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ASSIGNMENT

PART 1:  HOUSING AND UTILITIES

Saving money for a rainy day or future goals and dreams is another important part of your budget. 

Remember, pay yourself first!

Let's talk about that rainy day first.  You should set aside approximately 3 to 6 months’ worth of living expenses by creating an Emergency Fund, or Reserve Fund.  Saving for unexpected expenses will be helpful if you become unemployed, if you need unexpected medical attention or if you encounter some other financial problem.  AFTER you determine your total monthly expenses, you will better be able to estimate the amount you will need to save for these unexpected expenses.  Therefore, you will need to wait until you are finished budgeting your monthly expenses before completing the Emergency Fund section.

By setting priorities, you identify what is important to you.  By setting goals, you begin to translate your priorities into actions.  Goals can be categorized into different types of goals.  In addition to saving for a rainy day, you can save for short-term goals (5 years or less) and long-term (longer than 5 years) goals and set aside money each month to reach these goals.  Begin by writing your personal and financial goals.  Well-written personal and financial goals should:

               ~ be realistic.
               ~ be stated in measurable terms.
               ~ have a time frame.
               ~ state the action to be taken.

Examples:

I would like to save $9,000 for unexpected expenses (monthly expenses will be approximately $1,500 x 6 months) over the next 7 1/2 years. To reach this goal I will have to save $100 per month (9,000/90 months).

I would like to save $5,000 for a down payment on a new car in three years. To meet this savings goal, I will need to save approximately $140 per month (5,000/36 months).

**Saving at least 10% from each paycheck is a good rule to follow.**

Budgeting for Expenses

Expenses are money you spend on things you need and want.  A need is something you must have to survive, such as food, shelter and clothing.  A want is something you desire or would like to have or do.  For example, if you live in Wisconsin, you need a coat. You may want a leather jacket, but other types of coats could also keep you warm.

Fixed Expenses

Let's start with Fixed Expenses--expenses that do not change from month to month.

Housing Expense 

Housing will probably be the largest expense in your budget.  Experts recommend 25-35% of your net monthly income will be allocated to your housing expense.  To determine your housing expense, find an apartment which will fit into the budget you and your partner created in your budget planner.  Save the page of the housing you and your partner decided on as a PDF, make sure all information on the housing is visible (you may need to save multiple PDFs if you have to visit another web page by clicking on a link), and upload to your Google Drive Portfolio Project Folder, then to your Livebinder.  Enter the amount of monthly rent (or mortgage) on any day in April in Daily Spending tab of the Budget Planner worksheet. 

Utilities Expense

You will need to budget for utilities, such as gas and electricity, telephone, cell phone, cable, water, etc.  (Gas and electricity may already be included in your rent but you will still be required to research this information.  Be sure to Insert a Comment at the bottom on the final Budget if the amounts are included in the rent.)  You will likely need to search the Internet for additional information.

Enter the MONTHLY amounts for each utilities expense below in the appropriate categories on any day in April in Daily Spending tab of the Budget Planner worksheet. 

Below are the categories you will need to include for Utilities:

  • Electricity & Gas Bills
  • Cable Bill
  • House Phone Bill (unless you are doing cell phone only)
  • Water, Sewer, & Garbage Bills

Experts suggest you should budget 5 to 10 percent of your net income for utilities (Cell Phone should be included in this, see below).  

Save the pages you visited as PDFs that shows your research for utilities expenses and upload to your Google Drive Portfolio Project Folder, then to your Livebinder

Cell Phone Expense

You will need to budget for a cell phone plan.  Below are a couple of websites to help estimate these expenses.  You do not need to include the cost of the phone in your budget, but you will need to go .  Enter the MONTHLY amount for your cell phone on any day in April in Daily Spending tab of the Budget Planner worksheet. 

·        http://www.verizonwireless.com/

·        https://www.att.com/shop/wireless.html

·        https://www.sprint.com/#!/

·        http://www.uscellular.com/

·        http://www.boostmobile.com/

·        https://www.cricketwireless.com/

Save the pages you visited as PDFs that shows your cell phone and plan information and upload to your Google Drive Portfolio project, then to your Livebinder.  

 

ASSIGNMENT

PART 2:  EDUCATION COSTS

Educational Opportunities and their Costs

The purpose of this part of the project is to compare the relative costs of different educational opportunities. Even if you do not plan to attend any type of post-secondary educational institutions, it is important to have an idea of the possible costs. Research the costs of attending four different colleges or advanced training facilities (trade schools, technical schools, apprenticeship programs, etc).

