Return to flip book view
UNIT 16Planning for Living and Leisure (7 days)
UNIT 16 – PLANNING FOR LIVING AND LEISURE (7 Days)All teaching resources in this document are free for teachers. Here is how to you access them:1. Many are hyperlinked in the document, so you can get started right away. 2. Lessons that do not have a hyperlink can be found on the lesson plan resource calledVirtual Economics 4.5 or 5.0 (VE). All teachers can and should get this resource for freeby participating in a VCEE training session. Visit www.vcee.org for more information.3. Lessons from Financial Fitness for Life are on VE. They also have educationaltechnology tools that can be found here:https://www.econedlink.org/resources/collection/fffl-9-12/Once students have learned how to create a budget that includes setting aside money forlong-term goals as well as day-to-day expenses, and have learned in general terms aboutcomparison shopping, contracts, sources of reliable information, and consumer protection, theyneed more specific information about major household expenses such as rent or mortgage,utilities and a vehicle, and their associated rental and sales contracts.EPF.11 The student will demonstrate knowledge of planning for living and leisure expensesbya) comparing the costs and benefits purchasing vs. leasing a vehicleDay 1 Purchase or lease a vehicle?EPF.11 The student will demonstrate knowledge of planning for living a leisure expenses byb) comparing the advantages and disadvantages of renting vs. purchasing a homeDay 1 Purchase or rent a home?EPF.11 The student will demonstrate knowledge of planning for living and leisure expensesbyc) describing the process of renting housingDay 1 Going through a standard rental/lease agreementEPF.11 The student will demonstrate knowledge of planning for living and leisure expensesbyd) describing the process of purchasing a homeDay 1 Main points of the purchase processEPF.11 The student will demonstrate knowledge of planning for living and leisure expensesbye) calculating the costs of utilities, services, maintenance and other housing expensesDay 1 Household expenses beyond the rent or mortgageEPF.11 The student will demonstrate knowledge of planning for living and leisure expensesbyf) evaluating discretionary spending decisions1Virginia Council on Economic Education
Day 1 Understanding discretionary spendingEvaluation DayEPF.11 The student will demonstrate knowledge of planning for living and leisure expensesbya) comparing the costs and benefits purchasing vs. leasing a vehicleDay 1 - Purchase or lease a vehicle?Content KnowledgeA vehicle is often the first major purchase a student makes. It will be valuable for the student tolearn the types of questions that should be asked or researched so that they can weigh the costsand benefits of purchasing a vehicle. They should also recognize that leasing a vehicle is anoption and should be able to weigh the costs and benefits of this approach for their situation.Virginia Board of Education FrameworkConsiderations in purchasing or leasing a vehicle may include● Performance● Safety● Odometer mileage● Average miles driven annually● Fuel consumption● Size● Appearance● Price/payment limit● Insurance costs, taxes, and maintenance● Options/features● Warranty● Depreciation and resale.Consumers should identify several alternative vehicles, including new and used.Consumers should gather information and test-drive multiple vehicles. Consumers shouldcompare each alternative to the criteria established to determine which vehicles best meet them,keeping in mind that not all criteria are equally important.Information should include both subjective resources (e.g., advertisements, sales representatives)and objective resources (e.g., statistically based research)Teaching Tips2Virginia Council on Economic Education
1) Using local auto dealers, collect information on some basic vehicles with popular features.Have dealers provide information on purchase vs. lease, as well as the features of the lease.Financing of a purchase should be comparable in length to the term of the lease.2) Using PACED decision grid, have students do a comparison of the lease vs. purchase of avehicle of their choice. Students should be able to justify their decision using the criteria theyselect.3) A PACED decision grid can be used to decide what car to buy with each student decidingwhat criteria is most important for them. Based on their research as to what is available, theyshould narrow their choices to two or three and decide which one they would purchase based onthe criteria they had established as important.Lessons and ResourcesFinancial Fitness for Life: Grades 9-12 Lesson 20: What’s the Cost of Spending and Saving?Mathematics and Economics: Connections for Life – 9 – 12 Lesson 12: AutonomicsThe Road Ahead: Can You Afford Your Dream Car? – lesson planhttps://www.nh.gov/banking/consumer-assistance/documents/the-road-ahead-home.pdfCars, Cards, and Currency Lesson 4: The Car Deal Package. St. Louis Fed,https://www.stlouisfed.org/~/media/Education/Curriculum/pdf/Cards-Cars-and-Currency-Complete-Unit.pdfPACED Decision Gridhttps://www.econedlink.org/wp-content/uploads/legacy/584_decision%20making%20grid1.pdfLook Before You Lease – Federal Trade Commission Consumer Alert Bulletinhttp://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt005.shtmLease or Buy A Car – Calculatorhttp://www.smartmoney.com/calculator/autos/buy-or-lease-a-car-1302833645461/3Virginia Council on Economic Education
