Personal Budget Project

 Updated 3/28/16

Students will prepare a personal budget that summarizes typical monthly expenses for a single person, living alone and newly entering the job market. The early part of the project asks you to select a career, and  figure out how much income you will have in that career. The second portion of the projects asks you to decide how that income should be spent. Keep in mind that you will be required to pay income taxes, and dedicate 10% of your after taxes income to Savings in the categories of your choosing.

You will be expected to complete this budget exercise and turn it in pieces. You will earning 5 different classwork / homework grades for completing portions of the project in addition to the 15% of the quarter Grade reserved for Projects. Each portion must turned in by the due date, you may turn it in early, but not after the due date for each portion. NO LATE WORK will be accepted. 

This Personal Budget will also count as the Essay portion of your Final Exam which accounts for 30% of the Exam Grade. The final product should be composed into a bound (in a folder) document with a cover page that includes at least your name and period number.  The Budget worksheet should serve as an accurate table of contents. Please remember that each of your estimates should have some documentationShow the math that supports how you arrived at your calculations, don’t be afraid to write directly on your quotes that you print out from online. 

  1. Research your chosen career and complete the Career Summary, If you want to you can take the interest profiler to see what career types will be of interest to you. Interest Profiler can be found at https://broward.emsicareercoach.com.

   

  1. Make your own copy of the  Career Summary Questions. Questions 2-4 should be answered by researching your chosen career in the Occupational Outlook Handbook. Your responses to the questions 2-4 need to be supported by the text from the BLS website about that career, however, it must be written in your own words.  Highlight the text in the BLS and mark the # of the question that the highlighted text supports. You will need to write down your SOC Code, it  will help you later. Questions 5-7 should be answered by researching colleges or training programs, print documents to support the figures your answers. You will need to calculate your expenses for education or training based on current prices for each. Your responses need to be typed.

  1. Look up starting salary. Use http://data.bls.gov/oes/search.jsp?data_tool=OES.  Watch a Video HERE on how to get the 10th - 90th Percentile & the 25th Percentile in salary for your specific state of choice. Use the information to fill in questions 9-10 of the Career Summary. Print the salary page specific to the State or Region that you will work within. 

  1. There are three screencasts to explain how to do the taxes and how to print your return that uses a Form fillable website that is unavailable for part of the year. When the form fillable site is unavailable follow the link directly to the form on the IRS Website. Use this tax form to compute annual federal income tax.  Remember that you should be completing this form as though you are single, and have no unemployment compensation. The federal income tax withheld (Line 7) is 0, since you are only looking for an estimate of the amount tax you should pay on that much income.  Line 2,3,7,8,9 are all $0. For Line 5, you will claim yourself at $10300. For Line 11, you should check the box and enter 0. You will also need to view the tax tables within the fillable form or just find the 1040EZ online and look at the tables there. Plan to use the Single Column on the tax table . You will need to print a copy of your tax return. If you have trouble with the website or if you know you can edit PDF's on your computer, feel free to use the form directly from the Internal Revenue Service HERE .

  1. Complete a Tax Worksheet that summarizes income, Social Security and Medicare taxes. Once you have a view of the spreadsheet, click on File, Create a Copy in order to get one that you can edit. The worksheet allows you to calculates gross monthly income and total monthly taxes. It is suggested that you start entering in values in your Personal Budget Overview .  Tip : Look at your income after taxes and put aside at least 10% for savings.  The Amount can be allocated amongst any of the items in Savings Section H. If you plan on living in a state that charges an income tax, please account for that on the tax worksheet. See me if you have any questions about State Income taxes or consult this document for rates.

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See below

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Remember that each item requires proof that you MUST PRINT,  which shows how you arrived at that particular amount.

Each of these items within the budget are on a monthly basis.  So if you have yearly figures than make sure you divide by 12 to get monthly data. These amounts will all be entered into the  Personal Budget Overview

 

Income

 

Wages and Tips - Use the 25th percentile amount that you got from BLS using your SOC Code and specific to the area that you want to live. This would include any wages and tips paid to you for your work.

 

Interest Income – If you have money sitting in the bank and earn interest payments from that money.  This is only counted here if you are using that money as income and not letting it sit in your account to compound and grow until a time when you need it.  I would tell you that you should not build a budget that relies on taking money from savings regularly because it cannot go on very long before you have no savings at all.

