Learning Objectives:
- Prepare
a financial forecast and budget for the student who enters college after
high school and then obtains a job after graduating from college.
- Prepare
a financial forecast and budget for the student who enters the workforce
directly from high school.
- Calculate
the budgeted savings or debt each year for each students scenario as well
as the cumulative savings or debt after each year.
Assessment:
Students will: 1) determine yearly revenue, expense and
savings or debt for 10 years, and 2) determine cumulative savings or debt for
each of 10 years.
Business Skill:
Financial planning: Budgeting and forecasting skills are
fundamental to the financial planning process, and to estimating and tracking
revenues and expenses for both businesses and individuals. CPAs provide a
variety of services, including financial planning, that utilize and interpret
financial information.
ACTIVITIES:
Who Will Have More Money in the Bank at the Tenth Year
Class Reunion?
Part 1:
Jack and Diane graduate from high school the same year. Jack begins a full-time job, starting at
$19,900 and keeps his part-time job (where he earns an additional $1,500 a
year). Feeling flush, Jack moves into
his own apartment, purchases $1,300 worth of new clothing and goes on a
one-week vacation to Florida.
Diane heads to Florida as wellto college, where tuition for
the first year is $13,500 and a room in a dorm costs $7,000. Diane works all 12 weeks of the summer for
$350 per week, enters a work-study program at her school, wins a partial
scholarship, and qualifies for financial aid.
In addition, she sells her car for $1,000 and spends the money on
clothes ($250 per year).
Use this information to complete Year 1 of the spreadsheet
below for both Jack and Diane. Then forecast
revenue and expenses over the next three years for each, make the following
assumptions:
FOR JACK:
revenue increases 3% each year over the prior year and all expenses,
except the car payment, increase 4% each year (over the prior year).
FOR DIANE:
revenue remains constant each year and expenses increase 2% each year.
Jack
|
1
|
2
|
3
|
4
|
Diane
|
1
|
2
|
3
|
4
|
|
Revenue
|
|
Revenue
|
|
|
Full-time job
|
$
|
|
|
|
Summer job
|
$
|
|
|
|
|
Part-time job
|
$
|
|
|
|
Scholarship
|
$1500
|
|
|
|
|
|
|
|
|
|
Financial Aid
|
$6500
|
|
|
|
|
|
|
|
|
|
Work-study Program
|
$2000
|
|
|
|
|
|
|
|
|
|
Sale of Car
|
$1000
|
|
 |
|
|
| |
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