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Imagine yourself as an employed 24 year-old (about ten years from now). This activity will allow you to discover how much money you can expect to earn and what your lifestyle will cost you. Let's Get Started!

Part I
You will need to open up and put all your responses on the Lifestyle Budgeting Worksheet attached below:

I. The Job
Instead of just assuming the job you want is out there waiting for you, find a job using the classified ads of the region you would like to live such as The New York Timesor Monster.com. Not all organizations may be hiring for your dream job, but that's life. In that case, find a job that you are qualified for and meets your career interests. Be sure to record your job and yearly salary on the Lifestyle Budgeting Worksheet.

IA. Taxes
Now, before we get to budgeting we need to talk taxes. Your salary on paper might not look so large when you get your first pay check. That is because you have to pay taxes. The government realized a long time ago that the American people were not so smart about budgeting their money for tax day (April 15th), so they started to take money out of each and everyone's paycheck in order to cover tax expenses.
According to a study done by The National Bureau of Economic Research, on average, most workers pay about 40% in taxes. This includes a combination of Federal, State and Local government taxes. Yes, that's a lot as you watch your take home salary dwindle!!!

So let's recalculate your monthly salary using the salary paycheck calculator.


II. A Place to LiveOnce you have your job, now you must find a place to live and it hopefully won't be back in your parent's house, so shop around. Again, you might want to try the classified ads in the newspaper like The New York Times or try a sites such as apartmentguide.com or rent.com to find a suitable living situation. Make sure to record your monthly rent expenses.You will now begin to create your budget. Additional Items to include in budget:
As you begin to make your budget you need to get an idea of what expenses you'll have. Use the budget worksheet to help you complete this assignment.III. Student LoansIf your job requires a college degree, you will have student loans. According to the U.S. Department of Education, the average debt for students at a four-year college is $24,700. If you go to college you will need to repay your loan.
College loans can be payed off over 15 years at 6% interest. Use this financial calculator to determine your monthly payments of a loan. Remember, if it asks you how many payments, you will have 12 per year. So if you are paying off a loan over 15 years, you will have 180 monthly payments.
If you want to be a doctor, you will have a lot more debt. Go to this American Medical Association link to find out how much debt you will be repaying. If you want to be a dentist (scroll down to the chart and pick the most recent number) or **lawyer** click on the link to find out how much you will be borrowing.
IV. Auto Payment
After you graduate and get that job you want, you need a reliable automobile. Again, use the local classified ads or try autotrader.com to find that car. DON'T SPEND ALL CLASS LOOKING AT CARS. Again, use this financial calculator to determine your monthly payments of a loan. Use an Interest rate of 8% for buying a car. Used cars are typically paid off in 48 or 36 months. Hint - this would be a fixed expense.
V. Gasoline
You will need to determine how much you will spend on gas. Using the real-world fuel-economy averages as recorded by Consumer Guide® here's what each type of auto will get for miles per gallon:
SUV / Mini Van / Truck: 15 mpg
Luxury Sedan: 15 mpg
Midsize Car: 22 mpg
Compact Car: 25 mpg
Hybrid Car: 40 mpg
Assuming that the average drivers puts on 12,000 miles per year on their automobile, take 12,000 divided mpg to determine how many gallons of gasoline you will use in a year. Next, find what gas costs by going to fueleconomy.gov. Multiply the price of gas by the number of gallons you will go through in a year. This will give you your total yearly gas cost. Finally divide it by 12 to get your monthly cost.
For example if my car gets 30 mpg: 12,000 / 30 = 400 gallons of gas
400 x $3.75 per gallon = $1,500 per year. $1,500 / 12 = $125 per month.
VI. Auto Insurance
How much will your auto insurance cost you? If you already pay your own insurance use that figure but if you're on your parents policy, you'll have a different rate so look at the average costs of insurance by state. Remember, premium rates are stated for 6-month periods. Click here to look at insurance rates by state.Click on the link titled "Cost of Auto Insurance" and scroll down to state averages. These averages are for a year so divide by 12 to get your monthly cost.
VII. Utilities
You'll probably want, electricity, and if you're not in an apartment you'll need to pay for garbage service, water, and probably sewer service. To get an idea of what these items cost, ask your parents or someone who is out on their own already OR look at Con Edison for average monthly electric expenses.
VIII. Phone
If you want a phone, it will probably be a cell phone. Land lines are for your grandparents. Try some of these carriers: Verizon, and AT&T
IX. Food
Go ahead and use $250 for you food bill for the month. You may think this to be a high number but consider if you spend $1 on breakfast, $3 on lunch, and $5 on dinner every day - that would come to $270 per month.
Extra Credit Assignment - Make a monthly menu for yourself and then create a grocery list. Go to a store an price out the items or shop online at FreshDirect.com.
X. Savings and Investing
You're probably going to want to retire one day or want to spend some time traveling. You also do not want to live paycheck to paycheck so you want to put some money away for a rainy day. Money for investing is for long term but money put aside in savings is for short term needs and goals. You're going to want a savings account that has at least three months worth of wages in it and you're also going to need to invest money for your future.
XI. Cable/Satellite and Internet
Since many of you cannot live without these two items. Go to Cablevision or Direct TV or Time Warner for NYC residents to find what it will cost you each month.
XII. Other Items
You'll most likely want to spend some of your income on entertainment and dining out from time to time. You'll also want to have a miscellaneous category in your budget for those unexpected expenses that come up from time to time.
Part II.
Now that you have completed your budget, it’s time to reflect. Write your reflection to the questions below in a word document. Then you will copy and paste your reflection in a new post on the discussion tab of the wiki page. Remember, you need to login in order to post on this wiki.
  • Does your salary help you to live the life you picture for yourself ten years from now? Where did you choose to live and why?
  • Is setting a budget necessary when living on your own? Explain your response.
  • Are there any budget items that are “non-negotiable?” Please explain which and why.
  • What is the difference between “wants” and “needs?”
  • What did challenges did you face in budgeting?
  • What did you learn completing this activity?