Prepare a Budget
A WebQuest for Math521A
Designed by Laurie Callbeck
Introduction | Task | Process | Evaluation | Conclusion | Credits | Teacher Page
Introduction
You have graduated from university and have started work at an annual salary of $29 900 (or one provided to you by your teacher). You've spent the last five months with Mom and Dad and it's time you've moved out. A house nearby is for sale, but unfortunately you don't have the down payment. However, Grandma decides that it is a good investment and buys the house for its assessed value of $81 900 (for Mrs. Callbeck's class, you are to choose one of the houses currently on the market - see the House Listing - Grandma will put a 25% downpayment on any of the list homes). In return for living in the house, you are required to pay her rent equivalent to the monthly mortgage payments. In addition, you are responsible for all bills associated with owning a home (heat, electricity, property tax, house insurance, phone, cable, etc.)
Keeping in mind that your student loan (total of $37 000 or one provided by the teacher) repayments begin at the end of the month and the following deductions are taken from your bi-weekly paycheck: $18.20 Union dues, $85 RSP, $22 dental insurance and $32 health insurance; prepare a budget with the purpose of seeing how much you can afford to spend on a vehicle (factoring in car insurance, license, and registration). Remember that you are also planning for your future so investing money in RRSPs or mutual funds is encouraged.
Task
Produce a yearly budget using Corel Quattro Pro (or another spreadsheet program) and determine the amount that you will be able to place aside for a vehicle (including license, registration and insurance). From your yearly budget, you should create a monthly budget and present it in graphical form (pie graph is suggested). Where indicated you will be expected to submit forms, calculations or specific costs. In some instances, you will be provided with estimated costs based average households in the Summerside area.
Process
To accomplish the task, follow the steps below:
- First, you will work with a partner (a roommate). Between
the two of you, you will need to decide how to split the expenses.
You will each create your own budget but the expenses will be shared.
Keep in mind that you will each need to purchase a vehicle and account
for your own calculations.
- From the information provided in the introduction, determine your
net
annual income using the Income
and Consumerism web site created for your course (completed forms
will need to be submitted)
- Calculate the mortgage payment for the house at 4.75% interest amortorized over 25 years compounded semi-annually
- For Mrs. Callbeck's class, you will need to calculate your house
insurance based on the house you have chosen to purchase. To do this,
you will need to fill in the housing information in to the residential
quote provided by PEI
Mutual. Please note that you will need to know how far your home
is from a fire hydrant. For all other classes: According to
PEI Mutual (agent: Philip MacDonald), the insurance for your house
(for the full year) would be approximately $255 (based on 1008 ft²,
300 ft² finished basement, no deck, no garage, built-in dishwasher,
no air exchange, oil furnace)
- Property tax for a house in Summerside (according to Access PEI)
is based on the assessed value of the property. All property
on PEI is taxed at a rate of $1.50 per $100 of the assessed property;
however, as a resident of Summerside (you have resided at least a
total of 183 consecutive days during the taxation period) you receive
a credit of $0.50 per $100 of the assessed property. You are
also taxed for the municipality, in this case Summerside which is
at a rate of $0.74 per $100 of the assessed property. In addition
every property is charged $195.00 for WasteWatch. Given this
information, calculate the annual property tax for the property.
For more information access the PEI government website for land
and taxes. (Calculations will need to be submitted).
- According to the Consolidated
Credit Union, the interest rate for student loans is prime plus
2% which equals 6%. Use the payment period of 114 months (10
years less the 6 month grace period) to calculate your student
loan repayments on $37 000.
- Each month the City
of Summerside charges homeowners for utlilities: water and sewer
and electricity consumption. The Water and Sewer
are fixed costs within the city ($12.85 for water and $32.95
for sewer NO GST). According to Don
Forbes, the Director of Municipal Services, the average household
in Summerside consumes approximately 600 KWh per month. According
to the City of Summerside, the cost of electricity is based on the
meter (a set rate of $24.57 + GST) and $0.1205 /KWh (plus GST) for
the first 2000 kwh and 0.0920 /KWh for the remainder usage.
In total, determine the utility bill for the month. (Calculations
will need to be submitted).
- According to Bob
Hood, Sales Representative for Island Petroleum, the average island
bungalow uses approximately 3300 litres of oil a year. Many home listings
will also provide you with the approximate amount of oil needed to
heat the home for the year. Use a good approximation to calculate
the average cost per month to heat your home. You may use last
months bill from your home to calculate the price (please provide
a copy of the bill) or phone around town for the best price. If you
make calls, please give the date you made the call and specify the
provider. Remember that GST is added onto the bill. (Calculations
and mention of the provider and price/litre - and date will need to
be provided).
- You will be wanting to at least have a phone if not also a cell
phone, satellite, internet access, etc. Check out Aliant
and calculate the cost of these services (reminder: applicable
taxes include GST and PST). You may also wish to contact one
of the Service
Representatives and "chat" online. (Calculations and
mention of specific services will need to be submitted).
