Introduction
You spend many hours planning for your future and dreaming of what your life will be like--education, job, family, home, cars, travel. You dream of a certain lifestyle, but you probably don’t plan for how much that lifestyle will cost. It’s time to budget for your future.
Most adults live on a budget or at least plan a budget as a guide to how much they can spend. A budget is a listing of all your money (income) and all the things you spend it on (expenses). It is quite a challenge to make a budget that you can realistically live on and an even greater challenge to stick with it. In this WebQuest, you will look at yourself in the future, just after college graduation, starting the first job of your career. How will you manage your money? Based on your salary, needs, wants, and loan payments, you will complete a budget analysis, and a budget worksheet that will demonstrate how you will meet all of your expenses.
This project is to be completed by individual students. However, it can also be done by a pair of students who make individual budgets but assume they are roommates sharing whatever expenses they can. In either case, each student will submit a budget showing how you will manage your money. Your answers, and your budgets, will vary depending on the occupation you choose and the differences in expense amounts for the lifestyle you imagine and seek.
In this WebQuest, you will use a calculator and the recommended web resources to:
- Select an occupation and determine the salary for that occupation
- Use your salary as a basis for calculating percentages
- Determine your expenses in given categories
- Construct a budget in which expenses are less than income. This will include finding an apartment, buying a car, and anticipating your needs— such as food, clothing, utilities—and wants—such as entertainment, "toys", travel, etc.
Income
Knowing how much you earn each month is essential for creating a budget. How much you bring in depends on your occupation. What do you plan to do after you graduate from college? Use the Occupational Outlook Handbook and the College Board Career Browser to find your intended occupation with income expectations. List the median annual starting salary for your first job on your worksheet and calculate the monthly net income after taxes (use a tax rate of 15%) based on the gross monthly income included in the occupational summary.
Expenses
Expenses are money you spend on the things you need and the things you want. You can probably think of many, many things to choose from in deciding how you will spend your money. However, there are some basic categories of expenses considered necessary essential and necessary. Those are the categories you will use to plan your expenses. Figure out each of the following amounts and enter that figure on your budget worksheet.
Housing. This will probably be the largest expense in your budget. Find an apartment and list the amount of the monthly rent (or your share of the rent) on the budget worksheet.
Transportation. Remember, you have just graduated from college so celebrate by buying a new, or used, car. You will borrow (finance) the total cost of the car. Use AutoWeb, Edmunds, or CarPoint to pick out a car. In order to calculate your monthly payments, go to Yahoo! Autos for their Car Loan Calculator, using 8% for the annual percentage rate for the loan and four or five years for the loan payment period.
You will also need to add in the cost of maintaining and driving your car for the month. Figure on $75/month. Make sure to add your monthly car loan payment together with these extra monthly expenses and enter them on the budget worksheet next to transportation.
Food. It is difficult to determine expenses in this category because everyone's eating habits are different. As a guide, figure on spending about $50 a week on food if you eat most of your meals at home and often take your lunch from home. If you eat out a lot or eat a lot of meals prepared for take out, expect to spend approximately $100 a week on food. Include what you think is an accurate amount on the budget worksheet.
Utilities. Electricity, water, and gas come under the heading of utilities. These costs vary depending on where you choose to live. For this webquest, budget 15% of your rent amount for utilities. Calculate that amount and enter it in your budget worksheet.
Phone. Typically, basic phone service will cost you about $30 a month. That is for local calling. No doubt, you will get cellular phone service with both a regional and long distance calling plan. Figure the cost at $65 a month. Your total telephone service budget amount is $95. budget worksheet
Cable. Are you satisfied with watching whatever is on the major networks? If you can't live without cable, plan for $50/month on the budget worksheet.
Clothing. In your new job, you will need some new clothes, probably a new wardrobe. Your college attire will not generally be acceptable in the workplace. Business clothes, even business casual clothes, are very expensive. For now, budget $100 a month for clothing. budget worksheet
Entertainment and Recreation. Having fun, pursuing personal interests, providing for entertainment is important. Don't forget to plan for it in your budget. Figure on spending 2.5% of your monthly net income for entertainment and recreation and enter that amount. budget worksheet
Student Loan Payment. Many people have to take out a student loan while in college. The loan amounts can be quite large. For your budget, assume that you have a student loan of $15,000 if you attended a public or state university or $50,000 if you attended a private college or university. Using the Loan Payment Calculator, calculate your monthly loan payment and enter it on the budget worksheet. Use 8.5% for the annual percentage rate (APR), and select 10 years as the loan period. budget worksheet
Savings. While not an expense, savings is something you have to allot money for each month. Calculate 5% of your monthly net income and enter that amount for savings. budget worksheet
Miscellaneous. Make sure you set aside money for things which may come up unexpectedly, like car repairs, gifts. etc. Setting aside 2% of your monthly net income should allow you to deal with unplanned for expenses. budget worksheet
Additional websites for rent, transportation, and student loan information can be found by using search engines such as:
Note: Any websites used, other than those on this WebQuest, must be approved by the instructor.
You may also want to gather some cost information for telephone service, food, utilities, etc. by conducting a search using search tools. Verizon, Peco, and Internet supermarkets may give you a more precise idea of what you will spend on these items and services.
Using the Internet to Investigate Math. J. Weston Walch, Publisher.
The completed project should contain
- Documentation of all calculations needed to complete the budget
- Information about your job, salary, automobile
- The budget analysis
- The budget worksheet
The act of completing a budget can be a very sobering experience for those who have not had to worry too much about how far their money will go. It helps you to recognize the difference between needs and wants. Housing, transportation, food, utilities, etc. are obvious necessities.
Some items that are luxuries to some people but are necessities to others. What are some things that you cannot live without? For example cable is a necessity for some people and an "extra" for others.
Does this experience make you think any differently about the job(s) you will consider after college? After doing this budget, do you think your current plans for the future will enable you to have the kind of lifestyle you envision for yourself?
WebQuest developed by Fran Tomaselli and Maria Bartolotti
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