What do we pay?

How do we use ratios to budget? What ratios are important to us?

Ready...

In this lesson, you will complete the financial statements workbook. You will create the taxes and other expense for your 'Consumer'.

Set...

To find the monthly rental rate, you will use a ratio of 1:4 for your monthly salary. Use ApartmentGuide.com to compare that rate to the rates listed in the San Francisco Bay Area, Seattle, and Portland..

If you like you could buy a home, use Zillow Real Estate to find a home in the area you would like to live.

Research purchasing a car. You will use a ratio to calculate your monthly car payment.

Do NOT sign-up, or register, with a realtor or a car dealership. They work hard and do not have time to play games.

Go...

Debt Ratio

As you progress through this exercise, you need to watch changes in the total debt to income.

The debt to income ratio must stay at 1:2. Total debt includes all expenses plus taxes.

Tax Rate

In the last lesson you calculated your monthly salary. Now we want to figure the tax rate.

Hourly Rate

Calculate your hourly rate. Explain how you arrived at this rate.

Tax Ratio

if the hourly rate > 20 then the tax ratio is 1:3

if the hourly rate between 10 and 20 then the tax ratio is 1:4

if your hourly Rate < 10 the the tax ratio is 1:10

NOTE: Economists call this a progressive tax system.

Rent v. Mortgage

Rent a house or appartment. The ratio of rent to monthly salary is 1:4

Or --

You can choose to buy a house. The payment on the house will have a ratio of 1:100 (Payment to buy-price less a 15% down payment).

Buy a car

Use the price of the car you found above to figure your monthly payment. The down payment will have a ratio of 1:10.

The monthly auto payment will be calculated using a ratio of loan amount to payment of 40 to 1.

You could substitute the cost of public transportation. Research it and enter the monthly cost into your spreadsheet.

Send your workbook

Finish adding the expenses. Subtract expense from the income. Subtract taxes and finish the net income calculation.

Make sure to check your math before submitting your workbook?

Done Early?

If you are done early, complete a report on how buying house or car financing works?

Include your description of the differences between real and personal property.

The report will be 1-page double spaced in 12-point Arial font.

Pictures of Monopoly game, Hasbro.com. Monopoly Game