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Overview
As high school seniors, you will soon be faced with a pivotal decision:
What will you do with the rest of your lives? Should you go to college and
possibly earn more money in the future, or should you enter straight into the
work force and start making money immediately? This computer lab activity will
help you compare these two options and will, hopefully, help you discover which
option is best for you.
Going to College
(Complete this step even if you have no plans to go to college. Part of the
point of this activity is to explore opportunity cost-- the only way to know
what you are giving up is to research it!)
- Research a college
that you might like to attend. Do this even if you do not have any plans to
attend college. Find out the following information about your college.
 | How much does it
cost to attend your college per year? (Tuition and fees) Write this total
down.
|
| How much is room and
board at your college? (Assume you will be living in the dorms all four
years in this scenario.) Write this total down.
|
Create a yearly budget
for college as follows:
|
Category |
Cost for the year (9
months… you live at home in the summer) |
|
Tuition, fees, room &
board |
|
|
Cell phone |
$70.00/mo. * 9 =
$630.00 |
|
Laundry |
$20.00/mo. * 9 =
$180.00 |
|
Entertainment, Misc. |
$1,000.00 |
|
Books |
$600.00 |
|
TOTAL |
|
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- Multiply your total by 4. The total
cost for attending your college will be how much? (Write this total down.)
- Assume you will be
working at a campus coffee shop making $7.00 an hour. You work about 15 hours
a week.
| You make $105.00 a
week. When taking out taxes, you bring home $90.00 a week.
|
| $90.00 a week * 36
weeks in 9 months = $3,240.00 total income for the year
|
| $3,240 * 4 years of
college= $12,960
|
Subtract your total
cost for attending college from 12,960. The remaining figure is how much you
must take out in STUDENT LOANS. How much will you need to take out in student
loans? (Write this total down.)
Career After College
- What job could you get
with the degree that you plan to pursue? Choose one and look up how much a
person in that profession makes on average.
| Place of employment:
|
| Pay per year (salary
OR hourly wages multiplied by 2080):
|
| Gross monthly pay
(salary divided by 12 OR hourly wages multiplied by 160):
|
| Net monthly pay
(total from gross monthly pay multiplied by 0.85):
 | This takes into
account taxes.
|
|
Create a monthly
budget as follows:
|
Category |
Cost for the year (9
months… you live at home in the summer) |
|
Apartment (assume you
live alone) |
$500.00
|
|
Cell phone |
$70.00 |
|
Entertainment, Misc.
|
|
|
Utilities (electric,
cable, Internet) |
$80.00 |
|
Groceries |
$200.00 |
|
Savings |
|
|
Loan Payment from
college |
|
|
Car Payment |
|
|
TOTAL |
|
How to calculate some of the above figures:
 | Loan Payment from
College: Total debt from college
* 1.05 = _____.
_____ (total from above) / 10 (10 years to pay off) = Total yearly payment.
Total yearly payment / 12 = Total monthly payment.
Insert total monthly payment into table above.
|
| Car Payment:
Find a car on the Internet that you
would like to purchase. Assume you have no down payment. Assume you will
purchase the car at 5% interest. Calculate your payment as follows:
| Cost of car * 1.05 =
_____
|
| _____ (total from
above) / 5 (5 years to pay off) = Total yearly payment
|
| Total yearly payment
/ 12 = Total monthly payment.
|
| Insert total monthly
payment into table above. |
|
Straight to Work
- What job will you go
into right after high school? If it is somewhere you are working now, you can
mention it here. Otherwise, research online possible careers that do not
require a college degree.
- Give the following
information with regards to your total income:
| Place of employment: |
| Pay per year (salary
OR hourly wages multiplied by 2080): |
| Gross monthly pay
(salary divided by 12 OR hourly wages multiplied by 160): |
| Net monthly pay
(total from gross monthly pay multiplied by 0.85):
| This takes into
account taxes. |
|
Create a monthly
budget as follows:
|
Category |
Cost for the year (9
months… you live at home in the summer) |
|
Apartment (assume you
live alone) |
$500.00
|
|
Cell phone |
$70.00 |
|
Entertainment, Misc.
|
|
|
Utilities (electric,
cable, Internet) |
$80.00 |
|
Groceries |
$200.00 |
|
Savings |
|
|
Car Payment |
|
|
TOTAL |
|
Calculate car payment as follows:
Find a car on the Internet that you would like to purchase. Assume you have no
down payment. Assume you will purchase the car at 5% interest. Calculate your
payment as follows:
| Cost of car * 1.05 =
_____ |
| _____ (total from
above) / 5 (5 years to pay off) = Total yearly payment |
| Total yearly payment
/ 12 = Total monthly payment. |
| Insert total monthly
payment into table above. |
Opportunity Cost
| Opportunity cost is defined as the cost
of what you give up to do something else.
|
| College opportunity
cost: How much money could you have made if you went straight to work
full-time after high school? (Straight to work route multiplied by 4.)
|
| Straight to work
opportunity cost: What is the difference in the amount of money you could have
made if you had went to college versus going straight to work after high
school? (College career yearly salary multiplied by 5 MINUS straight to work
yearly salary multiplied by 5). |
Reflection Questions
(Homework 2)
Due tomorrow (11/6/08)
- What
did you learn by writing out this budget?
- What is
the opportunity cost of going straight to work? What is the opportunity cost
of going to college then getting a career?
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