How to Get Rich Slowly

Brenda Rider

Description

Students learn how to budget in order to live in today's world. Allocating their resources is of prime importance in the monthly budget.

Objectives

The student understands how many financial and nonfinancial factors (e.g., cultural traditions, profit, and risk) motivate consumers, producers, workers, savers, and investors to allocate their scarce resources differently.

Materials

- Newspapers
-Internet connected computer(s)
-Copies of worksheet (in associated file)

Preparations

Provide Newspapers.
Bookmark web site.
Call the utility companies if you don't want students to.
Xerox the worksheet.

Procedures

The teacher should initiate a discussion about living expenses in today's world. Allow students to 'guestimate' how much things like rent, car insurance, power bills, telephone bills, water bills, cable, etc. cost per month.

Assignment:
Hand out the worksheet found in the associated file.
Tell students to assume that they work 40 hours a week at \$7.00 per hour. They must:

-Calculate the weekly salary.
-Multiply by four weeks to get the monthly salary.
-Subtract 20% of the gross for tax purposes.
-Use the amount that they calculated to see if they can find the following living expenses that would be in their range.
**An apartment or place to rent
**Electricity, phone, water, cable
**A car (take the total price of the car and divide by 24 months to determine the monthly payment)
***Insurance for the car
***Gasoline and groceries (set a specific amount here or some students will try to eat off \$5.00 per month!!!)

1. Discuss HOUSING
Explain that people can check the local newspaper, real estate guide, etc. to find the average amount it takes to rent an apartment, mobile home, or house.
2. Discuss UTILITIES
Students can interview two or three separate occupants of households, (parents, grandparents, friends, etc.) to get an average of monthly utility bills which would include gas, electricity, water, telephone, and sewage. Add cable separately. If necessary, have a student call the various utility companies to ask for an estimate. Make sure that the students can give specific information such as 1000 square ft. home that is total electric with a family of 3 people. This will help the utilities give a fair estimate.
3. Discuss TRANSPORTATION
Students can check the classified ads to see how much the vehicle they desire costs. How much does insurance cost for this particular vehicle? Students can go to the website listed below to find information.

Conclude with a discussion based on the information students found out and the answers they wrote to the questions on the sheet.

Assessments

The worksheet will serve as each student's formative assessment.
In a group discussion, after completing the worksheet students should come to the conclusion that different people will budget their money differently even though all have to have the same things. For instance, some will spend more on an apartment, while others will forego a telephone and cable in order to have a nicer car. Help students to see that this is a choice that is made individually based on the resources that each person has.

To extend the assessment formatively, ask students to respond in writing to these questions, then ask volunteers to share their answers. As they share do not be judgemental but elicit complete answers. Collect papers.
Answers will serve as the formative assessment.
1. Assume that the job you have is a deadend one. In other words, you can never advance to a higher position or salary. What could you do to increase your earnings? List the steps you would do to accomplish this.
(Students should say that they could get training for a different job such as college or vocational or they could look for another job or a second job. They should be able to list the steps to accomplish this in a general fashion although some won't really know how to go about it.)

2. Would it be worth it to put money in a savings account even on your salary? If you put \$5 a week in a savings account, how much would you have at the end of the year?
Hopefully, students will be able to multiply 5 X 52 and realize that even \$5 a week adds up.)

3. What expenses did you not budget for? List at least 5 other expenses that you might have. (Students should be able to list car repairs, clothing, medicine, furniture, entertainment, etc.)

4. Almost everyone who did this activity allocated different amounts for different things. Why do you think they did this? Why are some people willing to work two jobs? Why do some people continue with school or specialized job training? (Students should be able to tell you that different people attach different importance to their resources. Some would rather have an older car in order to have more spending money. etc. They should be able to tell you that some people want more money (resources) that others and are willing to work or train to get it.)

Note: Students who could not stay within the allotted salary amount could possibly work with a student who was successful. If this is the first time students have tried to budget, they may have difficulty.

Extensions

Ask students if there is a way to obtain resources that are not money. For instance, could I trade a ride to school or work each day for two homecooked meals a week? If I paint this apartment, would you cut my rent in half this month? etc.