Personal Budgeting Assignment
As many of you are about to venture out to college and beyond it is important to develop an understanding of the cost of living. For this assignment you will be creating your own personal budget by taking a realistic look at some of the expenses you will incur once you are out in the “real world.”
Keep in mind there are some expenses that will not be covered in this assignment. Depending on the life style you live, the cost of living could be substantially larger (or relatively less). As is the case for many people, finding a job after college may cause you to relocate. In this assignment you may choose any city where you will begin your first “real job,” but be realistic. You must find housing located in this city and try to replicate the cost of living associated with the area you will be living.
You will complete this packet to be turned in by May 15th
The goal of this assignment is:
- Students will determine costs of living and develop personal budgeting skills.
- One place to begin your research is the regional BLS (Bureau of Labor Statistics) office for your area to calculate CPI and find average cost of living for your area.
- This assignment will be worth a total of 40 points
Page 1:Job and Salary:
We will begin by looking at your gross salary. The average salary for college graduates in 2013 was $43,000; however we know this differs depending on what field you go into. We are going to assume you only have your bachelor’s degree (while I know many of you will plan to continue education before you enter the workforce, let’s look at the budget as if you are beginning with just a bachelor’s degree).
Some of you know what your major will be in college, and some are you do not (which is totally okay!). If you know what your major will be in college begin by researching the median starting salary for college graduates with that major. If you do not know what you will be majoring in- choose something you are considering majoring in or have interest in.
Chosen major: ______
Potential source for starting income: or
Estimated starting gross salary: ______
Minus Federal income taxes and FICA (32% of gross)______
Minus State Income taxes (as % of gross)______
Find your state’s income tax rate:
Minus employer’s health insurance ($1000)______
Net annual income: ______
Now, divide this number by 12 to give you how much money you have to spend each month
______
Some things to think about before we continue:
Do you need a car to get to your job? Does the city you live in have a good public transportation system? Is your line of work conducive to public transport?
Will you live by yourself or with a roommate?
Page 2: Housing:
Step #1: Determine how much you can spend on housing.
Line #1: Record your monthly net income______
Line #2 Calculate the maximum monthly
Payment you can spend on your housing
(Line #1 X 28%)______
With the maximum monthly payment you have come up with, you need to search for an apartment. When it comes to housing location is incredibly important. Take a look at potential neighborhoods: what is the crime rate of certain neighborhoods? Is it important to be in an area with a relatively young population or do you want to live around families? (Do you want to live above a family with a baby? If this is important check out the average age.)
Potential source for information:
*If you plan on living with one or two other people, you must look for a two or three bedroom place. Your rent will be one half or one third of the total rent.
*If your rent does not include utilities, such as water, gas, or electricity, you will probably want to spend less on rent (more like 20-25% of your monthly income).
Fill in your monthly rent on the line below. (Are you living alone or has your rent been divided to be less because you have roommates?)
______
Page 3: Utilities, Phone, Cable, and Internet:
You can research on the Internet for help in calculating monthly averages for gas, electric, and water, assuming these were not included in your rent. You need to know if your apartment has electric or gas heating; if you have electric heating you will not have a gas bill. Research this information based on averages from your state/area you live in. If you cannot find this information please feel free to ask Mrs. Rabbitt.
Monthly Gas Bill ______
Monthly Electric Bill______
Monthly Water Bill______
You now need to find phone, cable, and Internet service. What service is available in your state and area?
*Be realistic; do you have an iPhone? Is a data package important to you? Do you really think you can go without cable and internet? How many channels do you want?
Monthly Average Cell Phone Bill
______
Provider______
Monthly Average Cable Bill______
Provider______
Monthly Internet Service Bill______
Provider______
Subtotal for Utilities, Telephone, and Internet Provider:
______
Page 4: Transportation:
Based on your choice for housing and its proximity to your place of employment, will you be taking public transportation to get to work or will you be making monthly car payments and paying for auto insurance?
Research your city’s public transit. How important is it for you to have a car? Can you buy a monthly or yearly public transport pass? If you’re looking to buy a car, what kind? (Try to find a car for sale in your city or a car dealership near your city)
Choosing to take Public Transportation
Public Transportation Monthly Costs (busses, trains, subways) ______
Taxi Costs______
Description of public transportation needed ______
______
Buying a Car, making the payments, and paying for maintenance, and insurance
Type of Car (ex: ’98 Plymouth Neon) ______
Name of website where you found car ______
Circle one: New CarUsed Car# of miles on used car______
Car Price______
Subtract 10% down payment
(multiply price of car by 10%)______
Total Amount on Car to be Financed ______
Financing a Car: Use these rates unless you find better rates and can prove them in your research.