EPF.11 The student will demonstrate knowledge of planning for living a leisure expenses byb) comparing the advantages and disadvantages of renting vs. purchasing a homeDay 1 - Purchase or rent a home?Content KnowledgePurchasing a home is the largest financial decision many people make. Regardless of rent orpurchase, paying for your shelter is a significant portion of a household budget.Virginia Board of Education FrameworkThe benefits of renting include● Less initial capital outlay● Increased mobility● Fewer maintenance● No property taxesThe costs of renting include● Building no equity● No tax deduction for interest paid● Limited ability or incentive to upgradeThe benefits of buying a home include● Possibility of building equity● Right to deduct interest on Federal Income tax● Opportunity to personalize to own tasteThe costs of buying a home generally include● Down payment● Property taxes● Maintenance of structure and yard● Limited mobilityTeaching Tips1) Gather information ahead of time on different levels of housing (both purchased and rented) inthe community. Local financial institutions could be utilized by providing example mortgagepayments (30-year, 20-year, 15-year, etc.) assuming a 10% down payment and acceptable creditrating.2) Provide the accumulated information to students. Place a PACED Model grid where allstudents can see it. Have the students select two comparable housing choices – one apartment torent, one house to purchase. Both should have a similar number of bedrooms and bathrooms.Have students suggest criteria for evaluation. (Be sure to include “size of payment” and “buildequity” as two of the criteria.)4Virginia Council on Economic Education
Have students use the PACED decision grid to make a selection. Each student should be allowedto make and defend their own decision, based on their evaluation of the alternatives using thecriteria.Lessons and ResourcesPersonal Decision Making: Focus on Economics Lesson 2: Applying a Decision Making Model,and Lesson 11: Housing: Deciding to Rent or BuyPACED Decision Gridhttps://www.econedlink.org/wp-content/uploads/legacy/584_decision%20making%20grid1.pdfIs it Better to Buy or Rent a Home – Calculatorhttp://www.nytimes.com/interactive/business/buy-rent-calculator.htmlFirst Time Home Buyers Guidehttps://themortgagereports.com/first-time-home-buyers-guideVideoKhan academy on renting vs buying (11:37)https://www.khanacademy.org/economics-finance-domain/core-finance/housing/renting-v-buying/v/renting-versus-buying-a-home5Virginia Council on Economic Education
EPF.11 The student will demonstrate knowledge of planning for living and leisureexpenses byc) describing the process of renting housingDay 1 - Going through a standard rental/lease agreementContent KnowledgeRegardless of their preferences, many students will rent an apartment as their first independentliving experience.VocabularyMonthly Payment – The amount of money paid to a landlord by the renter for use of the rentedproperty.Renters Insurance – An insurance policy, similar to homeowner’s insurance that protects arenter from loss due to theft, fire or other events.Security Deposit – An amount of money paid in advance of a rental as a guarantee againstnon-payment of rent or damage by the renter.Virginia Board of Education FrameworkThe first step in a decision model in selecting rental housing is to list alternatives (options).The second step is establishing criteria, which should be stated in positive terms such as● the monthly payment is no more than the budget allows● the property is conveniently located (to work, school, public transportation, shopping,friends, family)● the property has enough space● the property has amenities.Criteria are personal; each person decides what factors are important. Individuals should visit allproperties that appear to meet the criteriaAdditional factors for consideration include● the renter’s credit score● the specifics of each rental agreement● rental inspections● landlord/tenant responsibilities● estimated moving expenses and installation chargesSelection of a rental property is made when the renter decides which alternative best meets theestablished criteria.6Virginia Council on Economic Education
Teaching Tips1) If there are apartment complexes nearby, the teacher may want to ask if a copy of the leasecould be used in class. If that is not an option, there are a number of standard lease formsavailable online. Secure copies of several leases. Provide copies for the students or placeenlarged copies where they can be seen.2) Have students compare basic aspects of the lease including monthly payment, securitydeposit, responsibility for utilities, liability for damages, and loss due to theft, fire, etc.Lessons and ResourcesVirtual Economics: Insurance Lessons Lesson 4: Why Renter’s Insurance?Virginia Office of Consumer Affairs – Landlord Tenant FAQhttps://www.oag.state.va.us/index.php?option=com_content&view=article&id=634Free Landlord forms – including rental leases/agreementshttp://www.thelpa.com/lpa/free-forms.html7Virginia Council on Economic Education
