For the first part of this activity, you will be given a hypothetical monthly income, a list of your basic monthly bills, and a brief description of your living situation and daily life.
Based on that information, you will create a monthly budget and financial plan that allows Based on that information, you will create a monthly budget and financial plan that allows you to pay all of the necessary bills while also having enough money left over to live for the month. You will also need to take into consideration the details that are given about your life. You will need to weigh your options with these details and decide what is absolutely necessary to fit into your budget and what you can afford to live without. After completing your monthly financial plan, you will write a brief reflection (one to three paragraphs) on this financial activity.
The following questions should be addressed in your reflection: How easy or difficult was this activity?
• What were some challenges that you encountered?
• Were you able to pay for all of your bills and all of the additional expenses with your income? not, what did you eliminate or where did you cut back?
• How did you decide what to eliminate or where to cut back?
• How might this hypothetical financial plan differ from a future real-life financial plan? How might this hypothetical financial plan differ from a future real-life financial plan?
• Do you feel more or less comfortable with money management after completing this activity? You currently work as an elementary school teacher.
• Your annual salary is $45,000
• You bring home a weekly paycheck and your total monthly income, after taxes, is 2,850 you live alone in an apartment with tne tollowing DIlls:
• Monthly rent: $1,000
• Electric Bill: $82 Electric Bill: $82
• Gas and Water: $44
• Internet: $75 Utner montmy pills include:
• Cell Phone: $85
• Student Loan: $200 Car Insurance: $130
• Gym Membership: $20 You live a pretty simple life. You are single and enjoy going out to dinner with friends once
or twice a month.
• You enjoy eating healthily and generally spend a good portion of your income on purchasing organic food. You like to grocery shop weekly and, on average, spend $100 per on organic food You have a dog and he is due for a monthly check-up this month. You estimate this will cost around $150, but you have not scheduled the appointment yet.
• You are relatively healthy and rarely visit the doctor, but you do have asthma that requires monthly inhalers. These are not covered by insurance and cost you $110 per month. You love treating yourself to a movie. A movie ticket costs $10.
• There is a concert that your friends have asked you to attend this month. Tickets are
$250.
• You opened a savings account several months ago and set a goal to deposit $200 into it
every month. This is an important part of your financial plan and you prioritize it.
To begin creating your monthly budget, you first add up all of your monthly bills:
- Rent: $1,000
- Electric Bill: $82
- Gas and Water: $44
- Internet: $75
- Cell Phone: $85
- Student Loan: $200
- Car Insurance: $130
- Gym Membership: $20
- Dog check-up: $150 (estimated)
- Monthly inhalers: $110
Total monthly bills: $1,896
Next, you subtract the total bills from your monthly income to see how much money you have left for other expenses:
Total monthly income: $2,850
Total bills: $1,896
Leftover for additional expenses: $954
With the remaining $954, you can plan for other expenses such as groceries, dining out, and entertainment. Based on your lifestyle and priorities, you allocate the following amounts:
- Groceries (organic food): $400
- Dining out with friends: $100
- Movie ticket: $10
- Concert ticket: $250
Total additional expenses: $760
After deducting the additional expenses from the leftover amount, you still have $194 remaining. Since your goal is to save $200 per month, you decide to transfer $200 into your savings account.
Reflection:
This financial activity was moderately difficult. It required careful consideration of my income, bills, and additional expenses to ensure everything was covered. It was challenging to prioritize and decide what expenses were necessary and what could be eliminated or cut back. I had to weigh my love for organic food and dining out against saving money.
I was able to pay for all of my bills and additional expenses with my income. To fit within my budget, I cut back on some entertainment expenses, such as reducing the number of movies I would treat myself to and skipping the concert. I also carefully planned my grocery budget and tried to find lower-cost options for some items.
This hypothetical financial plan differs from a future real-life financial plan in several ways. In real life, unexpected expenses may arise, such as car repairs or medical emergencies, which would need to be factored into the budget. Additionally, income may vary in the future, either increasing or decreasing, which would require adjustments to the budget. Life circumstances, such as getting married or having children, would also impact the budget and expenses.
After completing this activity, I feel more confident in managing my money. It taught me the importance of budgeting and making conscious choices about where my money goes. I learned to prioritize my needs and wants, as well as the value of saving for the future. This activity provided a practical and realistic understanding of budgeting and financial planning.