You are paid $11.75/hr you work you work 40 hr/wk your deductions are fica (7.65%) , federal tax withholding (10.75%) and state tax withholding (7.5%)
Assuming your budget a month as 4 weeks, how much are the following: your total realized income, fixed expenses, and discretionary expenses?
How much can you put towards savings each month if you eliminate your discretionary expenses?
Total realized income:
$11.75/hr x 40 hr/wk = $470/wk
$470/wk x 4 weeks/month = $1880/month
Deductions:
FICA: 7.65% x $1880 = $143.94
Federal tax withholding: 10.75% x $1880 = $202.70
State tax withholding: 7.5% x $1880 = $141.00
Fixed expenses:
Assuming fixed expenses are those that do not vary from month to month, such as rent, car payment, insurance, etc., we would need more information to calculate this.
Discretionary expenses:
Assuming discretionary expenses are those that can vary from month to month and include things like entertainment, dining out, shopping, etc., we would need more information to calculate this.
Amount towards savings:
If we assume all discretionary expenses can be eliminated, we can calculate the amount towards savings as follows:
Total income - deductions - fixed expenses - 0 (discretionary expenses) = amount towards savings
Using the deductions calculated above and assuming fixed expenses of $800/month and discretionary expenses of $500/month, we can calculate the amount towards savings as:
$1880 - $143.94 - $202.70 - $141.00 - $800 - $500 = $92.36/month towards savings.
To calculate your total realized income, you need to multiply your hourly rate by the number of hours you work in a week and then multiply that amount by 4 (since a month is assumed to have 4 weeks).
Total realized income = (Hourly rate * Hours worked per week) * Number of weeks in a month
Given the following information:
Hourly rate = $11.75
Hours worked per week = 40
Number of weeks in a month = 4
Total realized income = ($11.75 * 40) * 4
Total realized income = $470 * 4
Total realized income = $1,880
To calculate your fixed expenses, you need to add together all the deductions mentioned.
Fixed expenses = FICA withholding + Federal tax withholding + State tax withholding
Given the following information:
FICA withholding = 7.65%
Federal tax withholding = 10.75%
State tax withholding = 7.5%
Fixed expenses = (FICA withholding + Federal tax withholding + State tax withholding) * Total realized income
Fixed expenses = (0.0765 + 0.1075 + 0.075) * $1,880
Fixed expenses = 0.259 * $1,880
Fixed expenses = $486.92
To calculate your discretionary expenses, you need to subtract your fixed expenses from your total realized income.
Discretionary expenses = Total realized income - Fixed expenses
Discretionary expenses = $1,880 - $486.92
Discretionary expenses = $1,393.08
If you eliminate your discretionary expenses, you would be able to save the entire amount. Therefore, you can put $1,393.08 towards savings each month if you eliminate discretionary expenses.