Budgeting & Saving

Link to Google Doc

Budget and Saving Project, Career Exploration Part II                   

This lesson is based on the Next Gen Personal Finance lesson.


A Salary-Based Budget

In this activity you will:  


Things to Think About:

Location


Lifestyle


Find the salary for the area you want to live in. 


STEP 1:  

Open the Salary-Based Budgeting worksheet, (provided by Mrs. MacFarland) and make a copy and replace COPY OF with LAST NAME, FIRST NAME. 


STEP 2:  

Visit My Next Move’s Career Search Tool.  To locate the salary for your future career:

Once you find your career, record the salary as your Annual Gross Wage on step 2 of your budget worksheet.


STEP 3:  

Calculate your monthly Gross Wage.  

Gross Wage (monthly) = Annual Gross Wage / 12

Record on your budget spreadsheet.


*While “wage” and “salary” are different (in how you are paid), for this activity both refer to the money earned from working

**From this point on, you’ll use MONTHLY amounts for all budget entries.


STEP 4:  

Use the ADP Salary Paycheck Calculator to find your Net Pay (the wage you actually take home each month, after tax deductions such as Federal Income Tax, Medicare, and Social Security along with benefits such as medical and retirement).   To do the activity correctly, choose the state you’ll be living in and then use these values:








STEP 5:  

“Pay yourself first” by putting aside a percent of your net salary into a savings account.  Choose one of the percents below, and calculate how much you’ll be saving off your net salary.

5% → this is low, but better than nothing

10% → this is a good goal for your first career; increase later

15% → terrific savings goal!

Savings = Net Wage (monthly) * % savings (remember 5% = .05)


STEP 6:  

It’s never too young to start saving for retirement.  You want to set aside another portion of your net salary to put toward retirement.

5% → this is low, but better than nothing

10% → this is a good goal for your first career; increase later

15% → terrific retirement goal!


Retirement = Net Salary (monthly) * % retirement (5% = .05)


STEP 7:  

Calculate the total amount you’re saving each month.  


Total Monthly Savings = Monthly Savings Account + Monthly Retirement


STEP 8:  

Calculate the monthly amount you have to budget.  

**Savings is NOT an expense; it’s the money you’re setting aside for your own future.  However, it’s also money that you shouldn’t spend on other things each month, so it gets taken out BEFORE you do your monthly budget.  


Monthly Amount to Budget = Net Salary (monthly) - Total Savings


STEP 9:  RENT

To determine how much you will spend on rent, choose the type of living situation you see yourself in.


Option A: Live at home

Option B: Live in an apartment/house by yourself  

Option C: Live in an apartment/house with roommates



STEP 9A:  RENT (Live at home)

Option 1:  If you’re planning to live at home or with other relatives, estimate how much they’re going to charge you per month.  Better yet, ASK!  Do not assume they’ll let you live rent free!  Record the answer in Monthly Rent.


If you’re planning to live on your own or with roommates, continue on.  



STEP 9B:  RENT (Live in an apartment/house by yourself ) 

If you want to live completely on your own, use the Zumper Average Rent Tool to calculate your Monthly Rent:  



STEP 9C:  RENT (Live in an apartment/house with roommates)

Option 3:  If you are willing to live with roommates ($ saving!), use the Zumper Average Rent Tool to calculate your Monthly Rent:  

Monthly Rent = rent price / # of people living there



STEP 10:  Renter’s Insurance


You want to have renter’s insurance, to cover replacement of your belongings in case of theft or apartment-wide damage (flood, fire, etc).  


Unless you have a lot of expensive stuff, you can budget $20 for Renter’s Insurance.


STEP 11a:  Utilities



STEP 11B:  UTILITIES

Cable/Satellite

See options locally for ideas at https://www.cabletv.com/tx/austin. 


Broadcast TV

$0

Internet TV streaming

$45

Basic Cable

$80

Premium Cable

$125

Cell Phone


2 GB Data

$45

Unlimited Data

$75

See options locally for ideas at https://coveragecritic.com/coverage-model/best-cell-phone-coverage-plans-in-austin-tx/


Internet


Average Cost

$38

See options locally for ideas at  https://www.allconnect.com/local/tx/austin 

Home Phone


Average Cost

$20

Gas/Electricity


Average Cost

$163


STEP 12:  

Calculate your total monthly budget for the cost of living.


Cost of Living = Rent + Renter’s Insurance + Cable/Satellite + Internet + Home Phone + Mobile Phone + Electricity/Gas




STEP 13:  Public Transportation (Buses, Trains, etc.)



New Orleans, Los Angeles

$90

Honolulu, New York

$135

Chicago

$105

Washington, DC

$195

Miami, San Francisco

$120

I’m going to use a car instead

$0


STEP 14:  Car Payment



 

$8,000 car -- $240/mo

$10,000 car -- $300/mo

$15,000 -- $450/mo

$20,000 car -- $600/mo

$30,000 car -- $900/mo

$45,000 -- $1340/mo




$8,000 car -- $150/mo

$10,000 car -- $185/mo

$15,000 -- $275/mo

$20,000 car -- $370/mo

$30,000 car -- $550/mo

$45,000 -- $835/mo


Are you not sure how much cars cost? Check out https://www.carmax.com/ to get an idea. 


