1. Major Expenditures: Housing, Transportation and Food
Advanced Level

2. Food, Transportation and Housing: Over 60% of Average Spending
Housing, transportation and food are the largest expenses for most individuals. Ask participants what influences spending choices.
i. The percentages are just averages. Consumers may spend more or less in a category depending on multiple factors such as their values, goals, where they live, etc.
Source: 2011 Consumer Expenditure Survey
What influences spending choices?

3. Your Present Self Impacts Your Future Self
Planned buying process is essential
Credit is often used to purchase housing and transportation
Choices impact net worth
Choices impact financial well-being
Using the planned buying process helps to maximize satisfaction; especially with durable good purchases.
b. Housing and transportation are often purchased with credit which impacts net worth.

4. Which do you prefer, preparing food at home or eating out? Why?
Have participants brainstorm if they prefer preparing food at home or
eating out. Why?
i. Record participant responses on the white board to reference
later.
b. Although food is a consumable item where individuals may spend less
time in the planned buying process planning their purchases, the
amount spent on food is significant. Especially because impulse
buying can be common.
c. Remind participants that the average consumer spends 13% of their
income on food. The breakdown is:
i. Food at home ‐ 7.7%
ii. Food away from home – 5.3%

5. Two Primary Sources Prepare Food at Home Least Expensive
Scratch
Convenience
Ready-to-eat
Fast-food restaurants
Fast-casual restaurants
Full-service restaurants
Prepare Food at Home
Least Expensive
Food Away from Home
Most Expensive
Food is a need. However, what is consumed and how it is purchased
can greatly impact the cost.
b. Preparing food at home is a form of household production.

6. Burger Night - Family of Four
Food Away From Home
Food Prepared at Home
McDonalds Quarter Pounder with Cheese Combo Meal
Burger with bun, condiments, 5lb bag of potatoes (for fries) and a 12 pack of Coke
Cost per person
$6.29
Family of 4
$25.16
Cost per person
$5.84
Family of 4
$23.36
Exact food prices will vary depending on the location and grocery
store. Food prepared at home is an average price from a large grocery
chain.
i. 2 lb burger ‐ $5.98, package of buns $2.29, cheese slices
$3.46, condiments $3, 5 lb potato ‐ $3.75 and a 12 pack of
coke $4.88.
b. Not only is the food prepared at home less expensive, but there will
be left overs.
c. Have participants brainstorm ways they could reduce the costs of
either meal.
i. Order from the value meal.
ii. Buy groceries on sale or use coupons.
iii. Purchase meat in bulk.
iv. Substitute Coke for water.
The meal prepared at home is less expensive
and will result in left-overs
What are ways to reduce the cost for either option?

7. Lasagna Comparison What is the cost per serving of each option?
What are two pros and two cons of each item?

8. Goal: Eat well-balanced meals high in nutrition
Regardless of how the food was prepared, individuals should strive to eat well balanced meals that are high in nutrition.
b. The United States Department of Agriculture provides this graphic
which illustrate what a well‐balanced plate would look like.
c. Have participants brainstorm 2‐3 examples of foods from each group.
d. An advantage to preparing food at home is the person has
opportunities to enhance nutrition and reduce calories.
i. Ask participants how nutrition could be enhanced or calories
reduced with the burger night meal prepared at home.
1. Include a fruit.
2. Substitute Coke for water.
3. Use turkey burger instead of beef.
4. Use sweet potato fries instead.
5. Bake, not fry, potatoes.
Brainstorm 2-3 examples of food from each group

9. Lasagna Draw your lasagna on your plate
Add other items to make it a well balanced meal.
Which food source (scratch, ready‐to‐eat or full‐service restaurant) would be the easiest and most cost effective to create a well‐balanced meal from. Why?
Describe a situation when each food source option would be the most ideal for an individual.
Scratch:
Ready‐to‐eat:
Full‐service restaurant:

10. Facilities and equipment
Other Considerations
Time
Skills
Facilities and equipment

11. Eating on a budget

12. Housing (Renting and Owning)
Bellwork –
Describe your dream house.
(include details such as location, nearby
facilities, amenities, etc.)
Housing (Renting and Owning)
Do they rent or own?
ii. Where is it located?
iii. How big is it and who lives there?
iv. What type of amenities does it have?
v. Which characteristics are needs vs. wants?