 

Dividends – are from stock or other investments that pay you an amount of money again which you are using to supplement your income.  I encourage you to not have this money go back into your monthly budget.

 

Gifts Received – Do you regularly receive cash gifts, document that here again if it is going to add to your overall income. 

 

Transfer from Savings - .  I would tell you that you should not build a budget that relies on taking money from savings regularly because it cannot go on very long before you have no savings at all.

 

Other – Please describe any other forms of income

 

 

A. Home Expenses - No Roomates or Sharing Expenses

 

Mortgage/ Rent – The assumption is that most you just starting out in your career will most likely be a renter.  If you desire to buy a property and more importantly can afford to do, you are likely to have expenses related to Lawn/Garden, Maintenance/Supplies and Improvements. If you are renting typically those things are done for you at no additional charge. Since most people will rent an apartment here are your directions.

 

Select an apartment that fits within your monthly budget. Be sure to check on utilities. Try Apartments.com.  Find a place to live that matches your expectations and desired area to live.  Remember that you don’t have to price it out for Florida unless you want to stay here.

 

Renters Insurance - To complete a Renters Quote visit https://www.geico.com/getaquote/renters/  You can find a walk through of what the steps looks like here - http://cohensbhs.clarify-it.com/d/hvjevg.  Input fake information but a real address so that you don’t end up with a bunch of calls and emails. Be sure to print the monthly quote and include it into your budget.

 

Electricity – You can easily estimate your expected cost by taking your parent or guardian's bill amount divided by the number of rooms and then taking that result and multiplying it by the number of rooms you will have in your apartment.  Please make a copy of an average bill of theirs, being careful to block account numbers and other personal information.

 

    For Example: Using your parent's electric bill, in a home with 2 bedrooms, 1 bathroom, 1 kitchen, 1 dining room, and 1 living room. Therefore there are a total of 6 rooms in your present home. Electric bill is $160 / 6 = $26.67 per room. Let’s say that in your new home after college there will be 1 bedroom, 1 kitchen, 1 living room and 1 bathroom, for a total of 4 rooms, take the per room amount $26.67 and multiply by the # of rooms in your new home [ $26.67 x 6 = $106.68]

 

Gas/Oil – This is particularly useful if you are living in a colder climate because you are much more likely to use Natural Gas.  This section is not for gasoline for your car, only for natural gas for the home. Calculate using the same method as above if this impacts you. If you don’t have any information or relatives that can help, you can use an average amount of $600 annually. Remember that the budget is done monthly so if you just use the standard amount of $600, you will need to .

 

Water / Sewer/ Trash – Again for most renters these expenses are paid by the property owner and not by you the tenant. If you are going to buy a home, please get a bill of this type from your parent/guardian and divide the bill amount by the # of people and multiply by the number of people in your target home.

 

Phone -  This can be for either Cellular or regular landline.  Either choice, please find a quote for the service you desire that either includes tax already (MetroPCS is one of the few companies that do this) or take a normal monthly rate and add 15% to it, in order to arrive at the total.

 

Cable TV / Satellite TV -  If you are going to have a television subscription you will be expected to find a rate quote for the channels that you watch the most.  Be careful, don’t be lured in by a low price for a short time like this offer from AT&T U-verse.  Don’t use the promo rates that are only good for a fixed amount of time and then climb after that amount of time.  Use the normal monthly cost. If you don’t plan on paying for Cable or Satellite TV and will use Comcast for your internet service, you should know that Comcast will put a data cap on your internet plan. If you don’t pay for TV in the project you are more likely to exceed the internet usage of 300gb per month and therefore should add $30 for an unlimited data plan from comcast.

 

Internet – Many times there are bundles that include this cost.  If it is covered in the Cable section because you bought a bundle, then you don’t need any numbers here, just make a reference to the fact that you purchase it in a package with  your cable and or phone.

 

Furnishings / Appliances  - If you are going to purchase furniture, cost it out over a period of one to two years.  Find furniture in a circular advertisement and divide its cost into 12, 24, 36, 48, or 60 depending on how long you think it will last. If you are going to be a homeowner, then you may want to purchase appliances, we will be generous and assume that the local appliance business is going to finance them to you with no interest for a period of up to two years.  This is again why it is important to maintain good credit. If you had bad credit you would have a harder time being able to buy things like appliances on credit.

