Instructions For Completing The Budgeting And Student Loan C

Instructions For Completing The Budgeting And Student Loan Caserememb

Instructions for completing the Budgeting and Student Loan Case: Remember: You must manually add and fill in the numerical values and subtotals for your case (budget on page 1). This assignment must be completed and turned in using this word document in order to be graded. DO NOT USE YOUR CURRENT PERSONAL FINANCIAL INFORMATION but rather USE the data as directed by the directions to estimate your future financial situation after graduation.

Row 1: You need to select two areas in which you may want to major and type them into Row 1 in Columns 1 and 2. It can be your current major and another major you’d consider or two majors you’d consider if you haven’t declared a major yet. If you can’t find your major’s estimated annual salary in Row 2’s instructions, choose the closest one to it. Then you need to complete the Cash Budget for both majors (careers) using the instruction given below. Assume your “family” only has one wage earner – you!.

Row 2: Calculate your expected gross monthly salary for both majors: 1st Find the estimated annual salary based upon your major using the 2019 Projected Salaries by Major document on Blackboard. Select the mean salary amount. 2nd Divide the yearly salary by 12 to get the gross monthly salary.

Row 3: Calculate the approximate amount your employer will withhold from your paycheck—FICA, Medicare, federal and state income taxes, union dues, contributions to charity, and others. Assume these total 30% of your gross monthly pay.

Row 4: Calculate your net “monthly” salary by subtracting the total withholdings from your gross salary.

Rows 5-6: List any additional revenue you expect, such as interest, dividends, or a second job. If none, leave blank.

Row 7: Total all revenues (Row 4 plus Rows 5 and 6).

Row 8: Calculate your expected payments based on your student loans at graduation, including the amounts for each loan, interest rates, and loan terms in months. Sum all monthly payments to determine the total monthly loan payment.

Row 9: Assume you have credit card debt of $3,000 upon graduation with a 15.36% interest rate, planning to pay it off in 60 months. Calculate the monthly payment based on this information.

Row 10: Allocate at least 2% of your total expected monthly revenue to an emergency fund or savings.

Row 11-14: Use IRS “Allowable Living Expense National Standards” to estimate expenses for food, healthcare, housing/utilities, transportation, and other possible costs. Adjust these estimates based on your anticipated circumstances and location (state or county). Add extra costs if documented higher expenses are expected.

Row 15: List any additional expenses not covered above. If none, leave blank.

Row 16: Sum all expenses from Rows 8 through 15.

Row 17: Subtract total expenses (Row 16) from total revenues (Row 7) to find your monthly surplus or deficit.

Complete the template below for a Monthly Cash Budget for two career choices based on your selected majors. Instructions for each row are posted with the assignment. Turn in this case via Blackboard by 11:55 pm on the due date; late submissions are not accepted.

Paper For Above instruction

The process of creating a comprehensive budgeting plan for future career choices, particularly after graduation, involves a detailed analysis of anticipated income and expenses. This exercise aims to equip students with practical financial planning skills necessary to manage their finances responsibly during their transition into the workforce. It requires integrating expected salaries, taxes, loan obligations, and living expenses, ultimately fostering informed financial decision-making that aligns with individual career goals and life circumstances.

Introduction

Financial literacy is a vital component of personal development, especially for college students preparing for post-graduation life. An essential aspect of this literacy involves understanding how to construct a personal budget based on realistic estimations of income, expenses, and debt obligations. This paper discusses the step-by-step process of creating a future financial plan for two potential career paths, emphasizing the importance of understanding income sources, loan repayment obligations, and living costs.

Estimating Income Based on Potential Careers

The initial step involves selecting two prospective majors and identifying their estimated annual salaries, which serve as the foundation for projecting monthly income. Using the 2019 Projected Salaries by Major document, students should select the mean salary figure corresponding to each major. Dividing this annual salary by twelve provides the gross monthly income, which is critical for planning purposes. For example, a student considering Accounting might find a mean salary of approximately $57,511, yielding a gross monthly income of about $4,793.

