John Maxwell once said, “A budget is telling your money where to go instead of wondering where it went.” One of the most effective ways to win with money is to know exactly where your money goes each month. In this class, you will be preparing two monthly budgets. This activity will prepare you for the Budget Assignments as you learn why it’s not only important to plan for the month, every month before the month begins, but also why you want to make sure you remain solvent (not in a deficit) each month.
If you haven’t done so already, review the budgeting videos from this module and then review the Jones Family’s financial situation below (current income and expenses). After your review, briefly answer the three (3) questions below.
The Jones family lives in a 2-bedroom apartment on the edge of town. They have one child and she is 14 years old. The father (Julio) is an Assistant Manager at the local Walmart. The mother (Ginny) is attending school part-time to become an accountant. They have a savings goal to pay for Ginny’s tuition next year.
Income: Monthly Take-home Pay: $3,000
Monthly Expenses:
Rent: $1,100 |
Electricity, water: $140 |
Telephone (3): $185 |
Cable, Internet: $145 |
Food (at home): $400 |
Food (away): $200 |
Auto payment: $310 |
Gas, car maintenance: $140 |
Insurance: $150 |
Clothing: $200 |
Personal, gifts: $100 |
Donations: $50 Credit Card Payment: $100 (this is not minimum) |
1. What situations might have created the budget deficit for the Jones family?
2. What amounts would you suggest for the variable categories (i.e., Insurance, Auto Payment, Cable, Telephone, and Rent are fixed) that would create a zero-based budget situation (Income = Expenses) for the family? Just list the variable expenses and the new amounts.
3. Describe any additional actions the Jones family could take to keep them solvent and help manage their money better?
