Math125 Unit 4 Assignment Answer Form Cash Conundrums Financ

Math125 Unit 4 Assignment Answer Formcash Conundrums Financial Liter

Answer ALL questions below regarding creating a budget, show ALL step-by-step calculations, and round all of your final answers correctly to the whole number. All monetary answers should be rounded to the nearest dollar. Write all explanations in the spaces provided. Enter your answers in the space provided in this document, and submit to the appropriate area. Creating a personal budget based on your current salary or your state’s median salary, estimate your monthly income, categorize expenses according to the 50/30/20 strategy, determine needs versus wants, and analyze how your budget compares to the guideline. Finally, reflect on the alignment and possible adjustments needed.

Paper For Above instruction

Creating a comprehensive personal budget is an essential skill for achieving financial literacy and stability. This assignment guides you through the process by estimating your income, categorizing expenses according to the 50/30/20 budgeting rule, and reflecting on the sustainability of your current financial plan.

Step 1: Determine Your Monthly Net Income

Start by identifying your gross annual salary, either based on your current income or your state’s median household income. Divide this figure by 12 to find your gross monthly salary (Box B). Then, subtract taxes, Social Security, Medicare, health insurance, and other deductions—estimated at 10-30% of your gross salary—to obtain your net monthly income (Box C). For example, if your annual salary is $50,000, your gross monthly income is approximately $4,166.67. Assuming a 20% deduction, your net pay would be about $3,333.

Step 2: Calculate Monthly Expenses Using the 50/30/20 Strategy

Based on your net income, allocate your expenses into the following categories:

  • Housing: Rent or mortgage
  • Food: Groceries, dining out
  • Transportation: Gas, auto repairs, parking
  • Utilities: Phone, electricity, water, internet
  • Insurance: Health, auto, home, life
  • Child care: Daycare, education, babysitting
  • Travel: Airfare, hotel stays
  • Entertainment: Movies, memberships, events
  • Personal care: Haircuts, massages
  • Savings: Emergency fund, retirement savings

Estimate realistic monthly expense amounts for each category, either based on your actual spending or hypothetical figures. For instance, if your net income is $3,000, then according to the 50/30/20 rule:

  • Needs (50%): $1,500
  • Wants (30%): $900
  • Savings (20%): $600

Distribute your estimated expenses into these categories within these constraints.

Step 3: Categorize Expenses into Needs and Wants

Break down each category’s total budgeted amount into what qualifies as a need or a want. For example:

  • Housing: Need
  • Food: Need
  • Transportation: Need
  • Utilities: Need
  • Insurance: Need
  • Child care: Need
  • Travel: Want
  • Entertainment: Want
  • Personal care: Want
  • Savings: Need/Wants depending on priority

This categorization helps identify where spending can be adjusted to align with your financial goals.

Step 4: Calculate Total Needs, Wants, & Savings

Sum the amounts for each category to find the total needs, wants, and savings expenditures. Transfer these subtotal amounts into the provided table and ensure they reflect your budgeting strategy accurately.

Step 5: Compute Percentage of Each Category

Divide each subtotal (needs, wants, savings) by your net monthly income and multiply by 100 to receive the percentage:

  • Needs Percentage = (Total Needs / Net Income) × 100
  • Wants Percentage = (Total Wants / Net Income) × 100
  • Savings Percentage = (Total Savings / Net Income) × 100

Compare these percentages to the standard 50/30/20 targets to evaluate your budgeting alignment.

For example: If your total needs amount to $1,500 and your net income is $3,000, then need percentage is 50%.

Step 6: Reflection on the 50/30/20 Method

Write a 100-word reflection discussing how your current budget matches the 50/30/20 guideline. Consider whether your percentages are aligned or if adjustments are necessary. For instance, if your wants percentage exceeds 30%, explore strategies to reduce discretionary spending. If your savings percentage is below 20%, identify ways to increase savings. This reflection should demonstrate your understanding of budgeting principles and personal financial planning, recognizing that individual circumstances can influence how closely your budget aligns with general recommendations.

References

  • NerdWallet. (2019). 50/30/20 Budget Calculator. Retrieved from https://www.nerdwallet.com
  • World Population Review. (n.d.). Median Household Income by State 2020. Retrieved from https://worldpopulationreview.com
  • Hercher, L., & Fagan, C. (2021). Essentials of Personal Finance. Pearson.
  • Clark, J. (2020). The Basics of Budgeting. Journal of Financial Planning, 33(4), 45-51.
  • Chatzky, A. (2022). How to Create a Budget That Works for You. CNBC. https://www.cnbc.com
  • Dave Ramsey. (2023). The Total Money Makeover. Thomas Nelson Publishing.
  • Financial Industry Regulatory Authority. (2020). Money Basics: Budgeting. FINRA.org
  • Investopedia. (2021). The 50/30/20 Rule of Budgeting. https://www.investopedia.com
  • Consumer Financial Protection Bureau. (2023). Budgeting and Money Management. https://www.consumerfinance.gov
  • Kaplan, S. (2019). Managing Personal Finances. Routledge.

Related Assignments