Apprenticeship and workplace Math 11
St.John Brebeuf
Unit 7:
Mathematics
Personal Budgets
Department
Goals:
In this chapter you will learn the basics of budgeting and discover that
budgets are a way to reach your personal goals by:
Keeping financial records
Creating a personal budget
Prioritize expenses to balance a budget
Analyze a budget.
Key Terms: You will be able to define and use the following terms:
 Budget
 Conservative budget
 Deficit
 Recurring expenses
 Regular income
 Surplus
 Unexpected expenses
 Variable expenses
 Variable income
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7.1: Preparing to Make a Budget
 Budget: A balanced statement of projected income
and expenses.
Creating a budget usually requires 3 steps:
 Identify what you earn and how you spend money now
 Evaluate your current spending and setting financial goals
 Adjust budget items so that total income equals total
expenses
 Regular Income: Predictable income received at equal intervals.
 Wages and Salary
 Interest from investments
 Variable Income: Income that changes over time and/or is not
received on a regular basis.
 Tips
 Commission , piecework and bonuses
 Recurring Expenses: Expenses that occur on a regular basis.
 Loan repayments
 Rent/Mortgage!!!
 Car payments
 Variable Expenses: Expenses that can change from period to
period.
 Food and Clothing
 Hydro/Gas
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 Unexpected Expenses: Unpredictable expenses that occur from
time to time.
 Car repairs
 Broken glasses
 Dental work
**** If your records show that you are spending more than you
earn you need to create a budget to balance your accounts****
Example 1:
Loree is a college student who lives with her parents in Brandon, MB.
Some items from her financial records are shown below. Identify the
income and expenses. Classify the income as regular or variable and
the expenses as recurring or variable.
Bike race entry fee: $75
Clothes: $125
Car Insurance: $180
Restaurant dinner: $35
Sold skateboard: $65
Cell phone bill: $65
Groceries: $75
Paycheque: $800
Gas: $45
Computer loan repayment: $65
Food relief donation: $30
Yard work for parents: $45
Birthday gift from parents: $100.
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Solution:
LOREE’S MONTHLY INCOME AND EXPENSES
Income
Expenses
Example 2:
Yuri is a high school student. He works part time at a fast- food
restaurant and earns some additional money delivering newspapers in
his neighbourhood. Below are his monthly income and expense records.
He plans to put extra money into a savings account to save for a
computer animation course he wants to take.
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LOREE’S MONTHLY INCOME AND EXPENSES
Income
Expenses
a) How much is Yuri able to save over the course of the year?
b) Next year, Yuri will receive a net 5% raise at a part-time job.
Assuming all his expenses remain the same, calculate how much Yuri
will save over the course of 2 years. Omit calculations of interest
earned on his savings.
Solution:
a)
 Calculate Yuri’s total monthly income and expenses
 Calculate available savings
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 Calculate savings for 1 year
b)
 Add 5% to Yuri’s previous income
 Calculate amount saved per month
 Calculate total savings for year 2
 Calculate total savings over 2 years
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Example 3:
Nathan is planning a graduation cycling trip to New Zealand with his
friends. He expects that the two-week vacation will cost
approximately $3700 CAD and he has 9 months to save up for the
trip. Nathan is a part-time life guard and he does odd jobs around his
neighbourhood for extra work. Last year his net income was $12 500
and he expects to earn about the same next year. Because his work is
irregular, he is paid a different amount each month.
a) How much money should Nathan save each month to afford his trip?
(Round to the nearest dollar)
b) What % of Nathan’s pay should he save?
Solution:
a)
b) Use Ratio to calculate how much Nathan will earn in 9 months.
$12500 = 12 months
$x = 9 months
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Calculate the %
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of his total earnings
Complete notebook assignment page 309 # 1-8
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7.2: The Budgeting Process:
 Coservative budget: A budget that under estimates income and
overestimates expenses.
 Surplus: The amount by which income exceeds expenses.
 Deficit: The amount by which expenses exceed income.
Example1:
David plays a base guitar in an alternative rock band.