13. Housing: Largest Expense for Most
Prices vary greatly
Size
Location
Amenities
According to the 2011 Consumer Expenditure Survey, the average consumer spends 34% of their income on housing. Prices for houses vary greatly depending on several variables. For example:
i. Homes in cities are often more expensive than rural areas.
ii. Homes near schools, shopping or other community areas can be more expensive
Choose housing that fits your personal needs
and spending plan

14. Renting a Home – Important Terms
Landlord
Person who owns a property and chooses to allow others to live there for rent
Rent
Price paid for the use of someone else’s property
Tenant
Person who rents the property
When individuals rent a home, they are paying to use property that a landlord owns.

15. What are common rental expenses?
The cost of housing is more than rent!
Utilities (all or some may be included in rent)
Household furnishings (some may be furnished)
Renters Insurance – provides payment to renters to cover the damage and loss of property in addition to liability losses
Communications (internet, television, phone)
Stress that there are several expenses, in addition to rent, that contribute to the total cost of housing. When creating spending plan,
individuals must include all expenses.
i. According to the 2011 Consumer Expenditure Survey, the
34% the average consumer allocated to housing was broken
down as follows:
% rent or mortgage
2. 7.5% utilities
3. 2.3% household operations
4. 1.2% household supplies
5. 3% furnishings and equipment
Renters insurance and communications are optional expenses. Stress
that renters insurance is highly recommended as the landlord is not
responsible for property loss or liability.

16. Where can you find a place to rent?
Sources
Online
Friends/Family
Bulletin Boards
Property Management Company
News-paper
When renting a home, there are several sources that advertise
available rentals.

17. When Comparing Properties
Make a list of essential vs. preferred features
If possible, visit properties of interest
Know what you can afford and calculate the total cost
Understand the policies
Individuals should make a list of essential vs. preferred features.
b. If possible, visit properties of interest in person or online.
c. It is important that individuals understand the rental policies and calculate the total cost of living for each rental to truly compare
properties and make sure it is an affordable location.
d. Have participants brainstorm what housing features would be essential vs. preferred for them.
What are examples of essential vs. preferred features?

18. Amenities (furniture, pool, laundry, etc)
What types of questions would you ask when comparing rental properties?
Direct Costs
How much is rent?
When is it due?
What is the rental contract length?
Rent & Length of Rental
Who is responsible for each bill?
Utilities
What is available?
Are there additional charges for usage?
Amenities (furniture, pool, laundry, etc)
a. Have participants brainstorm and then add to the discussion with
slides 10‐11.
b. Direct costs
i. Understand the rental length (typically renewed monthly or
yearly) and policies if an agreement is terminated early.
ii. Some rentals will include certain utilities in the monthly
rental amount.
iii. Some amenities may be provided including furnishings and
appliances. Check if laundry is available in the rental or an onsite
community laundry room. Learn if the machines are coin
operated.
c. Policies Each rental has different policies about how the property can
be used and safety features. In advance of renting, individuals
should get a copy of the policies to ensure it is a property
they will be satisfied with.
ii. Repairs and maintenance are typically the responsibility of
the landlord. But, individuals should be aware of policies
regarding items such as lawn care that may be their
responsibility and an added expense.
iii. It is important to know what constitutes a violation in the
rental agreement and eviction terms.

19. What types of questions would you ask when comparing rental properties?
Policies
What are the property features and restrictions - overnight guest and pet policies, parking, safety features?
Policies
Who is responsible for the work and fees?
Repairs and maintenance
What are the eviction terms?
Eviction terms
What are my rights?
Landlord/Property Manager Access
When an individual is interested in renting a property, they will
typically complete a rental application. This helps the landlord
compare potential tenants.
b. Landlords often review an individual’s credit history which is another
reason to have a positive history.

