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 budget 6. 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 $ 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

how-teens-are-spending-money how-teens-are-spending-money What are teens spending their money on? how-teens-are-spending-money

The Dilemma NEEDSWANTS Things 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

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 - monthly Gas - weekly Maintenance (new tires, oil changes, repairs) - monthly Title and registration - yearly Auto insurance - monthly

Cost of Auto Insurance Your monthly premium is based on: 1. Model, style and age of car 2. Age, gender, driving record of driver 3. Location of driver 4. Purpose of driving (work, recreation) 5. Where they drive to 6. Credit rating 7. Grades for teenagers

Types of Coverage Liability CoverageCollision 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.

ComprehensivePersonal 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.