New Car Financing—48 Months (4 years)—7%
Used Car Financing—36 months (3 years)—8%
(Page #4 continued on the next page.)
Page 4 Continued: Transportation: Public or Private:
Monthly Payments—fill in the information and calculate to figure out monthly car payments. Use the numbers on the previous sheet to help fill in this chart.
______X ______= ______
Car price to be financedFinance RateFinance Charge
______X ______= ______
Finance Charge# of years of loan Total Finance Charges
______+ ______= ______
Total Finance ChargesCar Price FinancedTotal Car Cost
______/ ______= ______
Total Car Cost# of monthsMonthly Payments
Monthly Car Payment______
Monthly Maintenance Costs ______
(For a new car these costs are $20. For a used car with less than 50,000 miles these costs are $30 a month. For a used car with more than $50,000 miles these costs are $50 a month)
Monthly Insurance Premium – Check out insurance companies for rates—DO NOT REQUEST A QUOTE.
(divide yearly premium by 12) ______
(You must search for car insurance quotes on the Internet).
Total Monthly Transportation Costs ______
Gas: How much is gas right now in your city? Estimate______/gallon
Assume 12 gallons in a tank of gas. How much is a tank of gas? ______tank
How far do you live from work? (minimum 10 mi) ______miles.
How many miles do you drive in a month? ______miles in a month.
Assume you need to get gas every 250 miles. How many tanks of gas will you need each month? ______tanks of gas
How much will you spend on gas (# of tanks X $ per tank) ______
Page 5: Groceries
Step #1: Create a grocery list
Create a grocery list for what food you would need to purchase for a week. Don’t forget beverages, snacks, and condiments (ketchup, mustard, etc)
Step #2: Pricing your grocery list
Using the internet determine how much your grocery bill will be each week. Try to find prices for your local area. (One potential website to check out peapod.com and see if it delivers to your area).
Total Spent on groceries per week (add up the prices on your list) ______
Multiply by 4 to get your grocery expense for the month______
Page 6: Other Variable Expenses
We have to be honest with ourselves at this point. We all like to spend extra money on ourselves. How often do we go out to eat? How often do we go shopping? Do you buy shampoo, soap, makeup, laundry detergent, clothes, CDs, candy? How often do you buy gifts for other people? Even cards for people can add up in a hurry.
In this section you need to really evaluate your own spending habits and make good estimates on how much you would spend on each of these following sections. Remember in this part that you don’t have your parents to help you cover these expenses, so be as realistic as possible. Answer the questions under each section.
Sundries & Household Supplies (“Walgreens” expenses) Estimate ______
(Cosmetics, Soaps/Shampoos, Paper Products, Cleaning Products, toothpaste, laundry, etc)
Why did you come up with this estimate, what things do you know you would buy from these stores on a monthly basis?
“Shopping” Expenses—Clothes/Shoes, Electronics Gifts, etc. Estimate ______
Why did you come up with this estimate, what things do you know you would buy from these stores on a monthly basis?
Entertainment—Eating Out, going to a movie, concerts, renting a movie, ice cream parlors, coffee shops.
Estimate ______
Why did you come up with this estimate, what things do you know you would buy from these stores on a monthly basis?
Other extraneous expenses—is there anything else you can think of that you should calculate into your budget? Do you want to allocate money to charity or church each month?
Estimate: ______
Total Monthly Misc Expenses______
Spreadsheet Totals for Budget
INCOME
Monthly Net Income (Page #1)______
LESS FIXED EXPENSES
Monthly Rent (Page # 2)______
Monthly Transportation Cost (Page # 4)______
Monthly Fixed Expenses (add the previous 2 lines)______
= DISCRETIONARY INCOME
(subtract fixed expenses from monthly net income)______
LESS VARIABLE EXPENSES
Food (Page # 5)______
Utilities, Phone, Cable, Internet (Page #3)______
Household Supplies (Page #6)______
Gas for your car(Page #4)______
“Shopping” Clothing, Gifts (Page #6)______
Entertainment (Page #6)______
Extraneous Expenses ______
Monthly Variable Expenses (add the previous 6 lines)______
= BUDGET SURPLUS OR SHORTAGE**______
**If you have a shortage, you must write an additional paragraph response explaining how you will make up the difference. What expenses will you cut? How will you cut them?
LAST PART: Now you must answer this final question. Your answers should be well thought out and developed, and very reflective of this assignment:
1)Describe what this experience taught you.