20. What types of questions does a landlord ask on a rental application?
Helps a landlord evaluate if they will rent to you
Who will be living at the property
Income/employment verification
Rental history
References
Credit history check
a. A rental agreement is a contract that protects both the landlord and the tenant.
b. Individuals should not rent a property without a written agreement.

21. Rental Agreement
Make sure all expenses and policies are clearly outlined
Contract specifying the tenant’s and landlord’s legal responsibilities
Rental agreement (lease)
A rental agreement is a contract that protects both the landlord and
the tenant.
b. Individuals should not rent a property without a written agreement.
Don’t pay any deposits or rent payments without a rental agreement!

22. What initial expenses may be required to rent a property?
One or both expenses may be required:
Pre-payment
First and last month’s rent
Security Deposit
Money paid to a landlord to cover cleaning costs and damage repairs beyond normal wear and tear
All or part of the security deposit may be returned when a renter
moves out depending on policies outlined in the rental agreement.

23. Rental Agreement Activity
Evaluate Rental Agreement. Questions?
What was missing from the rental agreement and why does it matter?
If you received this rental agreement, how would they work with a landlord to address any missing information?
Stress that the agreement is designed to protect both them and the landlord.
Have participants identify what expense categories should be included in a spending plan for this rental.

24. Purchasing a Home
Real estate agent - Licensed individual representing a buyer or seller in a contractual transaction to purchase real property
Helps buyers:
Find a property that addresses their needs and wants
Find a property that fits their spending plan
Work through the contract and closing process
When purchasing a home, many individuals work with a real estate agent.

25. Home Loan Most use credit to purchase a home
Lender evaluates many factors including:
Credit history
Income
Net worth
Income and expense statement
Most use credit to purchase a home
Lender determines the maximum amount that can be borrowed and the credit terms
Depending on the type of loan and lender, different factors will be evaluated to determine if an individual is eligible and the loan
amount. Common factors include credit history, income, net worth and current expenses.
b. There are several government programs that may help individuals with the down payment or qualify for a home loan. Especially for firsttime
home buyers. However, a positive credit history is still essential.
c. It is important to shop around for credit. Different lenders may offer different rates and closing costs vary.

26. Two Significant Initial Expenses
Down Payment
Portion of the purchase price not borrowed
Typically 5-20% of purchase price
Mortgage insurance – protecting the lender if the borrower provides less than 20% down payment
Closing Costs
Fees and charges associated with the purchase of a property
Typically 1-4% of purchase price
The down payment and closing costs are significant initial expenses when purchasing a property.
b. If an individual does not have a 20% down payment, they will pay private mortgage insurance as a part of their mortgage to protect the
lender. This is different than homeowners insurance that provides for the home owner in case of property loss or liability.

27. Mortgage Payment
A payment to pay off the loan used to purchase housing
Mortgage payments typically include:
Cost of the home
Interest
Funds to pay property taxes
Funds to pay homeowners insurance
A mortgage payment typically includes more than the cost of the
home.

28. What are typical home ownership expenses?
Housing expenses are more than a mortgage!
Utilities
Household Furnishings
Special Assessments
Homeowner’s Association Dues
Maintenance and repairs
Communications (Internet, television, phone)
The maximum amount a lender will loan an individual could be more than they can afford.
b. Special assessments are fees charged by local government to pay for things like street lights, schools, roads, etc.
c. Some experts recommend that individual’s should plan on 2‐3% of the home’s value be allocated to maintenance and repairs each year.