- If you prefer to deal with EastLink,
just provide the necessary information as outlined above.
- You will need to furnish your home. The house comes with basic
appliances (stove, fridge and built-in dishwasher). If you are
able to get "freebies", please attach a letter of agreement
about the free furnishings. For example, if Mom and Dad allow
you to take your childhood bedroom suite, then they must sign a letter
signifying that they willingly give you the set. The same goes
for any friend or family member. Please account for all furnishings.
If you need to purchase, attach a price (ads from stores and buy/sell/trade
are acceptable).
- Purchasing groceries is probably another area in which you have
little experience. A British Columbia company, QualityFoods.com,
is an online grocer that serves Vancouver Island residents.
This company has graciously granted the class permission to use the
site for the purposes of research on the provision that we do not
go through the checkout. To use this site, use the postal code
V9P 2G3 and create a username and password. Please use your
GroupWise email for contact. You may also use the school's mailing
address: 10 Kenmoore Avenue • Summerside, PE • V9P 2G3. Again,
please do not go through the checkout! (Ensure that a good estimate
on groceries for the month is specified in your budget).
- I'm sure you can think of other expenses that you might incur such
as clothing, recreation, etc. These things should also included
in your budget.
- Once you have calculated all income and expenses, you will need
to prepare a budget. You may wish to use Budget, Personal template
in Corel Quattro Pro or use Quicken to create the budget. You
should prepare a formal budget listing on income and expenses for
the year (see examples in textbook chapter 9).
- Once you see what you have in surplus, you will need to determine
what sort of vehicle you can purchase. You will be responsible
for determining where and how you will buy the vehicle as well as
finding out the cost of registration and insurance. When gathering
information on insurance you should assume that you are 23 years old
with a perfect driving record and no convictions. Assume you
have been driving since you were sixteen (seven years). I encourage
you to explore insurance options. Remember that you will need
to budget for maintenance and repairs but especially fuel.
(Calculations and specifics on the deal will need to be submitted).
- As a final product, you will need to submit an Annual Budget Statement
as well as a Monthly Budget (graphical form). The following
links provide short video on how to put your data into Quattro Pro
and make a graph. Data
File and Graph
Evaluation
You will be evaluated on your final products as well as the supporting information that has been submitted (calculations and specific services). The rubrics provided below will be used to evaluate your project. Check out the links for more specifics.
Specific Calculations Rubric
Project Checklist
|
Presentation Content |
Exemplary 4 |
Accomplished 3 |
Developing 2 |
Beginning 1 |
Score |
|---|---|---|---|---|---|
|
Supporting Materials
|
All calculations are submitted and supporting documentation provided. | All calculations are submitted, most documentation is provided (income tax forms are attached) | Most calculations are submitted and most documentation is provided (income tax forms are attached) | Most calculations are submitted and some documentation is provided (no income tax forms attached). | |
|
Calculations
|
All calculations were performed correctly (income tax was perfect) | Most calculations were performed correctly (income tax was perfect) | Most calculations were performed correctly (income tax contained some errors) | Calculations had several errors (income tax contained some errors) | |
|
Information
|
All information presented was clear, accurate and thorough. | Most information presented was clear, accurate and thorough. | Most information presented was clear and accurate, but was not usually thorough. | Information had several inaccuracies OR was usually not clear. | |
|
Organization
|
All data was clearly presented and organized in a tight, logical fashion. | Most data was clearly presented and organized in a tight, logical fashion. | All data was clearly presented but the organization was sometimes not clear or logical. | Data was not clearly presented. | |
|
Budget
|
A reasonable and obtainable budget was developed that incorporated all areas listed in the process. | A budget was developed that incorporated all areas listed in the process. | A reasonable and obtainable budget was developed that incorporated most areas listed in the process. | A budget was developed that incorporated most areas listed in the process. | |
|
Yearly Budget (Neatness and Attractiveness) |
Exceptionally well designed, neat and attractive. Good use of colour and/or special line features. Computer software used to create budget. | Well designed, neat and attractive. Computer software used to create budget. | Well designed, neat and attractive. Computer software NOT used to create budget | Not well designed, neat or attractive. | |
|
Yearly Budget (Calculations) |
All calculations are correct and headings clearly indicated. | Most calculations are correct and headings are clearly indicated | All calculations are correct. Headings are not clearly indicated. | Most calculations are correct. | |
|
Vehicle Purchase |
Vehicle is purchased and is incorporated into budget. All matters associated with a vehicle are accounted for. | Vehicle is purchased and is incorporated into budget. Most matters associated with a vehicle are accounted for. | Vehicle is purchased and is incorporated into budget. | Vehicle is NOT purchased |
Conclusion
After completing this project, you should have a better understanding of income and related financial responsibilities. In addition, you should have created an annual budget and a monthly budget based on your financial assets and liabilities.
Credits & References
Other sources of information ....
Knill, G., et al. (1999). Mathpower 11. Western Edition ed. Toronto, ON: McGraw-Hill Ryerson.
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