FINACIAL LOTWRACY BUDGET PROJECT essay

Personal Budget Project

Introduction

You’re an adult now! You are moving out of your parent’s house and want to live on your own. You have decided to skip college because you hate taking notes and you think you’ll have more time to text your friends and play video games. You are lucky enough to find an entry level job with health insurance. You must now figure out how you are going to budget your money based on a take home amount of $30,000 a year.

A budget is a plan for using your money in a way that best meets your needs and wants–it is the first step toward financial success. A budget is all about making your own choices. By using a budget you will learn how to live within your income, avoid running out of money between paychecks, evaluate your spending habits, make wise spending choices, set aside savings for unexpected expenses, and develop good money management skills that will help you reach your financial goals.

The Task

Now that you are ready to jump into the working world, your job is to create a personal budget from scratch. Do not assume that you have anything! Based on a take home amount of $24,000 or $2,000/Month (figure taxes have already been deducted from approximately a $30,000 salary) a year, create a personal budget.

Fixed Expenses :

· Rent (Payment per month)

· Automobile (Monthly Payment)

· Auto Insurance (Monthly Payment)

· Savings

Variable Expenses :

· Food (groceries, restaurant meals)

· Telephone

· Cell phone

· Gas & Electricity

· Entertainment

· Personal Care

· Pets (optional)

STEP ONE : ESTIMATE YOUR INCOME

Knowing how much you earn each month is essential to creating a realistic budget. You are making $24,000 a year after taxes. Divided by twelve months in a year, that comes out to $2,000 a month. You cannot exceed that amount when you arrive at your monthly budget for expenses.

Use the template in Microsoft Excel to populate the cells in order to create your budget. Make sure that you record whatever amount you need and the website or other resource where you found your information. Some areas such as allowance for vacation and savings are items that you may ask a parent or teacher for an amount, always be sure to document your resources. After information is gathered, using the information on your budget sheet, complete a monthly budget.

STEP TWO: BUDGETING FOR SAVINGS AND UNEXPECTED EXPENSES

Saving money for future goals and dreams is another important part of your budget. Remember, pay yourself first!

On your Excel spreadsheet, you will find the “Savings or Investments” section. When you are factoring your budget, begin by putting up to 5 percent of your paycheck into this section.

STEP THREE: BUDGETTING FOR EXPENSES

Expenses are money you spend on things you need and want. A need is something you must have to survive, such as food, shelter and clothing. A want is something you desire or would like to have or do.

Fixed Expenses are those expenses that do not change from month to month

Housing Expenses

Housing expenses will be the largest portion of your budget. Experts recommend spending no more than 25 to 30 percent of your budget on housing expenses. Record your monthly rent payment on your rent and rental insurance worksheet .

· Name of the complex and address – attach an ad for the complex or a brochure

· Describe the apartment (number of bedrooms and bathrooms, square footage etc.)

· What utilities are paid for by the apartment complex, which must you pay for

· What are the move in costs (security deposit, 1st months’ rent, etc.)

· Does the apartment include any kitchen appliances? What about a washer and dryer?

· What will be your total costs for moving into this apartment?

Transportation Expenses

If you already own your own car, you probably have your parents to thank for that. However, you now must pay for your own insurance and gas as well as maintenance costs each month. If you do not have your own car, you must now buy one and figure that into your monthly budget.

Most experts say your transportation costs should be 10 to 15 percent of your monthly budget.

Variable costs are those costs that change from month to month and are more difficult to budget for monthly.

Food/Dining Expenses

Estimating food costs can be difficult, but keep in mind that you eat 3 meals a day and there are 30 days in a month. If you figure an average of $3 per meal, you would spend approximately $270 a month for food. Food costs should be about 10 – 15% of you net monthly income. Since everyone’s eating habits are different and depending on how often you eat out or eat at home, this amount will vary. There are many websites available that you can use to estimate your monthly food bill based on your individual eating habits. Dining out is more expensive, but most of you will eat out more now without your parents to cook for you.

Personal Care and Pet Expenses

In additional to clothing, personal items include personal toiletries, laundry, haircuts, etc. Personal/clothing items will amount to about 2-10% of your net monthly income. Pets are a life choice and an option. If you plan on owning any, please populate the “Pets” cell.

· Remember – you have nothing, no food, no toothpaste, no soap, no towels, no toilet paper, etc.

· Make a list of items you need to buy, brand name price, etc.

· Look up prices on the internet or take a shopping trip (you don’t literally have to buy anything, so it can’t hurt to find out what things cost)

Utilities

You will need to budget for utilities, such as gas and electricity, telephone, cell phone, cable or satellite television, water, etc. (Gas and electricity may already be included in your rent but you will still be required to research this information. Be sure to make a notation on the final worksheet if the amounts are included in the rent.) To help estimate these expenses, the managers of properties or the local utility company might be willing to give you information about specific properties. You can also ask family/friends about how much they spend on utilities. Enter the amounts for each expense on the Utilities Worksheet . Experts suggest you should budget 5 to 10 percent of your net income for utilities each month.

Entertainment Expenses

Be sure to include leisure and recreation in your budget. Be realistic, you will not sit at home, you will go out and spend money on yourself and possibly your friends as well. Complete the “Entertainment” section of the budget spreadsheet.

Miscellaneous Expense

Because you cannot predict every monthly expense, the miscellaneous category will include out-of-pocket expenses, convenience items, incidental home expenses (laundry supplies, etc.), vacation (unless you have included this as one of your savings goals), health club membership, books, continuing education, magazines, newspapers, and other small purchases. This category also includes life insurance premiums. This will be identified as the “Other” cell in all the sections. Make sure to rename the “Other” cells you use to identify what expense you are adding.