29. Purchasing a $250,000 Home
Scenario 1: Down Payment 3.5% Interest Rate  30 Year Loan
20% Down Payment
5% Down Payment
Down Payment
$50,000
$12,500
Monthly Mortgage Payment
$1,158.51
$1,326.90
Total paid
$417,062.18
$477,683.21
$8, paid for mortgage insurance!
Scenario 2: Credit Score $50,000 Down Payment 30 Year Loan
Show scenario one to illustrate the cost of mortgage insurance as a result of a lower down payment.
b. Scenario two illustrates how a low credit score can result in a higher interest rate. Over time, the cost can be significant.
780 Credit Score
720 Credit Score
Interest
3.3%
3.5%
Monthly Mortgage Payment
$1,136.33
$1,158.51
Total paid
$409,077.76
$417,062.18
$7,924.42
Additional interest paid
Source: mortgagecalculator.org

30. Statement of Financial Position
Equity – the monetary value of a property minus the amount owed
Benefits of owning
Pride of ownership
Tax benefits
Opportunity to build equity
Risks of owning
Unanticipated expenses
Property value may decrease
May be difficult to sell
a. A home is an investment if it is worth more than what is owed on the home. This, along with the pride of ownership and tax benefits are
advantages to home ownership.
b. However, home ownership can be a risk because the property value may decrease, it is a contractual expense and may be difficult to sell
the home and there may be large unanticipated expenses.

31. Rent vs. Own Activity Set-up: work in groups of 2-3
Supplies: piece of butcher paper and markers
Activity: For both renting and owning, brainstorm:
2 Pros
2 Cons
Rent
Own
Pros
Cons
Have participants work in groups of 2‐3 to brainstorm at least two
advantages and two disadvantages of renting vs. owning on a piece of
butcher paper.

32. Rent Own Lower move-in cost Subject to terms of the rental agreement
Pros
Cons
Lower move-in cost
Subject to terms of the rental agreement
Potential to gain equity
May have significant negative effects on credit history is home loan is not paid according to the terms of the loan
Easier to move
May have restrictions such as no pets
Tax benefits
Large initial cost (down payment, closing costs)
No (or little) maintenance and repairs
Few or no opportunities for home improvements (appliances, paint, etc.)
May improve credit history if the home loan is paid according to the terms of the loan
Additional expenses
Less responsibility
No equity is gained
Free to make home improvements
More risky than renting
Typically less expensive than home ownership
No tax benefits
No restrictions (unless restricted by the specific homeowner’s association)
Usually requires additional resources (time, money) to maintain
Utilities are sometimes included in rent payment
Not as easy to move

33. What are transportation options in your community?
Remind participants that the average consumer spends 17% of their income on transportation. The breakdown is: i. Vehicle purchase – 5.4%
ii. Fuel – 5.3%
iii. Other expenses – 4.9%
iv. Public transportation – 1%
b. Ask them to brainstorm transportation options in their community.
c. Stress that transportation needs and access to different options varies greatly between communities.

34. Public Transportation
Examples include: taxi, subway, bus, etc.
Pros
Cons
May not be convenient or require more travel time
Availability depends on the location
Does not require extra cost of ownership expenses
Typically cost effective
Public transportation is often a cost effective way to get around, but
the availability depends on the location and the trade‐offs may be
convenience and time.

35. Purchasing an Automobile
Dealership
New and used vehicles
Convenient hours
Private Sources
Typically pre-owned vehicles
Most vehicles are purchased at a dealership or private sources such
as an individual.

36. Do Your Research! You are responsible for yourself!
Before working with sales personnel
Evaluate your needs and wants
Identify the right type of vehicle for you and desired features
Research expected costs
Before working with sales personnel, individuals should do their
research to know what type of vehicle they want and how much they
should expect to pay for that vehicle.
You are responsible for yourself!
Advance research will maximize your satisfaction with the purchase!

