BUDGETS & INSURANCE

LEARNING TARGETS

Students will… 1. Define what a budget is.2. Explain the importance of preparing a monthly

budget.3. Explain the difference between disposable and

discretionary income.4. Explain fixed and variable expenses.5. Prepare a budget6. Identify different forms of insurance (car, renters,

life, etc…)7. Understand basic insurance terminology (premium,

co-pay, deductibe)8. Define and understand the different types of auto

insurance (liability, comprehensive, collision)9. Understand the factors that affect the cost of

insurance

DID YOU KNOW?

Teens on average spend $75-125 per week on themselves?

92% of students believe they will meet their financial goals within 10 years?

40% know more about their iPod, than about saving, investing, renting/buying a home.

75% of adults say $ is the most stressful thing in their lives.

By age 2, a child can identify 40 ad brands. How?

We are exposed to 5000 ad impressions each day. The focus → SPENDING

http://www.businessinsider.com/how-teens-are-spending-money-2014-4

What are teens spending their money on?

The Dilemma

NEEDS WANTSThings needed

to sustain your life.

Food, shelter, clothing

Things we could live without, but would like to have.

4 STEPS TO PREPARING A BUDGET

This guy wishes he had budgeted. → →

STEP 1

Estimate your expected income

for a certain period of time.

Don’t forget about taxes

Social Sec. Tax 6.2%

Medicare Tax 1.45%

Federal Income Tax

State Income Tax

Disposable Income

The money you have left to spend after taxes have been paid.

STEP 2

Decide how much money you want to save.

How much is that?

10% of your paycheck

Step 3

Estimate your expenses.

Fixed Expenses

Costs you are obligated to pay at specific times regardless of what is going on in your life.

Variable Expenses

Costs that vary in amount and type.

First time expenses

Don’t forget about all those first time expenses.

List as many as you can.

Step 4

Balance your budget! Expenses should NOT exceed income.

Live within or BELOW your means.

What do Americans spend most their money on?

HOUSING

32.7%

18%12.8%

10.4%

5.7%

5.1%

4.1%11%

Monthly Budgets

HousingTransportationFoodRetirementHealthcareEntertainmentClothingMisc

Renting An Apartment

What you need to know!

Renting An Apartment

Step 1: Visit the complex and tour a model apt. Drive the neighborhood. Look at the type of cars in the parking lot and the condition of the garages/playground.

Step 2: Find out how much the rent and security deposit are. Security Deposit = refundable money you give the landlord in case you damage the property.

Renting An Apartment

Step 3: Ask how long the lease is for and ask to see a copy. Find out how much utilities cost each month.

Step 4: Fill out a rental application. √ Used to get information on your rental history, credit rating and employment history.

Renting an apartment

Do not give out your social security number until they’ve offered you the apartment.

Renting con’t.

On your move-in day, ask the manager to walk through the apt. with you ensuring that everything is in good condition. If something needs repaired or you notice other problems, write them down and show them to the manager. Better yet, take a picture. You don’t want to get stuck paying for damage caused by previous renters.

Health Care 5.7%

Terminology:

Premium = The amount you pay each month for health insurance.

Co-Pay = A small payment made each time you visit the doctor.

For example: A family might pay a premium of $412 per month and each time they visit the doctor, they pay a $20 copay.

Transportation 18%

Car payment - monthlyGas - weeklyMaintenance (new tires, oil changes, repairs) - monthly

Title and registration - yearlyAuto insurance - monthly

Cost of Auto Insurance

Your monthly premium is based on:

1. Model, style and age of car2. Age, gender, driving record of driver3. Location of driver4. Purpose of driving (work, recreation)5. Where they drive to6. Credit rating7. Grades for teenagers

Types of Coverage

Liability Coverage Collision Coverage

Protects you against claims for bodily injury to another person or damage to their property.

It pays nothing for your losses.

This coverage will pay for damage to your car in the event you are at fault.

Comprehensive Personal Injury

Covers damage to your car caused by fire, theft, tornado, hail and vandalism.

Covers medical and funeral costs of yourself, family and passengers regardless of who was at fault.