The family of three lives in the south suburbs of Chicago. Therefore, the costs associated with household expenses are consistent with the price of things in the south suburbs.

Assume that the single parent doesnot have financial support from the other biological parent. and extended family live outside the state of Illinois so they are unable to help out; e.g., aunts and grandmothers cannot assist with child care.

Our single parent is a high school graduate, physically able to work, plans to work 40 hours/week, and refuses to rely on government assistance ... so no food stamps (SNAP: Supplemental Nutrition Assistance Program), no medical card (Medicaid), no cash-assistance welfare (TANF: Temporary Assistance to Needy Families).

The two children include a 10-year-old daughter in the 5^th grade (public school) and a 3-year-old son. The younger child needs full-day, daycare, and the older child will need adult supervision when she is not in school and the parent is working.

The standard recommendation for an emergency fund is six months of living expenses. For purposes of this assignment, I recommend budgeting $100/month for this emergency fund. This will cover up to $1,200 of unexpected expenses for the whole year.

Calculations for living expenses must include safe housing (no homeless shelters), nutritious food (balanced diet), car expenses (car insurance, money for repairs, gasoline expenses), basic utilities (heat, electric, water), health insurance and copays for the family, and other common expenses that a family of three would have in order to live a no-thrills way of life.

Presume this parent has a used car, worth about $2,500. Therefore, there are no expenses for a car loan/note but there will be repair bills to keep it in working condition. Of course, there are car insurance and gasoline expenses, too.

For Worksheet #1, donot put a zero in any of the budget categories.

On the next page, I have identified several budget categories that you will use to calculate a living wage for our single-parent family of three. Keep in mind that this is a mathematical calculation: We are finding out how much money this single parent needs to earn in order to pay the bills. In determining the number of dollars necessary for each of the budget categories, consult the Internet, ask parents or family members, and if in the end, you need to take a guess (make an estimate), just do so. After determining the expenses for the budget categories, follow the steps for calculating a living wage.

BUDGET CATEGORIES

Monthly Rent (2 bedroom) $_________ (research prices in south suburbs)

Utilities (gas, electric, water) $_________ (water may be included in rent)

Daycare for children: $_________ (one full-time; one after school)

Groceries, cleaning/paper products: $_________ (this is the Walmart/Target budget)

Car expenses (insurance, repairs, gas): $_________ (liability-only insurance is okay)

Health Insurance (and copays): $_________ (do not assume work will pay for this)

Clothing: $_________ (for growing family of three)

Cable TV/Internet: $_________ (assume family needs WiFi access)

Phone plan: $_________ (need only one line for parent)

Entertainment: $_________ (movies, birthday parties)

Miscellaneous: $_________ (school expenses, Xmas gifts)

Savings/Emergency Fund: $ 100 (keep this as fixed)

Line 1: Total Monthly Expenses: $_________ (sum total of all budget categories)

Line 2: Total Annual Expenses: $_________ (multiply Line 1 by 12)

Line 3: Living Wage Salary: $_________ (multiply Line 2 by 1.15)

Note: For Line 3, multiplying Line 2 by 1.15 is necessary to account for taxesSocial Security/FICA taxes, federal income taxes, and state income taxes.

Line 4: Living Wage, Hourly: $__________ (divide Line 3 by 2,000)

Note: Line 4 assumes the parent is working 50 weeks/year and 40 hours/week, for a total of 2,000 hours/year. Many jobs pay by the hour, not by salary. We cannot assume that the job includes either paid sick days or paid vacation.

Answer rating: 100% (QA)

Monthly Rent 2 bedroom 900 Utilities gas electric water 150 Daycare for children ... View the full answer