1. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Comparing Job Offers 1.1.3 Take Charge of Your Finances Family Economics and Financial Education

2. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Comparing Job Offers 1.1.3 Lesson Objectives –Examine the importance of career planning, salaries, and benefits to overall financial well- being –Differentiate salaries in different cities using the cost of living equation

3. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Supply and Demand The availability of jobs and the rate of pay is dependent upon the economic concept of supply and demand. Supply – the relationship of prices to the quantities of a good or service that sellers are willing to sell at any given point in time. Demand – the relationship between prices and the corresponding quantities of a good or service individuals are willing to purchase at any give point in time.

4. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Supply and Demand High Supply = Low Demand Low Supply = High Demand There are more individuals with the abilities and training to be a teacher than an NFL football player. Ultimately there are less available jobs for NFL football players because there are not enough qualified individuals to fill those positions.

5. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Supply and Demand Because there is a lower supply of NFL players and higher demand compared to teachers, they are paid millions of dollars per season. The more people available for one job, the less money they will be paid. Therefore, teachers will be paid less money for their position because there are more trained individuals and more positions available.

6. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Congratulations! Sara just graduated from college with a teaching degree and received two job offers. Which is the best deal?

7. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona A.Job Offer 1 –$35,000 in Reno, NV B.Job Offer 2 –$40,000 in Anchorage, AK C.Not enough information to decide Which option is best? Which is the better deal?

8. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Cost of Living Cost of living – includes housing, food, transportation, and other everyday expenses –Rural communities often have a lower cost of living than urban communities. Index form – rates communities on a scale of 100.0 and gives an average cost community a rating of 100.0. –A lower index means a lower cost of living. –A higher index means a higher cost of living.

9. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona ` Comparing Job Offers Base Salary Dollar amount a person will receive in his/her monthly paycheck before taxes. Based upon supply and demand Fringe Benefits Paid sick time Holidays and vacation time Bonuses Health and life insurance Workman’s compensation Retirement contributions Opportunity for advancement and other work incentives Raised based on performance Bonuses Employer provided services Gym membership Flexible hours Merchandise discounts Child care Additional perks Relocation allowances Company car Repayment of education loans Stock options Location and environment Commute time Affordable housing Low crime rate Good schools Desired climate

10. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Cost of Living Cost of Living Equation Salary in city 1 x Cost of Living Index of City 2 Cost of Living Index of City 1 = Equivalent Salary in city 2 Round dollar amounts to two decimal places

11. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Sara’s Job Offers Job Offer 1 – Reno, NV –$35,000 salary –105.1 cost of living index Job Offer 2 – Anchorage, AK –$40,000 salary –123.1 cost of living index

12. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Salary in city 1 x Cost of Living Index of City 2 Cost of Living Index of City 1 = Equivalent Salary in city 2 Cost of Living

13. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Sara’s Cost of Living Equations $35,000 in Reno x 123.1 105.1 = Equivalent Salary in Anchorage $40,000 in Anchorage x 105.1 123.1 = Equivalent Salary in Reno Option 1 or Option 2

14. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Sara’s Cost of Living Equations $35,000.00 x 1.1712654 = $40,994.29 = Equivalent salary in Anchorage $40,000 x.8537774 = $34,151.35 = Equivalent salary in Reno Option 1 or Option 2

15. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Sara’s Job Outcome Option 2 Job Offer 1 $40,994.29 in Anchorage, AK Job Offer 2 $35,000 in Reno NV A person earning $40,000 in Anchorage must earn $34,151.35 in Reno to have the same spending power. Option 1 Job Offer 1 $35,000 in Reno, NV Job Offer 2 $40,994.29 in Anchorage, AK A person earning $35,000.00 in Reno must earn $40,994.29 in Anchorage to have the same spending power. Therefore, the salary offer in Reno is better by $994.29 ($40,994.29 - $40,000.00).

16. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Joe’s Offers Job Offer 1- Denver, CO –$24,000 salary –102.9 cost of living index Job Offer 2 - Seattle, WA –$32,000 salary –148.2 cost of living index

17. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Cost of Living Equation Salary in city 1 x Cost of Living Index of City 2 Cost of Living Index of City 1 = Equivalent Salary in city 2

18. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Joe’s Cost of Living Equations $24,000 in Denver x 148.2 102.9 = Equivalent salary in Seattle $32,000 in Seattle x 102.9 148.2 = Equivalent salary in Denver Option 1 or Option 2

19. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Joe’s Cost of Living Equations $24,000.00 x 1.4402332 = $34,565.60 = Equivalent salary in Seattle $32,000 x.6943319 = $22,218.62 = Equivalent salary in Denver Option 1 or Option 2

20. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Joe’s Job Outcome A person earning $24,000.00 in Denver must earn $34,565.60 in Seattle to have the same spending power. –Or A person earning $32,000 in Seattle must earn $22,218.62in Denver to have the same spending power. Therefore, the salary offer in Denver is better by $2,565.60 ($34,565.60 - $32,000.00). Job Offer 1 $24,000 in Denver, CO Job Offer 2 $34,565.60 in Seattle, WA

21. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Benefits Fringe benefits and employer provided services can make a difference: –For example, if a $35,000.00 job had 100% of medical insurance coverage valuing $400.00 per month, a person would not have to budget for $4,800.00 in medical insurance per year. This would increase the value of his or her salary to $39,800.00. –Benefits and services should be included within the salary before calculating the cost of living.

22. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Sara with benefits Job Offer 1 – Reno, NV –$35,000 salary + $4,800 benefits = $39,800 –105.1 cost of living index Job Offer 2 – Anchorage, AK –$40,000 salary + $5,200 benefits = $45,200 –123.1 cost of living index

23. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Sara With Benefits Salary in city 1 x Cost of Living Index of City 2 Cost of Living Index of City 1 = Equivalent Salary in city 2

24. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Sara with benefits $39,800 in Reno x 123.1 105.1 = Equivalent salary in Anchorage $45,200 in Anchorage x 105.1 123.1 = Equivalent salary in Reno Option 1 or Option 2

25. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Sara with benefits $39,800.00 x 1.1712654 = $46,616.36 = Equivalent salary in Anchorage $45,200 x.8537774 = $38,590.74 = Equivalent salary in Reno Option 1 or Option 2

26. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Sara with benefits With the benefits package included, the job offer in Reno is higher. A person earning $39,800.00 in Reno must earn $46,566.00 in Anchorage to have the same spending power. Or A person earning $45,200 in Anchorage must earn $38,590.74 in Reno to have the same spending power.

27. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Joe with benefits Job offer 1 - Denver, CO –$24,000 salary + $4,500 benefits =$28,500 –102.9 cost of living index Job offer 2 - Seattle, WA –$32,000 salary +$6,000 benefits = $38,000 –148.2 cost of living index

28. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Salary in city 1 x Cost of Living Index of City 2 Cost of Living Index of City 1 = Equivalent Salary in city 2 Cost of Living

29. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Joe with benefits $28,500 in Denver x 148.2 102.9 = Equivalent salary in Seattle$38,000 in Seattle x 102.9 148.2 = Equivalent salary in Denver Option 1 or Option 2

30. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Joe with benefits $28,500 x 1.4402332 = $41,046.65 = Equivalent salary in Seattle $38,000 x.6943319 = $26,384.61 = Equivalent salary in Denver Option 1 or Option 2

31. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Joe with benefits With the benefits package included, the job offer in Denver is higher. A person earning $28,500.00 in Denver must earn $41,046.65 in Seattle to have the same spending power. Or A person earning $38,000 in Seattle must earn $26,384.61 in Denver to have the same spending power.

32. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Additional Web sites Web sites available to help calculate salaries and cost of living in various locations –www.homefair.comwww.homefair.com –www.bankrate.com/brm/movecalc.aspwww.bankrate.com/brm/movecalc.asp –www.accra.orgwww.accra.org $12.95 fee

33. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona conclusion The base salary is not the only thing to consider when evaluating a job offer. –Also evaluate: Fringe benefits Opportunities for advancement and work incentives Employer provided services Additional perks Location and environment

34. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Cost of Living Index -- Review Index form – rates communities on a scale of 100.0 and gives an average cost community a rating of 100.0. –A lower index means a lower cost of living than the U.S. average. –A higher index means a higher cost of living than the U.S. average. Example: An index value of 115 indicates that the cost of living in that area is 15% higher than the average.

35. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Comparing Job Offers 1.1.3 Lesson Objectives -- Review –Examine the importance of career planning, salaries, and benefits to overall financial well- being –Differentiate salaries in different cities using the cost of living equation

36. © Family Economics & Financial Education – Revised May 2008 – Career Development Unit – Comparing Job Offers Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Comparing Job Offers 1.1.3 Assignments –What is the Best Job Offer? 1.1.3.L1 (in class) –Cost of Living Equation Practice 1.1.3.A1 (in class) –Comparing Job Offers 1.1.3.A2 (homework)