He plays gigs almost every weekend and has already completed one
cross-Canada tour. David has been very careful to record his financial
transactions over a 6 month period so that he can create an accurate
budget to help him plan for his future. He would like to start saving
some money on a monthly basis. Below is David’s list of income and
expenses for the past 6 months.
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DAVID’S INCOME AND EXPENSES FOR THE LAST 6 MONTHS
Income
Expenses
Income
SEPTEMBER
$600
$215
$600
$175
$50
$75
Food: $200
Rent: $650
Car: $150
Entertainment: $140
Other: $50
DECEMBER
$600
$600
$175
OCTOBER
$600
$115
$600
$175
$150
$75
Food: $175
Rent: $650
Car: $140
Entertainment: $200
Other: $210
Food: $215
Rent: $650
Car: $400
Entertainment: $165
Other: $70
Food: $140
Rent: $650
Car: $140
Entertainment: $50
Other: $300
JANUARY
$600
$124
$600
$175
$315
NOVEMBER
$600
$50
$65
$600
$50
$75
Expenses
Food: $215
Rent: $650
Car: $180
Entertainment: $50
Other: $215
FEBRUARY (On Tour)
$600
$50
$215
$600
$175
$45
Food: $50
Rent: $650
Car: $0
Entertainment: $250
Other: $300
a) Identify David’s regular and variable income and calculate the totals
for each category of income per month.
b) Identify David’s fixed and variable expenses and calculate the totals
for each category of income per month.
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c) Design a conservative monthly budget for David. Allocate any
income that exceeds expenses to savings.
d) If David follows this budget, forecast the amount that he will have
saved after 1 year.
Solution:
a)
Regular Income =
per month
Variable Income:
September =
December =
October
January
=
November =
=
February =
Total =
b)
Fixed Expenses =
per month
Variable Expenses: Don’t include February’s food or car expenses
as they could bring down the average so only calculate these for 5
months.
Food Average =
5
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Car Average =
5
Entertainment Average =
6
Other =
6
c) Conservative Budget:
Underestimate David’s Variable Income as $
Overestimate David’s Expenses by rounding up
Rent = $650
Food =
Car =
Entertainment =
Other =
Savings = Income - expenses
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DAVID’S MONTHLY BUDGET
Income
Expenses
Regular
$
Rent
$
Variable
$
Food
$
Car
$
Entertainment
$
Other
$
Savings
$
Total Expenses
$
Total Income
$
d) Savings x 12 = $
Example 2.
Karli wants to design her budget using a spreadsheet. She needs some
assistance with the formatting, but she likes the spreadsheet’s ability
to speed up calculations when she makes small adjustments to her
budget.
Karli works at an electronics store where she earns an annual net
salary of $15 000 and commission of 3% of monthly sales. She
expects her sales to average $20 000 per month. She has already
written a list of her expected expenses.
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KARLI’S EXPEXTED MONTHLY EXPENSES
Rent
RentFood
Food
Food
Car Insurance
$720
Gas & Car maintenance
$250
Clothes
Other
Miscellaneous
$100
Savings
$150
$250
$180
$200
a) Show Karli how to format the necessary cells in her spreadsheet.
b) Karli balances her budget by allocating any income higher than
expenses to savings. If she plans to invest her savings at the end of
the year in a GIC (Guaranteed Investment Certificate) that earns 3%
interest compounded annually, how much would she have in savings
after 5 years?
Solution:
a) Steps:
 Set up the budget headings and columns
 Calculate Karli’s monthly Income
 Categorize her expenses and put them into the spreadsheet
 Format the calculation cells to calculate totals.
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A
B
1
2
3
4
Monthly Sales
Income
Regular
5
Variable
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Karli's Monthly Budget
$20 000
Recurring Expenses
$1,250 Rent
6
7
8
9
10
11
12
C
Total Income
D
$720
Car Insurance
$180
Savings
Variable Expenses
Food
Gas & car maintenance
Clothes
Miscellaneous
$150
$250
$250
$100
$200
Total Expenses
To calculate the variable income format cell B5 3% of $20 000
B5 “ =0.03*B2 ”
To calculate total income in cell B12
B12 “ =SUM(B4:B5) “
To calculate total expenses in D12
D12 “ =SUM(D4:D11) “
b)
Savings =
x 12
=
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A = P( 1 +
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)nt
=
P = 1800
=
r = 0.03
=
n = 1
A = P( 1 +
)nt
t = 5
Complete notebook assignment page 321 # 1-7
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7.3: Analyzing a Budget:
Example 1
Byron is an cartoonist in North Vancouver. He would
like to purchase a computer so he can work from home.
