Saturday, September 25, 2010

Making Ends Meet (a budgeting project -- abbreviated version)

You have just received your diploma and are about to enter the real world. You will be given a career with a set income and your task is to create a realistic budget. An even bigger challenge is to live within that budget.

You will complete a number of items on this worksheet as you work to complete this project. Fill in all the required blank spaces and tables as you go along.
A budget starts with knowing how much money you bring in each month. This is called your income.
Expenses are the opposite of income. Money is spent on the things you need or want. Below are some basic categories of expenses. Your expenses need to be less than your monthly income. If not you will need to change your spending habits. Also, if your savings are not at least 5% of your income, you will need to adjust your spending habits.
Items that should be included in your expenses, depending on your career and your spending decisions (items that are listed in bold are required):

student loan payment (depending on career)
basic health insurance
utilities (10% of your rent or mortgage – multiply by 0.1)
transportation (car payment, insurance, gas)
charitable contributions

phones (home, cell)
cable or satellite television
misc. (2% of your net monthly income – multiply by 0.02)
pet and pet supplies (optional)
savings (a goal of at least 5% of your net monthly income – multiply your income by 0.05)

Part One

You will be given a career based on the luck of the draw. Depending on your career, you may have some monthly student loan payment amount. Every career choice will include a monthly cost for health insurance coverage.

Occupation __________________________________________________
Annual gross income ___________________________________________
Gross monthly income (income divided by 12) _______________________
Net monthly income (gross monthly income multiplied by 0.80) ___________
Student loan expenses ____________________________________________

Part Two

Choose a housing preference using the information listed below. Your housing cost should not be more than 30% of your monthly net income. (0.30 times your net monthly income)

How much money can you afford for housing? _____________________________
Which housing option did you choose? ____________________________________
What is your housing cost? ______________________________________________
What percent is this of your net monthly income (divide your housing cost by your net income, then multiply by 100)? __________________________________________
Utilities are 10% of your monthly housing costs. This includes gas, water, electric, and garbage collection (multiply your monthly housing cost by 0.1).
What is your utility cost? ________________________________________________
Apartment- rent per month
· One bedroom no roommate $650
· Two bedroom no roommate $850
· Two bedroom with roommate $450 per person
· Studio $500
Condo- mortgage and assessment per month
· One bedroom no roommate $850
· Two bedroom no roommate $1,050
· Two bedroom with roommate $550 per person
Townhome- monthly mortgage and property tax
· Two bedroom no roommate $1,350
· Two bedroom with roommate $700 per person
· Three bedroom with roommate $900 per person
Single-family Home- monthly mortgage and property tax
· Two bedroom $1,400
· Three bedroom $1,650
· Four bedroom $1,900

Part Three

You will choose one of three options (Used SUV, New Honda FIT, or Used Ford Focus) and calculate your monthly payments based on the length of time you choose to finance your purchase (3 years, 4 years or 5 years).
Car (make and model) ________________________________
New/Used ________________________________________
Purchase Price _____________________________________
Monthly Payment ______________________________________

Part Four -Other Expenses
Food and clothing are a necessity. Cable, cell phone, pets, and entertainment are not. Estimated expenses for each of these categories are listed below. Fill out this section on your student worksheet so that it accurately shows the items you have decided to include in your budget.

Your Monthly Expenses
Food -- 196.54
Clothing -- 49.14
Cable or Satellite TV -- 76.59
Entertainment -- 88.43
Pet and Pet supplies -- 51.12
Charitable contributions -- 144.39
Phone -- 127.38

Part Five
Furnishing Your Home

You must purchase basic items to furnish your new home. You may take 12 months to pay for your household furnishings. Do not spend more than you can afford. Use the IKEA catalogs provided in the classroom, or other advertisements or catalogs that you might find, to select the required items:


Table and chairs (for dining)





Towels (2)

Plates and bowls (4 each)

Drinking glasses (4)

Knives, forks, and spoons (set of 4)

Sauce pan and frying pan (1 each)

Part Six

Data Entry
You will have the opportunity to visit the computer lab to enter the information you have collected into an Excel worksheet You will find a copy of the spreadsheet (called Making Ends Meet) in the Daniel Folder on the P Drive. Please make a copy of this file, naming it with your initials and the word BUDGET. As you fill in the spreadsheet, it will calculate your expenses, savings, etc. You can make adjustments to your spending if necessary in order to meet these project goals:
• Save 5% of your income
• Don’t spend more than you earn

Part Seven
Make a circle graph
Use the data from your Excel worksheet marked circle graph information to make a circle graph. Place the circle graph next to the data and print entire spread sheet with graph.

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