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Overview and Purpose
Overview
This model allows students to see the relationship between education level, job choice, income, and buying power. Students determine the level of education they intend to complete and are then given a list of career options they will face with that level of education. Each job has a starting salary assigned to it, which serves as the income students can base their financial decisions on. Students can then research expenses: mortgage or rent, car payments, and living expenses. The expenses they determine are decided by the lifestyle they chose. Students in grades 7-12 should be able to develop an understanding of the effects of income on sustainable spending patterns through results shown in graph or table form. This model is intended for use in any mathematics, business, or living class, though it could be used in various other places as well in both the middle and high school levels.
- Inputs
- You determine your level of education, will you drop out before the end of high school? will you get a technical degree? will you go to a 4-year college? The level of education you select will determine which jobs you are eligible for.
- After determining your level of education, choose a career from the list of jobs you are eligible for, the starting salary it shows is the one you will use to build your model.
- You determine your expenses by using outside resources, for example, consult the classifieds to determine car prices, and the real estate section to determine housing prices. Your living expenses include food, utilities, entertainment, travel, gasoline, insurance, taxes, charitable donations, repairs, furnishings, etc.
- Running the Model
- The model will run, using the information that you provided. For each year the model will adjust your expenses for inflation, and your income for age and education level.
- The model will provide you with a table showing income, bank account balance, and expenses as they vary with age.
- The model will provide graphs of how income changes with age, and how account balance changes with age.
- Interpreting the Data
- Look at the graph of income and how it changes with time, compare it with graphs of income change for careers of a different education level than yours.
- Look at your bank account, do you accumulate debt with your level of expenses, what can you do to change that? How does debt accumulate?
- What type of lifestyle did you choose, what would be the results of choosing an "expensive" lifestyle versus an "inexpensive" lifestyle, what does your account look like at the age of retirement with these two lifestyles?
Purpose
The purpose of the model is to explore the differences in various education levels and the impact it has on buying power. This model allows students to explore the relationship between education level and job opportunity, similarly, it demonstrates the relationship between job choice and income. It also allows students to budget expenses, and determine how their income can determine their lifestyle choices. Students can experiment with the model to try to get the maximum earning-spending potential, then discuss whether choices they made are economically feasible. It also will make obvious, the tradeoffs implicit in the "good life".
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