You must research a minimum of two educational institution and at least one must be outside of Illinois.

If you are looking at online organizations, only one of the schools can be online educational opportunities.

School #1

Location:   

Is this a Public or Private School? Number of years you might attend?      

What is the purpose for attending this institution?         

Estimated tuition cost per year:  

Estimated housing costs per year: (if you can live with parents, this may be zero) Where did you get information for this school?               

School #2

Location:   

Is this a Public or Private School? Number of years you might attend?

What is the purpose for attending this institution?stimated tuition cost per year:  

Estimated housing costs per year: (if you can live with parents, this may be zero) Where did you get information for this school?               

School #3

Location:   

Is this a Public or Private School? Number of years you might attend?      

What is the purpose for attending this institution?         

Estimated tuition cost per year:  

Estimated housing costs per year: (if you can live with parents, this may be zero) Where did you get information for this school?               

School #4

Location:   

Is this a Public or Private School? Number of years you might attend?      

What is the purpose for attending this institution?         

Estimated tuition cost per year:  

Estimated housing costs per year: (if you can live with parents, this may be zero) Where did you get information for this school?               

Student Loan 

Many people take out student loans for college expenses.  After researching at least two institutions, choose one of those institutions to attend.  You will then use the College View Website (http://www.collegeview.com/collegesearch/index.jsp) to find the average amount of financial aid (Self-help Aid) students receive at your institution per year.  [Go to the website and search the school, click on School Facts, then click on Financial Aid & Scholarships]  You will then multiple that by the number of years you plan to attend the institution.  This will be your financial aid loan amount. 

You will then calculate your student loan amount using the Financial Aid Calculator (http://www.finaid.org/calculators/loanpayments.phtml), calculate your monthly loan payment:

  • Enter your loan amount (average amount from College View)
  • Enter 7% as your loan rate
  • Leave Loan Fees at 0%
  • Enter 10 for the Loan Term (in years)
  • Leave everything else the way it is and click on 'Calculate'

·         Save the page you visited as a PDF that shows your monthly student loan payment information and upload to Google Drive Portfolio Project Folder and upload to your Livebinder. 

  • Enter the MONTHLY amount in the student loan category on any day in April in Daily Spending tab of the Budget Planner worksheet. 
 

Housing

Housing Expenses 

Housing will probably be the largest expense in your budget.  Experts recommend 25-30% of your net monthly income will be allocated to your housing expense.  To determine your housing expense, find an apartment which will fit into your budget.  Save the page you visited as a PDF that shows your rent and housing information and upload to Google Drive Portfolio Project Folder (only 1 per group).  Enter the amount of monthly rent in the cell under the Actual Column in the Group Budget worksheet. 

Take a look at this Rent vs. Buy Calculator BEFORE you start your housing search!

TIP:  Rent is often 25% to 33% of your gross income; yours should be at that level or lower.  Padmapper may help you determine if you are planning to pay an average market price. 

 

Utilities

Utility Expenses

You will need to budget for utilities, such as gas and electricity, telephone, cell phone, cable, water, etc.  (Gas and electricity may already be included in your rent but you will still be required to research this information.  Be sure to Insert a Comment at the bottom on the final Budget if the amounts are included in the rent.)  Below are a couple of websites to help estimate these expenses.  You will likely need to search the Internet for additional information.

http://www.myfirstapartment.com/2010/03/how-much-should-you-budget-for-utilities/

Check out this article in Saving Money on the Average Utility Costs Per Month: What's Normal.

Utilities Calculators

Enter the MONTHLY amounts for each utilities expense below in the appropriate cells in the Actual Column in the Group Budget worksheet.

Other Resources

Experts suggest you should budget 5 to 10 percent of your net income for utilities (Cell Phone should be included in this, see below).  

Cell Phone Expenses

You will need to budget for a cell phone plan.  Below are a couple of websites to help estimate these expenses.  You do not need to include the cost of the phone in your budget.  Enter the MONTHLY amounts for each utilities expense below in the appropriate cells in the Actual Column in the Group Budget worksheet.

NOTE: Make sure to look at the cost after the first six months or look at suppliers of these services, such as:

Save the pages you visited as PDFs that shows your cell phone and plan information and upload to Google Drive Portfolio Project Folder (1 per person).  