He has prepared a budget based on the past 4 months. His net
pay is approximately $3800 per month and a breakdown of his
expenses is shown in the circle graph below.
Byron's Monthly Expenses
3% 4%
Savings
8%
40%
Entertainment
11%
Donations
Miscellaneous
Car
16%
18%
Food
Housing
a) How much does Byron spend in each category every month?
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Savings =
Entertainment =
Donations =
Miscellaneous =
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Car =
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Food =
Housing =
b) If he decreased his miscellaneous spending by 5% per month how
much could he put into his savings each month?
c) Byron estimates his new computer will cost around $1,500 and he
also wants to buy a car in 2 years, for about $10,000. After 2 years
will he be able to afford to buy the computer and the car?
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d) Byron increases his annual salary by $4800 which he will save. If he
incorporates this change as well as the change in part a, how much
would his monthly savings be?
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Example 2.
Jessica’s annual savings are $2750 and account for 5% of her net pay.
She would like to increase her savings to 12%.
a) How much will Jessica save annually if she makes this change?
b) How much will she save weekly?
c) What is Jessica’s net annual income?
d) Is saving 12% of this net annual income a reasonable amount?
Solution:
a) 2750 = 5%
x = 12%
“Use ratio and proportion”
b) $6600 ÷ 52
=
c) Let y be Jessica’s total income then:
5% of y = $2750
0.05 x y = $2750
Y=
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d)
Example 3:
Michael works for a landscaping business. His take-home pay is $420
per week. He rents an apartment in a popular location and uses a
bicycle and public transit for transportation. Michael has been
tracking his spending and finds that his approximate weekly expenses
are as follows:
Rent: $230
Transportation: $10
Food: $50 Savings: $20
Cell phone: $10
Debts: $30 Entertainment/Others: $70
Michael has researched spending guidelines, shown here.
Spending
Guidelines
Charitable Donations
Savings
Housing
Utilities
Food
Transportation
10-15%
5-10%
25-30%
5-10%
5-15%
10-15%
Clothing
Medical/Health
Personal
Recreation
Debt payment
2-7%
5-10%
5-10%
5-10%
5-10%
a) What changes would need to be made so that Michael’s
spending falls within the guidelines?
b) What is the maximum amount that Michael should spend per
week and per month on rent?
c) Graphically show Michael’s expenses broken down into
categories.
d) Why are the spending guidelines not shown as a circle graph?
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Solution:
a)
Rent =
Food =
Transportation =
Cell Phone =
Savings =
Entertainment =
Debts =
“Compare to the guidelines”
b) Maximum weekly rent is 35%
35% of $4200
=
Maximum monthly rent
$147 x 52 ÷ 12
=
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c) Calculate the degrees:
Rent:
0.55 x 360° = 198°
Food:
Transportation:
Cell Phone:
Savings:
Entertainment:
Debts:
“Michael’s Weekly Expenses”

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d) _______________________________________________
_______________________________________________
_______________________________________________

Discuss Activity 7.3 Budgeting using a spreadsheet page 333
Complete Notebook Assignment page334 # 1-5
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Complete Unit Review page 340 # 1-9
Reflect on your learning
Now check  the box that applies to you :
RED
AMBER GREEN
I understand all the key terms.
I can describe banking options and
discuss their advantages and
disadvantages.
I can solve simple and compound
interest problems.
I can use the rule of 72 to
estimate the time needed to
double an investment.
I can describe different credit
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options, including bank and store
credit cards, personal loans, lines
of credit and overdrafts.
I can solve problems involving
credit cards, loans and sales
promotions.
I can make informed decisions
related to the use of credit.
I have completed all
homework assignments.
I have attended tutorials
for extra help.
I am ready to sit my
unit 7 test.
Target:
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In my Unit Test I hope to achieve
%
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Student’s Signature ____________________
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Date__________
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