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Take Charge of Your Finances

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Presentation on theme: "Take Charge of Your Finances"— Presentation transcript:

1 Take Charge of Your Finances
Comparing Job Offers Take Charge of Your Finances Changes on Slides 4, 6

2 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. In other words, how many people possess the knowledge and skills for a particular field. Demand – the relationship between prices and the corresponding quantities of a good or service individuals are willing to purchase at any given point in time. In other words, how needed is this particular field.

3 Congratulations! Sara just graduated from college with a teaching degree and received two job offers. Which is the best deal?

4 Which is the better deal?
Job Offer 1 $35, in Reno, NV Job Offer 2 $40, in Anchorage, AK Not enough information to decide Which option is best? Added option C because it is in the body of the LP

5 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 and gives an average cost community a rating of A lower index means a lower cost of living. A higher index means a higher cost of living.

6 Comparing Job Offers Base Salary Additional perks
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 & Other Work Incentives Raised based on performance Guaranteed pay raise based on longevity Additional perks Relocation allowances Company car Repayment of education loans Stock options Gym membership Flexible hours Merchandise discounts Child care Telecommuting Location and Environment Commute time Affordable housing Low crime rate Good schools Desired climate

7 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

8 Cost of Living Equation
In order to compare the cost of living in two cities always follow these three steps: Step 1: Assign each cities numbers. One city will be assigned the number one and the other the number two. Step 2: Provide the corresponding salaries and index amounts. Step 3: Complete the math and indicate which city is a better offer and why.

9 Sara’s Job Offers Job Offer 1 – Reno, NV Job Offer 2 – Anchorage, AK
$35, salary 105.1 cost of living index Job Offer 2 – Anchorage, AK $40, salary 123.1 cost of living index

10 Sara’s Cost of Living Equations
123.1 $35, in Reno x = Equivalent Salary in Anchorage 105.1 Option 1 or Option 2 $40, in Anchorage x 105.1 = Equivalent Salary in Reno 123.1

11 Sara’s Cost of Living Equations
$35, x = $40, = Equivalent salary in Anchorage Option 1 or Option 2 $40, x = $34, = Equivalent salary in Reno

12 Sara’s Job Outcome Job Offer 1 Job Offer 2 $ 35,000.00 in Reno, NV
$40, in Anchorage, AK A person earning $35, in Reno would earn $40, in Anchorage to have the same spending power. Or A person earning $40, in Anchorage would earn $34, in Reno to have the same spending power. Therefore, the salary offer in Reno is better

13 Joe’s Offers Job Offer 1- Denver, CO Job Offer 2 - Seattle, WA
$24, salary 102.9 cost of living index Job Offer 2 - Seattle, WA $32, salary 148.2 cost of living index

14 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

15 Joe’s Cost of Living Equations
148.2 $24, in Denver x = Equivalent salary in Seattle 102.9 Option 1 or Option 2 $32, in Seattle x 102.9 = Equivalent salary in Denver 148.2

16 Joe’s Cost of Living Equations
Option 1 or Option 2 $24, x = $34, = Equivalent salary in Seattle $32, x = $22, = Equivalent salary in Denver

17 Joe’s Job Outcome Job Offer 1 Job Offer 2 $24,000.00 in Denver, CO
$32, in Seattle, WA A person earning $24, in Denver must earn $34, in Seattle to have the same spending power. Or A person earning $32, in Seattle must earn $22, in Denver to have the same spending power. Therefore, the salary offer in Denver is better

18 Fringe benefits and employer provided services can make a difference:
For example, if a $35, job had 100% of medical insurance coverage valuing $ per month, a person would not have to budget for $4, in medical insurance per year. This would increase the value of his or her salary to $39, Benefits and services should be included within the salary before calculating the cost of living.

19 Sara’s Job including benefit package
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

20 Sara’s Job including benefit package
Job Offer 1 – Reno, NV $35, salary + $4, benefits = $39,800.00 105.1 cost of living index Job Offer 2 – Anchorage, AK $40, salary + $5, benefits = $45,200.00 123.1 cost of living index

21 Sara’s Job including benefit package
Option 1 or Option 2 123.1 $39, in Reno x = Equivalent salary in Anchorage 105.1 105.1 $45, in Anchorage x = Equivalent salary in Reno 123.1

22 Sara’s Job including benefit package
Option 1 or Option 2 $39, x = $46, = Equivalent salary in Anchorage $45, x = $38, = Equivalent salary in Reno

23 Sara’s Job Outcome including benefit package
Job Offer 1 $39, (with benefits) in Reno, NV Job Offer 2 $45, (with benefits) in Anchorage, AK A person earning $39, in Reno must earn $46, in Anchorage to have the same spending power. -Or A person earning $45, in Anchorage must earn $38, in Reno to have the same spending power. Therefore, with the benefits package included, the job offer in Reno is higher.

24 Joe’s Job including benefit package
Job offer 1 - Denver, CO $24, salary + $4, benefits =$28,500.00 102.9 cost of living index Job offer 2 - Seattle, WA $32, salary +$6, benefits = $38,000.00 148.2 cost of living index

25 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

26 Joe’s Job including benefit package
Option 1 or Option 2 $28, in Denver x 148.2 = Equivalent salary in Seattle 102.9 $38, in Seattle x 102.9 = Equivalent salary in Denver 148.2

27 Joe’s Job including benefit package
Option 1 or Option 2 $28, x = $41, = Equivalent salary in Seattle $38, x = $26, = Equivalent salary in Denver

28 Joe’s Job Outcome including benefit package
Job Offer 1 $28,500.00(with benefits) in Denver, CO Job Offer 2 $38,000.00(with benefits) in Seattle, WA A person earning $28, in Denver must earn $41, in Seattle to have the same spending power. Or A person earning $38, in Seattle must earn $26, in Denver to have the same spending power. Therefore, with the benefits package included, the job offer in Denver is higher.

29 Additional Web sites Web sites available to help calculate salaries and cost of living in various locations (compares both where you live and where you work)

30 Questions?


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