 

Student Loans

Student Loan Expenses

Many people take out student loans for college expenses.  Assume you borrowed $10,000 if you plan to attend a public or state university or $40,000 if you plan to attend a private university.  Using the Financial Aid Calculator, calculate your monthly loan payment:

  • Enter your loan amount (either $10,000 or $40,000)
  • Enter 7% as your loan rate
  • Leave Loan Fees at 0%
  • Enter 10 for the Loan Term (in years)
  • Leave everything else the way it is and click on 'Calculate'
  • Save the page you visited as a PDF that shows your monthly student loan payment information and upload to Google Drive Portfolio Project Folder (1 per person)
  • Enter the amount in the appropriate cell in the Actual Column in the Group Budget worksheet.
 

Transportation

Transportation Expenses (Car)

For purposes of this Project we will assume we need to buy a car to provide reliable transportation for work.  To help you decide what type of an auto will meet your needs, review the website Choosing A Car That's Right For You

Also, check to see whether Leasing OR Buying is right for you!

    
Ownership

Buying

You own the vehicle and get to keep it as long as you want it.

Leasing

You don't own the vehicle. You get to use it but must return it at the end of the lease unless you decide to buy it.

Up-front costs They include the cash price or a down payment, taxes, registration and other fees. They typically include the first month's payment, a refundable security deposit, a down payment, taxes, registration and other fees.
Monthly payments Loan payments are usually higher than lease payments because you're paying off the entire purchase price of the vehicle, plus interest and other finance charges, taxes, and fees. Lease payments are almost always lower than loan payments because you're paying only for the vehicle's depreciation during the lease term, plus interest charges (called rent charges), taxes, and fees.
Early termination You can sell or trade in your vehicle at any time. If necessary, money from the sale can be used to pay off any loan balance. If you end the lease early, early-termination charges can be almost as costly as sticking with the contract.
Vehicle return You'll have to deal with selling or trading in your car when you decide you want a different one. You can return the vehicle at lease-end, pay any end-of-lease costs, and walk away.
Future value The vehicle will depreciate but its cash value is yours to use as you like. On the plus side, its future value doesn't affect you financially. On the negative side, you don't have any equity in the vehicle.
Mileage You're free to drive as many miles as you want. (But higher mileage lowers the vehicle's trade-in or resale value.) Most leases limit the number of miles you may drive, often 12,000 to 15,000 per year. (You can negotiate a higher mileage limit.) You'll have to pay charges for exceeding your limits.
Excessive wear and tear You don't have to worry about wear and tear, but it could lower the vehicle's trade-in or resale value. Most leases hold you responsible. You'll have to pay extra charges for exceeding what is considered normal wear and tear.
End of term At the end of the loan term (typically four to five years), you have no further payments and you have built equity to help pay for your next vehicle. At the end of the lease (typically two to four years), you'll have to finance the purchase of the car or lease or buy another.
Customizing The vehicle is yours to modify or customize as you like. Because the lessor wants the vehicle returned in sellable condition, any modifications or custom parts you add will need to be removed before you return the car. If there is any residual damage, you'll have to pay to have it fixed.

Check out this Lease OR Buy Auto Calculator if you are still unsure.

Using the advice that you just read about, determine the type of car which will best meet your needs.  You may click on one of the links below, or find your own link, to choose a car that matches your results.  Save the page you visited as a PDF that shows your car’s information and upload to Google Drive Portfolio Project Folder (1 per person).  

After you have selected your car, go to Yahoo! Autos Car Loan Calculator.  You will borrow (finance) the TOTAL cost of the car.  In the 'Auto Loan Calculator' section:

  • Enter the price of your car in the 'Loan Amount' area 
  • Keep the Loan Term as 4-years (48 months)
  • Enter 6% for the Interest Rate
  • Choose 'Monthly' under the Amortization area
  • Click on 'Calculate'
  • Save the page you visited as a PDF that shows your car loan information and upload to Google Drive Portfolio Project Folder (1 per person)
  • Enter the amount of your monthly car loan payment amount in the appropriate cell under the Actual Column in the Group Budget worksheet

Other Car Resources:

Transportation Expenses (Other)

This includes routine travel, such as commuting to work; as well as pleasure or other long-distance travel.  Transportation could include bus, train or plane fare, or maintenance on your car and the cost of gas.  You may also need to allow for parking fees and auto registration costs.  Click on any of the links below to find prices on the various transportation expenses listed in the Group Budget worksheet in the Budget Project spreadsheet.  Enter MONTHLY amounts in the appropriate cells of the worksheet which you feel accurately reflects your need for each item.  The following web-sites are approved for this process and these are the only sites to be used for this section!

When budgeting for gas, you must calculate the mileage for your drive to and from work each day (multiply by 52 then divide by 12) and then add an additional 250 miles for leisure activities. Take this mileage and multiply by the average gas price in the town/city you chose to live in on the Gas Buddy Website.

