Hat tip to Brian Page for pointing out this set of financial calculators at myFICO. The webpage provides financial calculators on credit cards, mortgage, new home purchase, home refinance, home equity, auto finance and college education and budgeting and banking. The structure of the page is engaging as it provides a list of questions that take a student to a calculator which enables the students to answer the specific question. I will plan on creating an activity each week that corresponds to this page.
Here’s a quick article from the Mint.com blog describing the importance of an emergency fund.
Now on the financial calcuators. The question is “How much should I set aside from emergencies?” which takes a student to a set of inputs (which students can adjust):
Lots of good concepts to review here (and be sure that students know they can adjust the assumptions):
- Major types of unexpected expenses
- Concept of insurance deductibles (the amount you need to pay before your insurance kicks in)
- Monthly living expenses and how much cushion you want should you be unemployed (3-6 months is typical)
- Savings rate: interest rate you expect to earn from your savings account
- Amount you can save monthly: This will drive how long it takes to create your emergency account.
Click on SEE YOUR RESULTS and here is the output:
Have students complete several scenarios by changing time for unemployment, amount saved monthly, monthly expenses and see how time varies to create that all important emergency fund.