37. What are typical automobile ownership expenses?
Automobile payment (if credit is used)
Fuel
Maintenance and Repairs
License and Registration (yearly fee)
Insurance
Parking (in some locations)
In addition to the monthly payment (if credit was used) there are
several out of pocket costs associated with owning a vehicle.
Before purchasing a vehicle, be sure you can afford the total cost of ownership

38. Marina’s Out-of-Pocket Expenses
Marina purchased a 2013 Honda Accord
Monthly Payment
Purchase Price
$21,548
Down Payment
$2,154.80
Interest Rate
2.84%
$347.09
Total Paid (down payment + loan)
$22,980.20
5-Year Average Out-of-Pocket
(15,000 miles driven per year)
Fuel
$9,852
Insurance
$3,915
State fees (licensing)
$1,932
Maintenance
$1,945
Repairs
$1,758
5 Year Total
$19,402
Monthly Amount
$323.37
Marina purchased a 2013 Honda Accord. She put 10% down on a 5‐year loan at a 2.84% interest rate. Her monthly payment is $
b. In addition, she used Kelly Blue Book Cost to Own Calculator and learned that, on average, she will pay a total of $19,402 in additional
expenses over 5 years to own this vehicle.
c. While not all expenses will be monthly and the total will vary, Marina should plan on the vehicle costing her approximately $ per
month to own for the first five years.
Marina’s monthly loan is $347.09, but on average, the car will cost her,
$ per month to own!
Source: bankrate.com
Source: kbb.com

39. Depreciation The value of most vehicles depreciates (lowers) over time
One of the biggest costs of ownership
Make sure you don’t owe more than you own if credit is used
The Statement of Financial Position should record the market value of the vehicle that day
One of the most significant costs of owning a vehicle is depreciation.
All vehicles depreciate in value.
b. In some cases, the vehicle may depreciate faster than the loan is paid
making an individual upside down on the loan.
c. The Statement of Financial Position should record Market Value of a
Vehicle (what it is worth today). This can be found from sources such
as Kelly Blue Book.

40. What features would you look for in an automobile?
Cost
Size
Usage
Gas mileage
Safety Ratings
Reliability
Environmental Impact
Depreciation
Upgraded features
Expand on the participants list with examples from the slide.

41. Using Credit Automobile Dealerships Depository Institutions
Credit history will most likely be checked to determine if a loan will be granted and the terms
Automobile Dealerships
Depository Institutions
Vehicles are often purchased using credit. Most lenders will check an
individual’s credit history to determine if a loan will be granted and
the terms.
b. It is important to shop around before negotiating. Loan terms may
vary significantly between lenders.
Loan rates vary significantly between lenders. Shop around before negotiating.

42. Down Payment Amount required (if any) varies
If selling a current vehicle, research the vehicles worth in advance of talking to others
If you trade-in your vehicle, negotiate the trade-in value separately from the price of your new vehicle
Not all vehicle purchases require a down payment. However, if this
occurs, individuals will pay more over the lifetime of the loan and are at greater risk of owing more than the vehicle is worth.
b. Use resources, such as Kelly Blue Book, to know the vehicles worth
before negotiating with others. The retail value is not what
consumers can typically expect to sell their vehicle for.

43. Leasing Leasing – renting a product while the ownership
remains with the lease grantor
You pay a specified amount of money (usually monthly) for a specific time
Once lease expires, vehicle returned to the lease grantor
Read the contract closely – look for hidden costs
Individuals may choose to lease a vehicle. If doing this, they must
look closely at the contract to fully understand the terms.
True or false activity

44. Summary Housing Transportation Food Housing, transportation, and food
Over 60% of spending
Determine if renting or owning a home is best for you
Housing
Consider the total cost of owning a vehicle
Transportation
Eat well-balanced meals high in nutrition that fit into your spending plan
Food
In addition to cost and nutrition, there are several other variables
that impact an individual’s food choices.
b. For each consideration, discuss it in the context of food prepared at
home vs. away from home.
i. Time – eating out may be quicker. But, individuals should
factor in transportation time as well.
ii. Skills – individuals may not have food preparation skills.
However, these skills can be gained from classes, peers,
watching online tutorials, etc.
iii. Facilities and equipment – are required to cook at home.