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The Ramirez family’s
monthly household budget
This page contains one example of a monthly household budget.
There are many formats for planning a monthly budget, including
many computer-based versions. You may want to look at some
other models for budget
planning to find one that meets the needs of your students.
You may also want to be aware that a budget is often difficult
for students to put on paper because they make so little
or are on public assistance. Use your judgment concerning
how to adapt this lesson
for your students.Here are a few suggestions for
discussing the Ramirez family’s finances:
1. Ask students to list the most costly items in the Ramirez
budget. They
may answer that car loans, credit card loans, and day care
are among the largest expenses other than rent.
How will living with Teresa’s family help them reduce
these costs? How else might they reduce these amounts? For
example, would selling their car and buying a cheaper one
help?
2. Day care is a huge expense for families of very young
children.
How do people you know resolve this problem?
3. Are there any other areas where Joe and Teresa could
cut back? Could they spend less on entertainment? Or, if
they are living with the in-laws, do you think they will
need the chance to get out of the house more often?
4. Do you think the Ramirez family members can stick to
their goals, or will it take longer for them to save the
amount they have planned?
Tax advantages
Before you begin the section on income tax, find out how
much your students already know. You may find that some
students have little or no
familiarity with tax forms. You may decide either to skip
this part of the
lesson or to devote more time to basic tax forms. For more
advanced
students, here are some additional items about taxes:
1. When they become homeowners, they will probably need
to fill out the Form 1040, the “long form,” instead
of the 1040EZ so they can itemize housing deductions.
2. They can deduct only the interest on their house, but
that alone may save thousands of dollars in federal income
tax. This will be true especially during the first few years,
since the bulk of the monthly payment is interest.
3. Federal law also allows for a deduction of property
taxes. In some areas, low- to moderate-income
homeowners may also qualify for a full or partial property
tax rebate.
4. During their first year as homeowners, they may also
be able to deduct other items such as the points they paid
to the lender and, if their move was job related, moving
expenses.
5. For more information on
homeowner tax deductions, call the Internal Revenue Service
(IRS) toll-free at 1-800-829-1040.
Working with numbers
Have students work as a group to find the answers to the
questions. Go over any math calculations they have trouble
with.
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