 

Renter's Insurance

Renter's Insurance Expenses

  • Enter $20 for your Renter's Insurance monthly premium amount in the appropriate cell in the Actual Column in the Group Budget worksheet.

To learn more about renter's insurance, check out the following site.

 

Variable Expenses

Variable Expenses 

Variable Expenses are expenses that can change from month to month making them more difficult to budget.  To determine a reasonable expense level, you can follow the recommended percentages suggested by financial experts or talk to your friends and family to see how your spending compares with theirs.

 

Food/Dining Out

Food/Dining Out Expenses

Estimating food costs can be difficult, but keep in mind that you eat 3 meals a day and there are about 30 days in a month.  For example, if you figure an average of $3 per meal, you would spend approximately $270 a month for food.  Food costs should be about 10 - 15% of your net monthly income.  Since everyone's eating habits are different and depending on how often you eat out or eat at home, this amount will vary. 

1.  To find the cost of your food items: 

  • Create a list of food items you feel you will need for ONE WEEK
  • Click on the Giant Food Shopping Online link
  • Click on 'Browse Aisles'
  • When finding an item you want to buy, put in the quantity of the item you want, then click 'Buy'
  • When done shopping, click 'Review Order' on the right hand side and Save the page you visited as a PDF that shows your grocery order information and upload to Google Drive Portfolio Project Folder (1 per group)
  • Multiply your result by 4.3 (There are 4.3 weeks in a month) to get an amount for your monthly budget.
  • Enter your monthly food expense in the appropriate cell in Actual Column in the Group Budget worksheet

2. Determine an average monthly amount for dining out. 

  • You can use any dollar amount you wish, but it has to be REALISTIC!!
  • Enter the amount in the appropriate cell in the Group Budget worksheet
 

Personal

Personal Expenses

In your new job, you will need clothes appropriate for your workplace.  Your college wardrobe may not be acceptable for your new job.  Business clothes, even business casual can be very expensive.  Certain careers require special clothing items such as safety shoes or uniforms.

In addition to clothing, other items include personal toiletries, laundry, haircuts, etc. will amount to about 2-10% of your net monthly income.

Click on any of the links below, or go to any other website of your choice to find prices on the various items listed in the Personal Expense worksheet in the Budget Project spreadsheet.  Enter Monthly amounts (divide by 12) in the Actual Column of the worksheet which you feel accurately reflects your need for each item.  The monthly numbers will automatically flow through to the Group Budget worksheet.  The following web-sites are approved for this process and these are the only sites to be used for this section!

Save the pages you visited as PDFs that shows your personal expenses information and upload to Google Drive Portfolio Project Folder (1 per person).  

 

Entertainment

Entertainment Expenses                                   

Including leisure time in your life is important to help maintain a healthy lifestyle.  Be sure to include leisure and recreation in your budget.  Click on any of the links below to find prices on the various entertainment items listed in the Entertainment Expense worksheet in the Budget Project spreadsheet.  Enter Monthly amounts (divide by 12) in the Actual Column of the Group Budget worksheet.  The following web-sites are examples of some of the entertainment expenses you might have.  Feel free to include any others you feel you would utilize (but it must include a price)     

Save the pages you visited as PDFs that shows your entertainment expenses information and upload to Google Drive Portfolio Project Folder (1 per person).  

 

Healthcare

Healthcare Expenses    

The Healthcare category includes expenses beyond the medical insurance premium which we deducted from your paycheck.  This category includes co-pays and items not covered by your insurance.  Click on any of the links below to find prices on the various healthecare items listed in the Healthcare Expense worksheet in the Budget Project spreadsheet.  Enter Monthly (divide by 12) amounts in the Actual Column of the Group Budget which you feel accurately reflects your need for each item.  For Prescription Co-Pays enter $120. For Medical Co-Pays enter $240.  The following web-sites are approved for this process and these are the only sites to be used for this section!

 Save the pages you visited as PDFs that shows your healthcare expenses information and upload to Google Drive Portfolio Project Folder (1 per person).  

 

Miscellaneous

Miscellaneous Expenses        

Because you cannot predict every monthly expense, the miscellaneous category will include unforeseen expenses that you may incur over the course of each month.  Enter a MONTHLY amount in the appropriate cell in the Group Budget worksheet that is somewhere between $50-$150 so you can be sure you have planned conservatively. 

 

Where Does the Money Go?

Click to view a larger version.

 

How the Average American Spend their Income

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