Jesse and Kimberly recently graduated

from college and are starting a family.
Currently, they are just making ends
meet with their $45,000 salary. They
want to contribute the maximum amount
(currently $2,000) to fully fund an
Educational Savings Account when their
baby is born. How much additional money
will they need to budget every month and
what are some things they can do to their
budget to find the money?

To determine how much additional money Jesse and Kimberly will need to budget every month, we first need to calculate the total amount they will need to fully fund their Educational Savings Account.

Given that they want to contribute the maximum amount of $2,000, we need to consider how many months they have until their baby is born. Let's assume they have 9 months left until the baby arrives.

Total amount needed = Maximum contribution per month × Number of months
Total amount needed = $2,000 × 9 = $18,000

So, Jesse and Kimberly will need an additional $18,000 to fully fund their Educational Savings Account before their baby is born.

To find the money within their budget, here are some steps they can take:

1. Evaluate their current expenses: They should assess their current spending habits and identify areas where they can make cuts or reduce costs. This could include scrutinizing monthly bills, subscriptions, dining out, entertainment expenses, etc. Creating a detailed budget and tracking their expenses will help them identify specific areas for potential savings.

2. Reduce discretionary spending: They could limit their discretionary spending on non-essential items. This might mean finding alternative, cost-effective forms of entertainment, shopping smarter, or prioritizing their purchases.

3. Minimize eating out: By reducing the number of times they dine out or eat takeout, Jesse and Kimberly can save a significant amount of money each month. Planning meals in advance and cooking at home can lead to substantial savings.

4. Look for cheaper alternatives: They can search for lower-cost alternatives for services they currently use. For example, they could switch to a cheaper cell phone plan, find more affordable insurance options, or negotiate better deals on their bills.

5. Explore second sources of income: Jesse and Kimberly can consider part-time jobs, freelance work, or other side gigs to supplement their current income. This can help them generate additional cash flow specifically for the Educational Savings Account.

6. Automate savings: They should automate their savings by setting up an automatic contribution to the Educational Savings Account each month. By doing this, they can ensure the money is allocated without the temptation to spend it elsewhere.

By implementing these strategies and potentially others that are suitable to their specific circumstances, Jesse and Kimberly can allocate the necessary additional funds and achieve their goal of fully funding an Educational Savings Account for their baby's future education.