Personal Finance Spread Sheet
Economics Budget Simulation This exercise is about budgeting. It is worth one quiz grade. Take the criteria below and fit them into the budget sheet in Excel you should be able to save a copy to your files and print a version for this assignment. Remember to take yearly amounts and divide them by 12 in order to get monthly figures. Your goal for this exercise: To avoid a negative balance in any month and to have something to save by the end of the year. Scenario: It is six months after college graduation in June. You’ve traveled, visited friends and blown through your summer income, moved back in with your parents/guardians and you and your family are getting on each other’s nerves. Now it is time for the “real world” Good news: You’ve got and your own place. It’s in Chicago; your address is 800 Halstead Street Chicago, IL 60607. You love it – it has history and you love the Cubbies. Bad News: You’ve got to work and move out of the house. You are on your own. Below are all the budget categories and choices you need to account for over the next twelve months. You must stay in the budget. No assuming wealthy relatives or lottery success. Job: You are earning the liberal arts graduate average income at a firm income at a firm of your choice (yes, now you wish you majored in Economics). You yearly salary is $36,700 before taxes. You must also subtract for taxes use the brackets in the text to consider the impact of the progressive tax system. This is ALL your income. Debt: A) College debt – you have $19,000 in school loan debt. It is payable over 10 years at an interest rate of 6% interest. Determine the monthly payment. Try the Sallie Mae calculator: http://www.collegeanswer.com/financing/lt_financial_planning/ltfp_monthrep.jsp B) Credit Card Debt – You have the average American College student’s credit card debt of $3000.00 payable now at an interest rate of 19.9%. Determine how you will pay this off, preferably this year. Try the following calculator. http://www.familyhorizons.com/loan_calculator.htm Housing: You have signed a year long lease on a one bedroom apartment for $800/month. It has a coin laundry ($.75 for wash and $.50 for dryer) in the basement. You must do at least one load of laundry each week. Utilities are included gas, heat, water). Parking is free. You live next to a bus stop. Transportation: Your place of work is five miles away , you cannot walk everyday in a suit. The bus fare is $1.75 each way. Food: A) Groceries – weekly groceries cost between $30.00 and $50.00. Determine your monthly amount (select a figure and multiply by four). B) Eating Out – Pizza is about $18.00. Dinner at McDonald’s is about $6.00 Dinner in a restaurant is between $18.00 and $50.00 before tip of 15% and 9.75% tax. Decide if you want to eat out and how often. Telephone: You need a cell go out to the internet and shop for a plan. Provide all the supporting documents concerning the minutes taxes and cost per month. Clothes: You need work clothes and your parents were so proud you moved out they purchased a coat and suit for you and shoes and a few accessories. You could use a few more items to get through the year. Provide support on the internet of additional items you purchased. Health Care: You have dental, medical and eye coverage through work. You need to get an annual physical at least and pay the co-pay of $20. Assume you are healthy and do not need much more. Personal Care: You need shampoo, hair cuts, facial products how much? Entertainment: This is the town with Wrigley Field. You might want to catch a game, go the website and get some tickets during the regular season. Or you might want cable? Concerts? Movies? Video Games? Savings: You want to save something if that is possible. You must put aside at least 5% of your income in case of an emergency. You are creating an emergency fund. Can you do it? What can you afford to put aside for retirement? Other: Do you contribute to a charity? Gifts for holidays or birthdays? Travel home to NY? Assignment – Create the worksheet with all the line items mentioned each month. Make choices where you have to. Remember that your income is fixed. On a separate sheet of paper you need to type, spell check and proofread the answers to the following questions. 1) What expenses can you not change? 2) Where would you reduce spending? 3) What would you have earned if you were an economics major? Provide the website where you received this information 4) Go to bankrate.com and investigate how many months you would be paying off the debt if you had only made the minimum payments on the credit card debt? 5) What have you learned from this exercise?