 

Maintenance / Supplies – Renters ignore, Owners you will need to make a guesstimate as to what maintenance you will want to create and its costs.

 

Improvements – If you are a renter, don’t improve your landlords property, because they may not view it as a improvement and keep some of your deposit to put it back to how it was before.

 

B. Transportation                                                                                    

 

For purposes of the project and better projecting your expenses I am going to say that you should be purchasing a new car.

Car Purchase - You can use Cars.com to find a car. You may finance it out for anywhere from 1 to 5 years.  Take notice that the longer the time you take to pay it off the lower the monthly payments are but ultimately the more the car actually will cost you. YOUR CAR MUST BE A NEW CAR ONLY (not certified pre-owned, aka used)  because it makes it easier to forecast the Fuel, Maintenance and Repairs.

 

For Calculating the Cost to finance Car -

Use cars.com. If cars.com isn't working use  Edmunds.com or Vehix.com. Here you will need to print the Car information with cost and another document with the payment information (assume a rate of 4%) from Cars.com

Also, be sure that you add in Sales Tax of 6% if buying from a dealer in Florida.

 

Car Insurance Quote - Use a website called TheZebra.com to get a quote. Get a quote using the Better or Best Version of coverage. If you get the State Minimum or Basic coverage your automobile may not be fully covered in the event the car is a total loss due to accident or fire, and you may not enough Bodily Injury coverage.

Directions -  Use Allstate  (GEICO seems to have changed and is requiring  more information than I want you to be reuired to procide them.) Visit GEICO.com and input fake personal information (leave out the Social Security #. GEICO Video Directions  Print the page at the end that shows your estimate for a 6 month or annual period. Note the total cost and divide by 6 if the quote is for a 6 months or by 12 if it is annually.

For your monthly car maintenance, fuel and repairs you will use information from Edmunds.com and get a TCO (True Cost of Ownership). Be sure that it is for the specific type of car that you financed above. See screenshot for details.

 

FUEL - Use the 5 year total for FUEL from edmunds TCO and divide by 60 to get a monthly value.

Repairs - Use Maintenance and Repairs numbers from edmunds TCO, combining the 5 year totals for Maintenance and Repairs and divide by 60 to get a value. See screenshot for more details.

 

Registration / License – Please find the fees from the Department of Motor Vehicles for the State you are going to reside in. Be sure that you capture both the Drivers License and Vehicle Registration.

The amount you spend here will depend on the length of time you are going to finance the car for. 

    Ex. I financed a car for 5 years

                    Initial Registration $225

                    Renewal of Car Registration $44 per year

                        So I have $225 plus $176 ($44 x 4) = $401/ 60 (5 years) = $7 per month

        

        License Renewals lasts 8 years so take the cost for Driver License renewal and divide by 96

 

 

C. Health

 

Health Insurance – Use eHealthinsurance.com to get a quote for Health Insurance. Take note of the Co-Payment for a doctors visit.  Let us say that you will be visiting the doctor twice, so the cost of a doctors visit can add up.  Be sure that you change your age today by the number of years that it will take for your training.  In other words, say I am 18 today and I was born in 1995, I am going to need a 4 year Bachelors Degree for my job. So I will change my birth year to 1991 to pretend that I am 4 years older than I really am. The deductible amount listed is an amount that you have to pay before the insurance starts to cover your expenses, so if you have a $5000 deductible you will expected to pay out of your pocket the first $5000 of expenses except for some events like annual checkups.

 

Doctor – Depending on the coverage that you selected, you will need to pay your doctor a co-payment or pay out of pocket for the doctors visit.  The Co-Pay(ment) is the amount that you pay and your insurance will typically cover the remaining balance of the visit.  But not all insurance is created equal.  Some plans save you money monthly, but may only contribute a set amount towards the doctors visit leaving you to pay the rest.  Assume you visit the doctor at least once a year, once for a routine exam and possibly another time for illness, so you will have to pay a copayment amount which can be found in the plan details.

So if I have $50 co-pay and I visit the doctor twice a year, my doctor amount is $100. If you insurance doesn’t include a co-pay amount, you may have to meet your deductible first before the insurance will pay anything towards your visit. In this case you will have to pay for the visits which on average cost approximately $230 per visit (Source).  So if your insurance doesn’t pay anything towards the doctors visits expect to pay $230 for each visit, if you made two visits that would be $460 per year or more if you visit the doctor more frequently.

