Suggested Target Age: Grades 9-12 (especially 11-12)

Topics Covered: budgeting, moving, independent living

Time Required: 45 minutes

What Will the Students Learn?

• They will gain a “reality check” on the income necessary to support the lifestyle preferences they may have
• How to set up a budget, and compose one that includes living expenses plus moving expenses and the costs of establishing a new household
• What a security deposit is
• They will gain an understanding of the expenses associated with moving and setting up an apartment

State Content Standards Key
California: History/Principles of Economics grade 12- 12.1(3), 12.4(3)
Florida: Math MA.B.3.4; MA.A.3.4
Indiana: no specific standards identified
Virginia: Math A.1, A.2; Civics & Economics CE.4, CE.9; Govt 16, 17; Economics & Financial Literacy Objectives 1,4,7,8,12,13

Materials Required:
Copies of the handout, Calculating the Costs of Setting up an Apartment

NOTE: This lesson requires access to computer with Internet connection.

Lesson Plan:

Set-Up: Gather students into a computer lab for this lesson.

Introduction: Explain that today’s class is the first is a short series you will be teaching about living independently. Over the course of this series, the students will learn about personal money management, budgeting, and moving into an apartment, including info on leases and relationships with landlords.

1. Have the students log into Jump Start’s “Reality Check” exercise at this link:
http://www.jumpstart.org/madmoney/pgv_money_rc_main.html  They should go ahead and do the activity (takes only 5 minutes or less). Basically, with this exercise, they are indicating their preferences for their lifestyle once they are on their own….then the system calculates an income they will need to make in order to support that lifestyle. It also gives examples of jobs that pay that income level and estimates the amount of schooling one would need to have to obtain such jobs.

2. Hold a brief group discussion on the exercise. Were the students surprised at all by the amount of money they will need to make to support their preferred lifestyle?

3. Now have your group of students brainstorm answers to this question: What are all the things that you would have to budget for when you are moving into your own apartment and beginning to live independent from your parents? Write their answers down on a chalkboard or large “Post it” note where everyone can see them. The answers should include at least the following:

• Moving expenses (ex. renting a U-Haul, paying movers, or buying dinner for friends who help you move)
• Apartment security deposit and first month’s rent
• Set-up furnishings for the new apartment (everything that you don’t come with...such as furniture, household supplies)
• Utilities deposits
• Monthly rent and utilities expenses
• Monthly food expenses
• Monthly transportation expenses (car payment, car insurance, gas & maintenance, or cost of public transport)
• Personal expenses (dry cleaning, laundry, haircuts)
• Out of pocket medical expenses
• Clothing
• Entertainment

4. Review the list the students make, then add in any missing items, explaining what these are (e.g., they may not know about utility deposits one must pay to establish brand new service with the electric or gas company)

5. Ask if anyone can define the difference between a fixed expense and a flexible (or variable) expense. Once the definitions are articulated (by either a student or by you, if needed), then go through the list you’ve written down and ask the students which expenses are fixed and which are flexible/variable.

6. Break the students down into 3-4 small groups and pass out copies of the handout titled “Calculating the Cost of Setting Up an Apartment.”

a) Assign each small group a room in an apartment. Choices include kitchen, bedroom, living room, and bathroom.

b) Tell each team to estimate how much it would cost to furnish and equip that room. Encourage students to consider various alternatives, including secondhand stores, garage sales, donations from relatives, etc.

c) Tell each team to prepare a summary of their findings, including an itemized list of what they would buy, the estimated cost of each item, the source for each item, and the total cost of furnishing and equipping "their" room.

d) Have each team take a turn presenting their findings to the class. Write down on the board the total cost of furnishing each room in the apartment.

e) Add up each room’s cost to get a total cost for furnishing a new apartment. What is the students’ reaction to the total cost?

7. As a class, brainstorm some ways to cut costs.