Assignment Summary
Today’s guest speaker is a financial planner. He is here to clarify the purpose of creating a family budget,
and to reinforce the importance of saving for your future.
In this task, you will create a budget that includes calculating your income as well as managing your
overall expenses.
Assignment Instructions
Complete each task, reading the directions carefully as you go. Be sure to show all work where indicated,
including inserting images of graphs. Be sure that all graphs or screenshots include appropriate
information such as titles, labeled axes, etc. If your word processing program has an equation editor, you
can insert your equations. Otherwise, print this activity sheet and write your answers by hand.
Type all of your work into this document so you can submit it to your teacher for a grade. Show all your
work and answer each question as you complete the task, as this is what your grade is based on. Partial
credit will be given according to the completeness and accuracy of your explanations.
Your teacher will give you further directions as to how you are to submit your work. You may be asked to
upload the document, e-mail it to your teacher, or hand in a hard copy.
Now, let’s get started!
Step 1: Analyzing Components of a Budget
Before a detailed family budget can be created, your financial planner has advised you to examine the
important aspects that affect a budget such as income, taxes, savings, and expenses. Work through the
following questions to start thinking about these aspects of budgeting.
•
As a student, you are able to earn extra money by assisting your neighbors with odd jobs.
If you charged $10.25 an hour for your assistance, about how many hours would you
need to work to earn $8,425? Show your work. (5 points)
8425/10.25
821.9
students need to work about 822 hours to earn $8425.
•
Imagine that you earned $8,425 in one year. If the government enforces a 15% income
tax, how much money would you owe in taxes at the end of the year? Show your work. (5
points)
8,425 x .15 = 1263.75
•
Your parents have been advised to save 5% of their income for your college education,
which would include money for housing, tuition, books, and fees. How much would your
parents have saved in one year, following the recommended 5%, if they had an average
household income of $48,948? Show your work. (5 points)
48,948 x .05 = 2447.40
•
As a smart consumer, you are always on the lookout for sales, coupons, and rebates.
While shopping for new clothes, you notice that one particular brand of shirts is on sale for
20% off the original price. You also have a coupon for $10 off a $40 purchase. Coupons
are applied after the 20% discount is taken. If each shirt originally costs $17.99, how
many shirts would you need to buy to be able to use your coupon? Show your work. (15
points)
17.99 x .20 = 3.60
17.99 - 3.60 = 14.39
•
What would be the total cost of purchasing the number of shirts needed to use your
coupon—after your coupon is applied and a 7.5% sales tax is charged on the purchase?
(15 points)
35.67 Would be the cost.
Step 2: Calculating Monthly Expenses
The second step to building a family budget is to outline your expenses in greater detail, itemizing fixed
and variable expenses.
Suppose the table below shows your family’s monthly expenses by category.
Fixed or
Average
Variable
Monthly
Expense?
Cost
Income Tax
Fixed
$400
$4,800
Housing
fixed
$950
$11400
23
Food
variable
$650
$7,800
16
Clothing
Variable
$75
$500
2
Fixed
$500
$6,000
122
Insurance & Medical
variable
$1,200
$13400
27
Entertainment
variable
$100
$1,200
3
Emergency Fund
Fixed
$50
$600
1
Savings for College
Fixed
$600
$600
1
Savings for Retirement
fixed
$100
$1,200
2
Total
$4,075
$48,900
100%
Expense
Transportation
Percent of
Yearly Cost
Yearly Budget
(Rounded)
•
Fixed expenses are expenses that do not change from month to month, and variable
expenses are expenses that can fluctuate from month to month. Complete the second
column of the chart by determining if each expense is fixed or variable. (10 points – 2 points
each)
•
Choose an example of a fixed expense and an example of a variable expense, and explain
why they are classified that way. (4 points)
Transportation is a fixed expense because the price per month doesn’t change.Food is a
variable expense because the amounts spent can vary.
•
Complete the remaining columns in the chart by calculating the missing values for each
category. Round your percentages to the nearest tenth of a percent. (16 points)
Step 3: Creating a Balanced Family Budget
•
Search for a "family budget estimator" and calculate the monthly expenses for a family living
in your city.
2 adults and 4 children
Union County, NJ
children $1,723
bills $1,411
food $1,142
residency $1,731
vehicle $1,173
health insure$1,528
misc $1,159
Monthly cost $9,865
Annual cost $118,386
Insert a screenshot of the calculator you used, as well as all of the information you entered
into it. If you are unable to insert a screenshot, then list the information below. (10 points)
•
State the minimum monthly income and hourly wage per worker needed to cover monthly
expenses for the family you used in part a. Then, explain how to calculate the hourly wage
based on the monthly income and state the hourly wage. Assume that each full-time worker
works four 40-hour work weeks per month, and each part-time worker works two 40-hour
weeks per month. (10 points)
Part-time worker minimum monthly wage = US$ 7,846.40
Full-time worker hourly wage = US$ 49.04
Part-time worker hourly wage = US$ 98.08
•
Keeping all other criteria the same, add a child to the family you used in part a to determine
the monthly expenses. How does an additional child impact the family budget and hourly
wage? Which category was least affected by this change? Explain why you think there was
little impact to this category. (5 points)