Budgeting #2

Secondary students frequently misjudge the earning power of jobs that follow high school. This lesson builds on Budgeting #1, requiring students to make more complex calculations. They calculate federal withholdings, FICA, social security, etc. Like Budgeting #1, the following lessons help provide a reality check on the costs of living on one's own. Working with spreadsheets, students will use the concepts of percentage, decimals, and graphing to make direct comparisons within a given set of data. Students can use spreadsheets to compute income and deductions on several different wage-earning occupations.

In Lesson 1, the students will use a spreadsheet to build a data table of five different wage-earning jobs. In this lesson, students only needs to know two pieces of information: the title of the job and the hourly wage. With this information, they will use spreadsheet functions to compute weekly, monthly, and yearly wages. Bar charts will be used to make comparisons between the different jobs.

In Lesson 2, students will use spreadsheets to calculate the percentages of each deduction that is taken out of an average paycheck. Then students are asked to create a pie graph to compare and explain the percentage taken out of the paycheck and how much is left over.

Lesson 3 asks students to combine the information found in Lessons 1 and 2 in a final data table and bar graph. At this point the student can make direct comparisons of the earning potential of each wage-earning occupation.

Lesson 1

Lesson 2

Lesson 3

Lesson 1 - Compute Weekly, Monthly, and Yearly Gross Income

Classroom Discussion and Activities (Whole Class or In Teams)

• Define gross income and net income

 

Begin discussion by asking students for the current minimum wage and ask them whether they think a person can live on it. This will start students thinking about just how much money is needed to meet an individual's basic needs, but in the context of data analysis. Next, obtain salary schedules for a variety of jobs which only require a high school education. Using a data table, each student should record the title and hourly wage of at least four different jobs, and the earnings of a job at minimum wage. You may want to include a job that requires training and pays well, in order to sharpen the contrast in numbers that the students will find later in the lesson.

 

Computer Lab Activities

• Organize a spreadsheet for computing of weekly, monthly, and yearly wages.

 

Have the class plan a spreadsheet that will calculate many jobs at once. An example such as the one below can be found in payroll.xls.

 

Next, in order to focus the contrast in wages, ask the students to use the spreadsheet program to create a bar graph that compares the weekly, monthly, and yearly wages for each of the five jobs. An example can be found in payroll.xls. To emphasize the use of decimals, students must use the formatting commands in the spreadsheet to insert dollar signs and decimals. In Excel, this involves FORMAT - CELLS - NUMBER.

Added Exercises

• Have students research various jobs, or work with your vocational teachers to obtain a list.

Lesson 2 - Computing Net Pay and Deductions

Classroom Discussion and Activities

Begin discussion by defining net income and the role that deductions play in reducing the gross income an individual receives. This is an opportunity to review percentages. Using worksheet 2 of payroll.xls, ask the students to consider what the deductions would be from their paycheck if they only made $100. Here, we give the students a number they can easily work with to understand the central concept of a percent-how many hundredths one value is of another. This approach also provides an opportunity to point out the role the decimal point plays in defining percentages and other values.

Computer Lab Activities

• Create a deductions data table like the one found in payroll.xls. Again, this is an opportunity for students to use the formatting commands of the spreadsheet application to define which values are percentages and which are monetary.

• Next, students can use the graphing functions of the spreadsheet to plot the percentage values into a pie graph like that found in payroll.xls. The use of a graph focuses and contrasts different data points. In this case, the pie graph creates a visual representation of each percentage that allows the student to think of the percentage as a fraction.

Lesson 3 - Connecting & Comparing Deductions and Net Pay

Classroom Discussion and Activities

This discussion can begin by asking the students to summarize the data they have uncovered by calculation thus far. Students can test their understanding of percentages by predicting which job will have the highest net pay and the highest deductions. In order to make this prediction, the student must use his or her knowledge of percentages to find that, as the earnings of the job increase, there is a corresponding increase in the amount of each deduction, even though the percentage remains constant.

Computer Lab Activities

Now the students can combine the data tables they created in Lessons 2 and 3 into a final data table that calculates deductions and net pay for all five jobs. An example of such a table can be found on worksheet 3, Lesson 3, of payroll.xls. To illustrate the fact that percentages remain constant in all the calculations that this new data table will perform, students will need to be reminded that when working with a spreadsheet program they need to enter in the cell reference that is constant and not relative. For example, $E$3 instead of E3 in a cells formula.

Again, in order to focus and highlight the contrasts of values, the students will need to create a bar graph using the spreadsheet program's graphing capabilities.

Added Exercises

Prepare a pie chart for the minimum wage, make a transparency, and interpret the chart with the students.