Creating Your Budget

  • Due No Due Date
  • Points 100
  • Submitting a text entry box or a file upload

A budget is a planning tool that can be used to help individuals and families manage their money. The idea of a budget is to use money to stretch purchasing power and raise the budgeter's standard of living.  Look at the sample budget below.

 

Sonny Cruz, a full-time tour guide, has an annual salary of $15,000. After he pays his taxes and health insurance, his annual salary is $12,000. This is what Sonny's monthly budget looks like:

Income (after tax & health insurance) $1000
Savings interest earned $      4
Total Income $1004
   
Fixed Expenses  
   Housing/Utilities $350
   Telephone $  30
   Transportation $200
   Credit/Student Loan $100
   Savings $  71
Total Fixed Expenses $751
   
Variable Expenses  
   Clothing/Personal Care $  50
   Food $110
   Household Supplies $  25
   Medicine/Health Supplies $  18
   Entertainment $  50
Total Variable Expenses $253
   
Total Expenses $1004
   
Comparison  
   Total Cash Available $1004
   Less Total Expenses $1004
   Cash Balance $      0

 

Remember that income is money that you earn or "bring in."  It can be wages, gifts, dividends, tips, or commissions, for example.  Expenses are items that you pay. There are two types of expenses - fixed and variable.  

    • Fixed expenses – expenses that remain the same each month. Examples of fixed expenses include rent, car payments, insurance, monthly savings plan, etc.
    • Variable expenses – expenses that change each month. Examples are clothing, food, entertainment, etc. 

You will now create a personal budget.  Look at the Starting Salaries Links to an external site. chart for various career areas.  Pick a career that is in an area of interest for you.  Earlier this year we did a career interest inventory.  Find a career in the areas the inventory indicated should be appropriate for your skills and interests.  Remember there is a direct correlation in years of education to the salary that is earned.  Click the link Links to an external site.to go to the interactive budget and begin creating your budget.

    • The Interactive exercise will calculate your take-home pay.  You can click on the links like Decoding Your Paycheck to see the deductions from your gross pay - taxes, for example.
    • You must deduct expenses from your take-home pay. To do this, you must choose from the various size expenses in each grouping, Housing, communcations, etc. Click on the cost and it will be automatically added to your budget. If you do not complete this activity online and use a hard copy, you will have to do the math.
    • After you have entered your expenses, you should compare "what you have left" unspent that is calculated on the Results page, or from your calculations.  This could be used for savings!

When you complete this exercise, upload your results using the Submit Assignment link.

 

 

Information was copied from http://www.themint.org/teachers/budgeting-your-financial-resources.html Links to an external site. on July 25, 2014.

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