 

Medicine /OTC – If you take medication regularly, figure out approx what your costs would be for that medication on the insurance you chose, you are looking for the Prescription Drug costs, many drugs can be found in a Generic form, plan on paying the mid level for these since it is too time consuming to find each drug on the plan and its actual costs.

Assume that you occasionally get sick, say once a year, find out how much the Over the Counter medication that you would normally take costs like cold medicine and/or tylenol.  Suggestion, if you can find it online like on CVS.com print out the page with the pricing info or feel free to include a picture of the item and its price tag. Once you get your amount annually, divide it by 12 to represent a monthly cost for these.

 

Gym Membership - OPTIONAL this is referencing a gym membership.  You are not required to have one, but if you did this is where you will include the cost for it.

 

Life Insurance – OPTIONAL - If you want to purchase life insurance on yourself, WholesaleInsurance.net is one place you can put in some basic information and get a quick quote without having to disclose any personal information.  Feel free to choose whatever coverage amount you would like.

 

 Veterinarian/ Pet Care –  OPTIONAL - Will you have a dog or cat, etc. that could require any visit to Vet.? Don’t forget to find documentation supporting the costs.

 

D. Charity /Gifts

 

Gifts Given - I imagine that you will give out some gifts to people throughout the year and during the Holidays.  Think about Birthdays, Anniversaries, and Religious Holidays.  Be sure to consider your spending a per month basis.  For example I would say to budget a set amount on gifts, say $600 a year, reserving $400 for Christmas/Hanukkah Gifts.  If my yearly total is $600, then divide by 12 to get to $50 per month for gifts.

Make a list of the people who you will be giving gifts to and decide how much of a gift you are going to give them for re-occuring occasions like Birthdays, Anniversaries and  Holidays. 

 Use this table to make your calculations easy for Gifts. Be sure to print table and include in your budget.

Charity - OPTIONAL - This is where you would record your charitable giving.  Use a site like charitynavigator.org to find a charity if you don’t already have one in mind. Remember that  your charitable donations can be not only be beneficial to the groups you donate to, but also can reduce your taxable income. 

Notice separate columns for Charitable & Religious Organizations.

EVEN IF YOU DO NOT GIVE TO CHARITY - YOU MUST include a sheet that says “ I will not donate any money to Charity”.

 

E. Subscriptions

 

Newspaper – Will you subscribe to the local paper to stay up to date on current events in your neighborhood, state and nation?

 

Magazines – Have a favorite magazine that you will want to read when you are relaxing at home? How much is the subscription for a year, take that amount and divide by 12.

 

Dues/Membership – Will you be a Union member?  Country Club member? Or a members of a club or group that requires a monthly or yearly fee. In dues and membership include here if you will be a member of a discount buying club like COSTCO, BJ’s, or Sam’s Club.

If you will not have any Subscriptions, include a page that says “I will not have any subscriptions”.

 

 F. Daily Living

Groceries – Get receipts from normal shopping from Parents/Guardians.  If this represents a weekly shopping trip, then multiply by 4 for each week and divide by the number of people in the household. Make the receipts you select representative of a normal shopping trip. 

Example: - Receipts total $100 for a weeks shopping, So $100 x 4 = $400

                        3 people in Household $400/3 = $133.33

Personal Supplies – Hygiene – Deodorant, Gel, toothpaste, soap, shampoo, etc. Use Drugstore.com, add items to shopping cart that would be needed monthly and print result.

Clothing – Wherever you are likely to shop as a college graduate and part of the workforce, think about the kind of clothes you are likely to need for work. Find those clothes and don’t forget undergarments and price them out for what you are likely to want to purchase for an entire year, add those things in the cart, print cart.  Take total, divide by 12 and document amount in Overview.

Cleaning- Feel free to use Drugstore.com again or whatever other website you would like, find the cleaning supplies that you will need and add them to cart and print out total.

Education/Lessons – This is where you reflect any further education or lessons that you would like to acquire. Maybe you want to take piano lessons or cooking lessons.  Find lessons and information online and print for proof.

