides it is an example of the yearly insurance premium you might need to pay.
Replacement CoverageAnnual Premiums
$ 10,000-$92 per year
$ 20,000-$ 159 per year
$ 30,000-$ 208 per year
$ 40,000-$ 268 per year
$ 50,000-$ 304 per year
$ 60,000-$ 367 per year
Locate the yearly premium you might have to pay. Divide this by 12 to give the monthly payment.
$ ______divided by 12 = $ ______
Yearly Premium Monthly Premium
MONTHLY COST OF TENANT INDURANCE: $ ______Electricity
An average two-bedroom apartment in Alberta with two people living in it will cost about $45 per month for electricity. A larger apartment or townhouse will cost about $62. A small 1100 square foot home with the usually appliances will cost $78.00 per month for electricity. A large executive-type home with many appliances, a hot tub, and air conditioning, may cost over $120.00 per month.
MONTHLY COST OF ELECTRICITY: $ ______Telephone
There are many options when looking into getting a phone. To rent a phone in Alberta costs $23.86 for the line for which you must then buy phones. What other telephone services do you need? Voice mail, call waiting, caller ID, call answer, call forward, 3-way call. Long distance charges also are extra and can really add up. For long distance consider a minimum of $20 to about $80 a month. Then there are Cell phones which cost anywhere from $25 per month to $300 depending on the plan and how many minutes one uses.
Go to the TELUS website or another phone provider, such as Shaw, and research the costs and determine if you will require a land line and a cell phone, or if one will suffice.
What Telephone Company did you choose? What services did you pick? Why was this, your choice? Explain in detail the decisions you made.
______
MONTHLY COST OF TELEPHONE: $Cable TV
Go to the TELUS website or another Cable provider, such as Shaw, and research the costs of having cable TV for your home.
What Cable Company did you choose? What services did you pick? Why was this, your choice? Explain in detail the decisions you made.
______
MONTHLY COST OF CABLE TELEVISION: $Internet Access
Having Internet access is very desirable if your income can afford it.
Go to the TELUS website or another Internet provider, such as Shaw, and research the costs of having Internet for your home.
What Internet Company did you choose? What services did you pick? Why was this, your choice? Explain in detail the decisions you made.
______
MONTHLY COST OF INTERNET ACCESS: $Utilities
Natural gas, water and sewage expenses are usually included in the rent unless the rental home has an outside entrance (house, townhouse or duplex), in which case they are not usually included.
Natural Gas
It is hard to estimate utilities because they vary so much depending on different circumstances. Here are some very rough guidelines of how much they might cost in Alberta.
-Average (1200 sq. Ft.) house - $94 per month
-New energy efficient average home (1200 sq. Ft.) - $67 per month
-Large new home (1800 sq. Ft.) - $90 per month
-Larger older home with heated garage - $128 per month
Based on these rough guidelines, how much do you think the gas for the furnace and water heater for your house might cost?
MONTHLY COST OF NATURAL GAS: $______Water and Sewer
For a small home, water and sewer cost approximately $40.00 per month. For a larger home $80.00.
MONTHLY COST OF WATER / SEWER: $______PART TWO
ADDING IT ALL UP.....
Monthly cost of renting the house/apartment / $Tenant Insurance / $
Electricity / $
Telephone / $
Cable TV / $
Internet Access / $
Natural Gas / $
Water and Sewage / $
TOTAL / $
You should not spend more than 35% of your net income (take home pay) on rent and utilities.
Are you over or under the 35% that is recommended for housing expenses? If you are over what are some decisions you may take to help you lower the percentage of your housing costs?
______
Why did you choose this place to live? What are some of the negatives and positives of living in this rental accommodation? (Location, size, appliances, etc.) How does this choice reflect your values? Is this the type of place you saw yourself living in the future? Explain.
______
MOVING-IN EXPENSES
As well as the monthly expenses, there are one-time moving-in expenses to consider.
Security / Damage Deposit (must not exceed one month’s rent) / $Hook-up costs
Phone (land-line) / $45.00
Power / $22.00
Water / $23.50
Cable / $40.00
Internet / $30.00
Deposits
Power / $65
Water / $50
Purchase of Telephones ($10-$200) / $
Cell phone cost ($0-$300 if you do not already own one) / $
New Furniture/appliances ($0-$5,000) / $
Moving costs ($50-$300) / $
TOTAL / $
TOTAL COST OF MOVING IN: $______
FURNITURE
What furniture will you be able to take from home to furnish your rental accommodation? Make a list below of all the items you will be taking with you. Remember you have to furnish your bedroom, kitchen, living room etc.
What will your roommate (if you have one) bring to supplement the furniture in your rental accommodation? List.
What will you need to buy that either you or your roommate do not have? List.
TRANSPORTATION
(Do separate from roommate)
Find an advertisement for a vehicle that you would like to be driving when you move out. You may not choose a car that costs less than $3,000. Also, you may not accept a car from your relatives. If you own a car presently you may not use it for this simulation. Place the ad below. Beside it, write the price and any information that is pertinent.
How does this vehicle reflect your values?
______
PART THREE
Assume that you have saved enough to make a 10% down payment and have to borrow the rest of the money.
Total Price of Vehicle / $Subtract Down Payment (10% of total) / $
Total Loan Amount / $
Use the following table to find the monthly payments. If the amount of your loan is in between the table amounts you will have to estimate the monthly payment. If you finance for 48 months the monthly payment will be as follows:
Loan Amount / Monthly Payment @ 8%$2,700 / $66
$3,000 / $73
$4,000 / $97
$5,000 / $122
$7,000 / $771
$8,000 / $195
$10,000 / $244
$12,000 / $313
$15,000 / $365
$18,000 / $444
$20,000 / $487
$25,000 / $609
$30,000 / $731
$35,000 / $852
TOTAL MONTHLY COST OF VEHICLE: $______
TRANSPORTATION OPERATING COSTS
What about operating costs? Calculate how many kilometres you might drive in a week when you move out. Include driving to work, shopping, recreation, visiting etc. Allow on average 250 km for living within 15 km of work. Multiply this by 4 to get the number of km per month.
The average cost of an average car is approximately $.28 per kilometre. This covers fuel, maintenance, tires, insurance, license, registration, and depreciation. To calculate your monthly driving costs, multiply the number of kilometres driven per month by $.28. If you have high insurance costs or an expensive car, you should multiply the kilometres by $.34.
______X 0.28______
Kilometres Driven Per MonthMonthly Operating Cost
Now calculate the total monthly cost:
Monthly Loan Payments $______
Monthly Operating Cost $
______TOTAL __$______
TOTAL TRANSPORTATION EXPENSES: $______Compare this to the cost of public transportation. Research andfound how much a city bus pass costs? Cost of Bus pass $______.
TRANSPORTATION DECISIONS
According to your income, determine the method of transportation you will be utilizing. Would you use your own car or public transportation and why?
______
If you choose not to buy a vehicle, what method of transportation will you use?
______
MEAL PLAN
Create a meal plan for a week. Make sure that it is healthy and nutritious.
BreakfastLunchDinnerSnacks
Monday
Tuesday
Wednesday
Thursday
Friday
SHOPPING FOR FOOD
You created a meal plan for a week now you must see how expensive the food you have chosen to eat will be. Research the price of these food items in your local grocery store, online ( ) etc. Be sure to choose the smallest quantities possible to buy. Remember you are feeding yourself, not a family.
Grocery List ItemsCost $
TOTAL COST of Groceries for the week $ ______
x 4
TOTAL COST of Groceries for the month $ ______