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Learning Objectives:

  1. Prepare a financial forecast and budget for the student who enters college after high school and then obtains a job after graduating from college.
  2. Prepare a financial forecast and budget for the student who enters the workforce directly from high school.
  3. Calculate the budgeted savings or debt each year for each student’s 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. CPA’s 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 well—to 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