60.1K

Verified Solution

Link Copied!

Week 2: Part 1 - Budget Basics

• Due by the end of Week 2 at 11:59 pm, ET.

Budget Basics

1. Monthly Net Pay

1. In the space below, state your profession and provide your annual income (remember for this scenario, you have recently graduated and have been working in your industry for 5 years). You can research the median annual income for your profession based on the state in which you are working or just the median annual income for your state.
   • The links below will assist you with your research on your profession.
     1. Occupation Handbook and Salary Information
     2. Median Income Information
2. Use your annual salary listed above to determine your monthly net pay (take-home) pay. Your net pay is your gross pay minus income taxes, FICA taxes, and benefits, including health insurance if provided. Realistic net monthly wages are about 20% less than gross monthly wages. Enter your income information in the table below:

2. Monthly Expenses

1. Calculate your monthly expenses for each category below and fill in Table 1: Monthly Expenses. You can share real numbers, or you can create a hypothetical experience with realistic estimates as follows:

• Housing: 25-35%
• Food: 10-15%
• Insurance, such as life, medical, home, or auto: 10-25%
• Transportation or auto services: 10-15%
• Utilities: 5%
• Personal care: 10%-15%
• Entertainment: 5-10%
• Savings: 15-20%
• Misc.: 5%

Some categories may not apply, and this is ok! Just enter a zero.

Table 1: Monthly Expenses

3. Create a Monthly Expenses Pie Chart

1. Use the information from Table 1: Monthly Expenses to determine the proportion of your net pay currently allotted to needs, wants, and savings. Use Microsoft Excel to create a pie chart to represent the 3 categories. Add a chart title, a legend and include the percentage on each pie slice (data labels). Paste your Microsoft Excel pie chart below. Use the following link to review how to create a pie chart in Excel.

• Creating a pie chart in Excel.

4. Compare your Monthly Expense Ratios to the 50-30-20 Rule

Using the 50-30-20 rule each month, a person spends 50% of their money on needs, 30% on wants, and 20% on savings. Use the following link to assist you with your expense ratio comparison to the 50-30-20 rule.

• 50-30-20 Rule

1. Describe how your pie chart (Part 1 c) compares to the 50-30-20 rule in 2-3 sentences.
2. Indicate whether you plan to make any changes in your needs, wants, or savings based on the comparison to 50-30-20 rule.

Answer & Explanation Solved by verified expert

See Answer