Tax Withholdings and Net Income

Next, an estimate of total tax and other withholdings—such as FICA, Medicare, federal and state income taxes, union dues, and charitable contributions—is calculated at 30% of gross income. Subtracting this from the gross figure provides the net take-home pay, which reflects the actual cash available for living expenses and debt repayment. This step emphasizes the importance of understanding tax liabilities and their impact on disposable income, an essential aspect of financial planning.

Additional Income and Total Revenue

Besides primary salary, students should consider any additional income sources, such as dividends, interest, or second jobs. If no additional income is anticipated, this section remains blank. Summing all income sources yields the total monthly revenue, establishing the baseline for assessing affordability of expenses and debt obligations.

Student Loan Payments and Debt Management

Graduates typically carry student loan debt, which necessitates understanding repayment obligations. Using predefined loan amounts, interest rates, and loan terms in months, students calculate monthly payments for each loan. Summing these provides the total monthly debt repayment obligation. For example, a student with a $70,000 loan at 10.4%, over a 180-month term, would have a specific monthly payment. This calculation reinforces the importance of planning for debt management as part of overall financial stability.

Credit Card Debt and Payments

Additional liabilities such as credit card debt must also be incorporated into the budget. Assuming a $3,000 balance with a high-interest rate of 15.36%, the student calculates the monthly payment needed to pay off this debt in five years. Managing credit card debt responsibly is critical for maintaining good credit and avoiding excessive interest costs.

Savings and Emergency Funds

Financial advisors recommend setting aside at least 2% of total income for emergency savings to cushion unforeseen expenses. Allocating funds toward an emergency reserve enhances financial resilience and reduces stress associated with unexpected costs.

Living Expenses and Cost of Living

Using IRS standards, students estimate essential expenses, including food, healthcare, housing, utilities, transportation, and other costs. Adjustments are made based on living circumstances and location, considering higher or lower expenses where applicable. For example, housing costs vary significantly depending on whether a student plans to live in a metropolitan area or a rural region. Estimating these costs accurately ensures realistic budget planning.

Additional Expenses and Final Budget Calculation

Students should list any other anticipated expenses not previously covered, such as entertainment, insurance, or personal care. Summing all expenses provides the total outflow, which, when subtracted from total income, reveals whether the individual will have surplus funds or face a deficit. This insight promotes proactive financial management by highlighting areas where spending adjustments are necessary.

Conclusion

Creating a detailed personal budget based on projected income and expenses is an invaluable skill for recent graduates. By understanding how to estimate salaries, calculate taxes and loan payments, and plan for living costs, students can develop responsible financial habits that support their career and personal goals. This exercise underscores the importance of early financial planning, debt management, and saving strategies, which are pillars of long-term financial stability and success.

References

  • Bankrate. (2021). Student Loan Repayment Calculator. https://www.bankrate.com/calculators/student-loan/student-loan-calculator.aspx
  • Internal Revenue Service. (2023). IRS Standards for Living Expenses. https://www.irs.gov/social-security
  • U.S. Bureau of Labor Statistics. (2019). Projected Salaries by Major. https://www.bls.gov/oes/current/oes_nat.htm
  • NerdWallet. (2023). How to Calculate Your Student Loan Payments. https://www.nerdwallet.com/article/loans/student-loans/student-loan-calculator
  • Federal Student Aid. (2022). Types of Student Loans. https://studentaid.gov/sites/default/files/types-of-federal-student-loans.pdf
  • Marketing Calculator. (2020). Loan Payment Calculation Tool. https://www.calculator.net/loan-payment-calculator.html
  • Investopedia. (2022). Understanding Credit Card Interest and Payments. https://www.investopedia.com/terms/c/creditcardinterest.asp
  • Financial Planning Standards Board. (2021). Building an Emergency Fund: Best Practices. https://www.fpsb.org/building-emergency-fund
  • Consumer Financial Protection Bureau. (2023). Budgeting and Saving Tips for Recent Graduates. https://www.consumerfinance.gov/about-us/blog/budgeting-and-saving-tips
  • National Association of Realtors. (2022). Cost of Living by Region. https://www.nar.realtor/research-and-statistics/quick-real-estate-statistics

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