Assignment: Personal Budget Investigation
Pretend that you are grown up and on your own, starting your life in your chosen career. Create a personal budget for your new, independent life.
Find a typical starting salary for a career that interests you from an online source. (You can use the salary you located earlier in the discussion about cost of living adjustments.)
Chosen career: military_____________________________________
Typical starting salary: 1,000___________________________________
Calculate the taxes you would have to pay on this salary. Be sure to show your calculations.
First, find your annual income tax based on this rate schedule: ______________
2013 U.S. Federal Income Tax Rates for Single Adults
• 10% on taxable income from $0 to $8,925, plus
• 15% on taxable income over $8,925 to $36,250, plus
• 25% on taxable income over $36,250 to $87,850, plus
• 28% on taxable income over $87,850 to $183,250, plus
• 33% on taxable income over $183,250 to $398,350, plus
• 35% on taxable income over $398,350 to $400,000, plus
• 39.6% on taxable income over $400,000.
Then, find your annual social security tax (6.2 percent of total income): __________________
Next, find your annual Medicare tax (1.45 percent of total income): ___________________
Now find your net annual income after taxes (subtract your federal income tax, social security tax, and Medicare tax, from your annual salary: ____________________
Now that you’ve found your net annual income, divide this number by 12 to find your net monthly income: ___________________
Use your net monthly income to create a monthly budget. Find online sources that will tell you the typical cost of housing, etc. in your area. Make sure that your expenses do not exceed your income.
City and State (or Country) of Residence: __________________________________________
Net Monthly Income: $ ______________
Expenses:
Housing ____________________
Utilities ____________________
Food ______________________
Transportation _________________
Clothing _________________
Entertainment _________________
Savings ____________________
Other Expenses __________________
Total Expenses: $ _____________
Describe the kind of lifestyle you believe this budget will afford you. What kind of housing will you have? What kind of transportation? What kinds of things will you eat? What kinds of clothing will you wear? What do you do for fun? What are you saving for?
Some things to think about:
If you plan to own a car, all of your auto-related expenses should be included under transportation (Car payments, insurance, maintenance, gasoline, registration, etc.). Depending on where you live, it might be possible to forgo car ownership and use public transportation, which is usually less expensive.
How much cooking do you plan to do? If you plan to cook most of your meals (and pack your lunches) you will spend less than if you eat most of your food in restaurants.
Questions (Be sure to show your calculations):
1. What percentage of your net monthly income is budgeted for housing? ______________
2. What percentage of your net monthly income is budgeted for utilities? _____________
3. What percentage of your net monthly income is budgeted for food? ______________
4. What percentage of your net monthly income is budgeted for transportation? __________
5. What percentage of your net monthly income is budgeted for clothing? _____________
6. What percentage of your net monthly income is budgeted for entertainment? __________
7. What percentage of your net monthly income is budgeted for savings? _____________
8. What percentage of your net monthly income is budgeted for other expenses? ________
Liabilities, Assets, and Net Worth
The Hanson Family has the following assets and liabilities. Can you tell the difference? Identify which are assets and which are liabilities:
• Ownership of a home ($175,000)
• Credit card debt ($200)
• Home mortgage ($120,000)
• Value of retirement savings ($92,000)
• Ownership of 2 automobiles ($23,000)
• Automobile loan debt ($8,500)
• Value of Home furnishings ($3,800)
• Worth of jewelry and other valuables ($5,000)
• Checking account balance ($3,200)
• Savings account balance ($8,800)
• Value of stocks and investments ($12,400)
• Student Loans ($11,000)
List the Assets of the Hanson Family:
Calculate the total value of the family’s assets: ____________
List the Liabilities of the Hanson Family:
Calculate the total value of the family’s liabilities: ______________
What is the net worth of the Hanson family
The assets of the Hanson Family are:
- Ownership of a home ($175,000)
- Value of retirement savings ($92,000)
- Ownership of 2 automobiles ($23,000)
- Value of home furnishings ($3,800)
- Worth of jewelry and other valuables ($5,000)
- Checking account balance ($3,200)
- Savings account balance ($8,800)
- Value of stocks and investments ($12,400)
The total value of the family's assets is $323,200.
The liabilities of the Hanson Family are:
- Credit card debt ($200)
- Home mortgage ($120,000)
- Automobile loan debt ($8,500)
- Student Loans ($11,000)
The total value of the family's liabilities is $139,700.
The net worth of the Hanson Family is the difference between their assets and liabilities:
Net worth = Total assets - Total liabilities
Net worth = $323,200 - $139,700
Net worth = $183,500