EPF.11 The student will demonstrate knowledge of planning for living and leisureexpenses byd) describing the process of purchasing a homeDay 1 - Main points of the purchase processContent KnowledgeBuying a home includes choosing a home, signing a contract, securing a down payment,financing the home, and identifying other costs associated with the purchase and ownership ofthe home.1The down payment can significantly affect the size of the mortgage payment andhomeowners insurance which is required in many states to secure the mortgage loan.VocabularyDown Payment – A portion of the purchase price that is paid in advance to secure some equityin the purchased property and minimize default.Mortgage – An agreement to borrow funds to purchase real property. The loan is then repaidover time, with interest through a series of monthly payments.Homeowners Insurance – An insurance policy that protects the homeowner from financial lossin the event of theft, fire or other misfortunes.Virginia Board of Education FrameworkThe buyer can use a decision model, which includes the step of establishing criteria, stated inpositive terms such as● the home is in a desirable location● the monthly payment is no more than the budget allows● the home is convenient (to work, school, bus routes, friends, family)● the home has enough space● the home has good expected resale value● property taxes, insurance costs, utility costs, community fees, and estimatedmaintenance costs fit in the buyer’s budget.Criteria are personal; each person decides what factors are important. Individuals should visit allproperties that appear to meet the criteria.The process of purchasing a home also includes● submitting to a credit check● making a down payment● obtaining homeowners insurance● securing financingTeaching Tips8Virginia Council on Economic Education
1) The teacher should reference students’ goals and budgets with respect to saving for a downpayment.2) The teacher may want to ask a licensed realtor to discuss the process of home buying.Lessons and ResourcesYour Credit Counts Challenge: Trainer’s Guide Section 4: A Roof Over Your HeadTeaching Financial Crises Lesson 6: The Role of Housing in the Financial Crisis 2007 - 2009Buying a Home (Calculator)http://openpossibilities.nbcuni.com/calculator-categories/buying-homeVideoKhan academy on types of mortgages (14:17)http://www.khanacademy.org/video/mortgage-interest-rates?playlist=Finance9Virginia Council on Economic Education
EPF.11 The student will demonstrate knowledge of planning for living and leisureexpenses bye) Calculating the costs of utilities, services, maintenance and other housing expensesDay 1 - Household expenses beyond the rent or mortgageContent KnowledgeThere’s more to owning a home than just making the mortgage payments.VocabularyInsurance – A contract that allows one party to make regular payments over time in return forpayments that cover certain types of losses.Property Taxes – Taxes paid to a governmental unit, based on the value of piece of real orpersonal property.Utilities – Electricity, gas, water, sewer, waste disposal and other services.Virginia Board of Education FrameworkSome expenses related to utilities include● installation● deposits● monthly payments for service● equipment maintenance and repairs related to electricity, gas, oil, water, cable,Internet service, and telephoneAdditional costs to be considered include● homeowners insurance● property taxes● appliances and furniture● maintenance (e.g., painting, carpet cleaning/repair, plumbing)● equipment● suppliesTeaching Tips1) Have students research rates and information to service a home. This should includeinsurance, property taxes, and utility costs. A table should be created showing different insurancerates. The same can be done for other contracted services such as waste disposal,phone/internet/cable, etc.2) Have students review their budgets. Verify that reasonable estimates of these expenses havebeen used.10Virginia Council on Economic Education
Lessons and ResourcesEstimating Electric Bill calculatorhttps://www.electricitybillcalculator.com/Property Tax 101https://www.propertytax101.org/virginia/taxcalculatorCosts and Benefits of Renters and Homeowners Insurancehttps://njaes.rutgers.edu/money/pdfs/lesson-plans/DoE-Lesson-Plan-15-The-Costs-and-Benefits-of-Renters-and-Homeowners-Insurance.pdf11Virginia Council on Economic Education
EPF.11 The student will demonstrate knowledge of planning for living and leisureexpenses byf) evaluating discretionary spending decisionsDay 1 - Understanding discretionary spendingContent KnowledgeIt’s easy to think of some services as necessary until one realizes that others are more necessary.Virginia Board of Education FrameworkDiscretionary spending is spending for goods and services beyond the essentials of food, shelter,and clothing.Discretionary spending allows consumers freedom of choice in what to purchase and how muchto spend on such things as education, health care, entertainment, transportation, andcommunication technology.Consumers can weigh costs and benefits of alternative spending choices.Consumers can use decision models to clarify choices.Consumers can consider saving as an alternative to current spending.Teaching Tips1) Students should compare discretionary spending categories to necessary spending categories(utilities, insurance, etc.).2) Lead a discussion comparing the satisfaction of purchasing less essential discretionary itemsin contrast with the satisfaction of achieving long term goals. How long does the pleasure ofbuying new clothes, or going out to eat, last? How long does the satisfaction of owning one’sown home last? Reiterate the strategy of keeping one’s long term goals in view, to counter thedesire for immediate gratification.Lessons and ResourcesYour Credit Counts Challenge: Trainer’s Guide Section One: Income and ChoicesMaking Personal Finance Decisions (lesson series) Unit 5: Budgetinghttps://www.mcee.umn.edu/sites/mcee.umn.edu/files/mpfd2016.pdfBudget Game: Living on a twenty square salaryhttp://ohiotreasurer.gov/Documents/CMS/BudgetGame8%205x11.pdf12Virginia Council on Economic Education
Spending Plan worksheethttp://anniesproject.rutgers.edu/ap_2012winter_presentations_wk6/ap2012w_wk6_ho_spending_plan_wksht.pdfATM/Credit Card/Cash trackerhttps://njaes.rutgers.edu/money/pdfs/expense-tracker.pdfEVALUATION DAY13Virginia Council on Economic Education