MATH $101$ Project $1$: Saving Money

Due September $18,2024$

Name:

Introduction

In this project, you will begin to develop a sample financial plan for your $($fictional$)$ family. The work that

you do in this project will carry over into the next one, so make sure that your answers are reasonable.

$1$ Your Family

Create a fictional family. You may use your real family if you choose, but you will likely prefer to use

made$-$up characters. List the names and ages of the members of this family below, including yourself and

your spouse$/$partner$,$ if applicable. There must be at least one child in this family $($you$$ll plan for their

college education later$).$

First Name Last Name Age

Location Next, you need to determine where this family lives. Pick a city and state other than Frederick,

MD:

$1$

$2$ Income

Occupation Pick a job for yourself $($and your spouse$/$partner$,$ if applicable$)$ and list it below. Pick

something that relates to your current major or certificate plan.

$$ Your job:

$$ Your spouse$/$partner$$s job $($if applicable$)$:

Income Do some research and find the typical salary $($or salaries$)$ for the job$($s$)$ listed above in the

city$/$state where you chose to live. Add the incomes for your household and list the total income below.

Gross Yearly Income: $

To account for federal and state income taxes without going to all the trouble of calculating them, we

can estimate that they will total a third of your total income. To get your net income, subtract $33\%$ of

your gross income.

Net Yearly Income: $

Net Monthly Income: $

$2$

$3$ Interest Rates

Interest Rates For the savings accounts used in this project, you must do some research and find typical

interest rates. One place to look is at bankrate.com.

$$ Specifically, for your emergency fund, find a standard savings account and record what interest rate

is offered.

$\%$

$$ For the college fund, find a certificate of deposit $($CD$)$ and record what interest rate is offered.

$\%$

$$ For your retirement account, look up Individual Retirement Accounts $($IRAs$)$ and find a reasonable value for the typical interest rate you can expect over time.

$\%$

$4$ Emergency Fund

Most financial planners recommend that you have an emergency fund set aside with enough money to

cover three months of expenses. Multiply your net monthly income by three and list this number below.

$

Suppose that you build up this emergency fund over the course of two years. Using the annuity formula

with the appropriate interest rate listed above, calculate how much you$$ll have to deposit each month to

reach your goal after $24$ months. Show your work in the space provided below.

$

$3$

$5$ College Fund

You need to plan for college for each child in your family. To simplify things, though, in this section you$$ll

only need to plan for the youngest child. As another simplifying assumption, you can use your yearly

college costs as an estimate for what you$$ll need to pay for this child. You can choose to either pay for two

or four years of college. Fill out the table below to find the amount that you need to save.

Year Tuition Books Total

Total: $

Time Based on the age of the youngest child, how long do you have to save for these costs, assuming

that this child goes to college at $18$ years of age?

Saving Assume that you want to create this college fund with a one$-$time payment at the present. Use

the compound interest formula with the CD interest rate from the beginning of the project to determine

the amount that you must deposit now in order to achieve this goal. Show your work in the space provided

below.

$

$4$

$6$ Retirement

Pick when you want to retire $($typically $65$ or so$)$ and determine how many years you have to work between

now and then.

Determine how much you$$d like to be able to withdraw from your IRA each month after you retire.

$

Use the payout annuity formula to determine how much your IRA must hold at the moment of retirement in order to achieve this goal. Show your work below.

$

Use the savings annuity formula to determine how much you must deposit each month between now

and retirement in order to achieve this goal. Show your work below.

$

Calculate the total amount that you will end up depositing over time.

$

$5$

Grading Rubric

Criteria Possible Points Your Points

Section $1$: Your Family

Family clearly listed $3$

Location clearly specified $3$

Section $2$: Income

Jobs clearly listed $3$

Income is current and realistic $5$

Net yearly income calculated correctly $5$

Net monthly income calculated correctly $5$

Section $3$: Interest Rates

Savings account interest rate $5$

CD interest rate $5$

IRA interest rate $5$

Section $4$: Emergency Fund

Fund amount $5$

Monthly deposit amount calculated correctly $5$

Work shown $5$

Section $5$: College Fund

Total education costs $5$

Time to save $3$

One$-$time deposit amount calculated correctly $5$

Work shown $5$

Section $6$: Retirement

Time until retirement $4$

Monthly withdrawal $4$

Amount in account at retirement calculated correctly $5$

Monthly deposit amount calculated c