STEP 15:  Car Insurance

National average for auto insurance is $1,621 per year ($136 per month) and the minimum coverage is $676 per year ($56 per month). You must be insured! 


STEP 16:  Car Maintenance

Assume $100 per month -- some months will be $0, but some will be expensive!


STEP 17:  Gas

Estimate how many miles you’ll drive per day and use this chart to find your gas prices (based on $2.82/gallon and 23.6mi/gallon):



Miles Per Day

Monthly Cost of Gasoline

25 

$90

35 

$126

45

$162


STEP 18:  

Calculate your total monthly budget for transportation.


Cost of Transportation = Public Transportation + Car Payment + Car Insurance + Car Maintenance + Gas




STEP 19:  

Choose which meal plan you’re likely to follow for the cost of Groceries: 



Thrifty

Low Cost

Moderate Cost

Liberal Cost

$178

$233

$288

$350


STEP 20:  

Choose which plan you’re likely to follow for the cost of Dining Out: 

Here is some helpful information about Austin specifically: https://www.numbeo.com/cost-of-living/in/Austin 



$10/meal

$15/meal

$20/meal

$30/meal

1 meal/week

$40

$60

$80

$120

2 meals/week

$80

$120

$160

$240

3 meals/week

$120

$180

$240

$360

5 meals/week

$200

$300

$400

$600


STEP 21:  

Calculate your total monthly budget for food.


Cost of Food = Groceries + Eating Out


Calculate the cost of your insurance




STEP 22:  Haircare/hair appointment

If you know how much you pay for a haircut / hair appointment, enter it.  If you’re not sure, use the US average: $50

Haircuts are $10-15 cheaper for men and people with short hair.

Braiding or coloring can cost $100 or more.

**If you only get a haircut / hair appointment every 3 months, divide the cost by 3.


STEP 23:  Other Grooming/Hygiene

Everyone’s different, but let’s assume $25/mo for other hygiene, medication, grooming, or personal needs.  



STEP 24:  Gym Membership

Remember, the first step to wealth is health!


If you don’t workout, or you do it free outside or at home, $0.


Otherwise, assume $58/mo for a gym membership or research a local gym and see how much it is.



 STEP 25:  

Calculate your total monthly budget for health.


Cost of Health = Health Insurance + Dental Insurance + Vision Insurance + Haircuts + Other Grooming/Hygiene + Gym Membership



STEP 26:  Student Loan Payments

If you did not go to any post-high school schooling, or you somehow did so without any student loan debt, congrats on paying $0/month!


Otherwise, choose your best estimate based on how much debt you’ll have when done with college or other post-high school education. You can also check out https://smartasset.com/student-loans/student-loan-calculator to determine an amount. 


Debt

$10,000

$20,000

$30,000

$40,000

$50,000

Monthly Loan Payment

$115

$230

$345

$460

$575


STEP 27:  Discretionary Spending

So far, your budget is neglecting FUN STUFF (clothes, going out with friends, entertainment, new technology, gift giving, donations, travel, vacations, a morning coffee, etc).  


In the Wants category, record how much you’d like to be able to spend on these items (total) per month.  


If you want to donate to charity, you can always deduct the costs on your yearly taxes for your adjusted gross income. Check out the IRS website to learn about charitable deductions at https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-contribution-deductions. 



STEP 28:  Monthly Spending

It’s time to figure out how much you’re spending each month:


Total Costs = Cost of Living + Transportation + Food + Health + Student Loan + Wants



STEP 29:  Balance

At the end of the month, how do your finances look?

Balance = Monthly Amount for Budget - Total Costs


STEP 30: Reflect! Answer the questions in the Google spreadsheet after you finish the spreadsheet. 




Works Cited


“Browse Careers by Industry at My next Move.” My Next Move, https://www.mynextmove.org/find/browse.


“Ngpf Blog.” New Economy Adaptation - CREATE: A Salary-Based Budget - Blog, https://www.ngpf.org/blog/activities/new-economy-adaptation-create-a-salary-based-budget/.


“Salary Paycheck Calculator – Calculate Net Income.” ADP, 23 Dec. 2021, https://www.adp.com/resources/tools/calculators/salary-paycheck-calculator.aspx


Zumper. “Rental Market Trends for the US & Canada.” Zumper, https://www.zumper.com/rent-research/.


Please add any additional sources besides the ones provided for you. :)





Statement of Inquiry:Learning how to use resources to navigate societal systems can lead to an informed perspective. 








Helpful Links for Budgeting Savings Project

Links

Will you be able to afford the lifestyle you want?

https://texasrealitycheck.com/

After high school, students can expect to pay for housing, transportation, clothes, etc., but how much will their future cost? In order to adequately prepare for the future, students should explore the cost of their future.