Dining / Eating out – Look at a menu for your favorite restaurants that you would like to visit. Decide what dishes you would like to eat, add a drink, 6% for sales tax, and 20% for tip. Each person's numbers will be a little different as tastes and how frequently eat out will vary. For Example: Let's say I eat the same dish at Red Lobster once a week as the only meal that I eat out each week. I order a dish that costs $16.99 + $1.99 Beverage = $18.98 + 6%(1.14) Sales Tax = $20.12 + 20% Tip ($4.02) = $24.14 .  If I eat there once a week, then $24.12 x 4 = $96.48

Salon / Barber – Recognize that these costs vary between Men and Women dramatically.  Examine how frequently you require a haircut, probably about once a month.  Typically mens haircuts are $17 plus tip and women are roughly twice that amount. Sample - http://bit.ly/11CYfsH

Pet Expenses- You need to care for and feed the furry little friend. Go to this link from ASPCA for info on what the costs of having a pet are like. Remember we are doing everything on an annual basis so if it is a yearly amount, divide by 12.

Other – This is where you are to include Dry Cleaning costs and other Daily living expenses that I haven’t thought to include.  Please provide documentation and be specific.

 

G. Entertainment

Use proof for each of your expenses. For Movies – Fandango.com is a good resource, video rental, Neflix.com if you want to rent movies regularly. Priceline.com for travel. Remember that the amounts that you put in the Overview is a monthly amount. On your proof, detail the cost on a per month basis.  You will be required to go on a vacation of your choosing once a year. Priceline.com is a good site to get vacation package quotes.

 

H. Savings

This section must total up to 10% of your income after Taxes are factored in. It should be dispersed among the categories. Be sure to put something in each section (except for Education Savings Account). Note that the amount you devote to savings will be used later in the Compound Interest Calculator.

Emergency Fund – Save for things your budget doesn’t factor in and are unknown until they happen, like a speeding ticket, an unfortunate illness, car problem, cell phone overage, etc.

Transfer to Savings – The amount you dedicate here will go into the Compound Interest Calculator.  Assume a rate of interest of 4%. You have to include some money in this section.

Retirement (401k, IRA) – These types of plans can be offered by your employer to allow to invest your money in a way that provides you with some tax advantages that you don’t get from a normal savings account. Those advantages aren’t experienced until you retire, but they often are very worth the time to set up the account.

Investments – Real Estate, Stocks, Collectibles, these are the more risky of your investments where you take more risk for the possibility of more reward.

Education Savings Account – This is for your children where you can save for their education costs in a tax advantaged way. This is not to pay for your education only to save for your children or other family members education.

Don’t forget to include the Compound Interest Calculator.

I. Obligations

Student Loan – If you didn’t have enough money and scholarships to cover your costs of education, you will need to borrow the money to pay for it. Once have figured out the lump sum that you would need to borrow, enter it into the FinAid Calculator.

Credit Card- Shouldn’t really have any budgeted amount for this, because you are going to have money to pay for everything except emergencies, for which you have an emergency fund.

Federal Taxes – This is the total Monthly amount of Tax that you got from the Tax Worksheet.  This means you will be combining the Medicare, Social Security and Income Taxes to form a monthly amount.

State Taxes - Some (43 to be exact) states have a state income tax, Florida does not, if you chose to live in a State other than florida, you will need to figure out if they have a state income tax.  If there is a state income tax there, you will need to look up in a table to find the amount of State income tax you have to pay and include it here. 



Last Step - Complete Budget Thought Sheet - Answer the Questions on the Budget Thought Sheet

Double Check - Your final budget has to be in line with your income, in other words your budget cannot call for you to spend more than you take in.  If you do spend more than your income, not only will you have debts in real life, for this project you will lose 30% of your grade.

 

Assembly of Project: Use the Econ Project Item List to tell you what order the pages should go in. Each page of supporting documentation (ie. Apartment Research Printout - A1) should have a Letter Corresponding to the letter of that section and its page number, So Apt info would be A1, Electric Bill would be page A2 and so on. If you don't use an item just skip over the number.  Make sure to highlight the appropriate cost information on the advertisement (rent, statement about utilities, etc.).  Documentation must be provided for each line item included in the budget.  A better grade is earned for documentation that reflects the student’s effort to research and obtain objective estimates of expenses. 

The total project is worth 15 Percent of the quarter grade . 

 

Please Print your Budget Overview in Portrait and make it all fit on one page.

Use a 3 Prong Folder, NOT a 3-Ring binder to present your project.

Just get something that is not expensive.

Please don’t use sheet protectors.