STEP FOUR: REVIEW – COMPLETE ALL REQUIRED WORKSHEETS, SPREADSHEETS, AND SUBMIT ONLINE THE FOLLOWING ITEMS:

1) Excel Budget Spreadsheet 4) Food/Grocery Worksheet

2) Rent and Rental Insurance Worksheet 5) Transportation Worksheet

3) Utilities Worksheet 6) Review Questions Worksheet

Personal Budget Checklist

Requirement Points Points

Possible Earned

Requirement 1: Budget Spreadsheet

1) Complete the Excel Budget Spreadsheet 100 _____

Requirement 2: Worksheets

1) Complete the Rent and Rental Insurance Worksheet 40 _____

(Fill it out all worksheets digitally)

2) Complete the Utilities Worksheet 40 _____

3) Complete the Total Food/Groceries Worksheet 40 _____

4) Complete the Transportation Worksheet 40 _____

5) Review Worksheet 50 _____

Requirement 5: Digital Submission

1) ALL WORK SUBMITTED VIA EMAIL 10 ______

Total Points Possible 320 ________

Rent and Rental Insurance Worksheet

1) Find an apartment to rent

You want to live on your own (you may have up to 2 roommates). Document all of your information and provide examples of your final choice of apartment. Answer the following questions neatly in full sentences in blue or black ink. You may want to make a copy of this sheet so you can make adjustments and corrections to your information.

2) Name of the complex and address – attach an ad for the complex or a brochure

______________________________________________________________________________

3) Describe the apartment (number of bedrooms and bathrooms, square footage etc.)

_______________________________________________________________________________

_______________________________________________________________________________

4) What utilities are paid for by the apartment complex, which utilities must you pay for?

_______________________________________________________________________________

_______________________________________________________________________________

5) What are the move in costs (security deposit, 1st months rent, etc.)?

_______________________________________________________________________________

6) Does the apartment include any kitchen appliances? What about a washer and dryer?

_______________________________________________________________________________

_______________________________________________________________________________

7) What furniture must you buy to move into this apartment? What will that cost?

_______________________________________________________________________________

_______________________________________________________________________________

8) What will be your total costs for moving into this apartment?

_______________________________________________________________________________

9) Monthly Rental Payment ____________ Monthly Renters Insurance Payment ____________

Utilities Worksheet

1) Provide documentation for all of the utility bills you will have, these monthly bills will be an

estimate. These bills are variable from month to month so you will be providing an estimate

of your average monthly bill. Answer the following questions neatly in full sentences in blue

or black ink. You may want to make a copy of this sheet so you can make adjustments and

corrections to your information. Provide copies of bills when possible.

2) Gas/Heat – Company __________________________ Monthly Average Bill _________

Website: ____________________________________

3) Electricity – Company _________________________ Monthly Average Bill _________

Website: ____________________________________

4) Telephone – Company _________________________ Monthly Average Bill _________

Website: ____________________________________

5) Garbage – Company ___________________________ Monthly Average Bill _________

Website: _____________________________________

6) Water – Company _____________________________ Monthly Average Bill _________

(if applicable – most apartment complexes pay for water)

Website: _____________________________________

You can find out who your utility providers be by calling or visiting the rental office of your chosen apartment complex. Providers will vary depending on the complexes location.

Total Food/Groceries Worksheet

1) Groceries — Since everyone’s eating habits are different and depending on how often you eat

out or eat at home, this amount will vary. There are many websites available that you can use

to estimate your monthly food bill based on your individual eating habits. Answer the

following questions neatly in full sentences in blue or black ink. You may want to make a

copy of this sheet so you can make adjustments and corrections to your information. Provide

copies of bills when possible.

2) Make a list of items you are going to buy and total up the average monthly price for groceries

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

Total: __________________

IMPORTANT – You can buy more if you use coupons. Cut out coupons or make copies of coupons and attach them to your packet.

3) Dinning out – You will be dining out, and it is typically more expensive, but most of you

will eat out more now without your parents to cook for you. List where you will eat, how

often per month and what your meals will cost you.

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

Total: ___________________

Transportation Worksheet

1) Transportation — If you already own your own car, you probably have your parents to thank

for that. However you now must pay for your own insurance and gas as well as maintenance

costs each month. If you don’t have your own car, you must now buy one and figure that into

your monthly budget. Your transportation budget should be approximately 10 to 15% of your

monthly budget. Answer the following questions neatly in full sentences in blue or black ink.

You may want to make a copy of this sheet so you can make adjustments and corrections to

your information.

2) What type of car? Make, model, year _________________________________________

_________________________________________________________________________

3) Websites Used _____________________________________________________________

4) Monthly Payment _________________________________________________________

5) Gas/Oil/Maintenance________________________________________________________

6) Car Insurance _____________________________________________________________

7) Websites used ______________________________________________________________

8) Gasoline bill per month ______________________________________________________

Review Worksheet

(Retype this worksheet with the exception of these directions and fully answer all of the questions in complete sentences. This page is worth forty points of your total on this assignment)

1. When you finished entering your income and expenses, was your total income more than your total expenses? If so why?

2. Explain amounts you did not include in your budget (such as land phone because you will use your cell phone—still include documentation, however).

3. How would your budget be different if you earned an income less than you used in your budget? More than you used in your budget? Explain your answer.

4. Do you feel you are better prepared to make a budget after completing this project?

5. Other comments/suggestions for improving this project.
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