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MATH125: Unit 4 Assignment Answer Form

Cash Conundrums: Financial Literacy

Assignment Instructions

For this assignment, you will create a personal budget and compare it to the 50/30/20 budgeting strategy.

1. Answer ALL questions below regarding creating a budget.

2. Show ALL step-by-step calculations, and round all of your final answers correctly to the whole number. All monetary answers should be rounded to the nearest dollar.

3. For full credit, write all explanations in the spaces provided.

4. Enter your answers in the space provided in this document, and submit to the appropriate area. Scanned or handwritten work will not be accepted.

5. If you need assistance, please contact your course instructor.

Creating a Budget

You will create a personal budget based on your current salary, or based on your state’s median salary. You will create a personal budget based one of the following: (1) your current salary, OR (2) your state’s median salary. Review the median income information on this site.

Step 1: Income (6 points)

A. Provide your Annual Salary. Base this one of the following: your current salary, OR your state’s median salary.

Annual salary

$

B. Determine your Gross Monthly Salary. This is your annual salary listed in part A divided by 12.

Show work here:

Gross Monthly Salary

$

C. Determine your Monthly Take-home Pay. This is the monthly gross pay listed in part B minus FICA, taxes, Social Security, and health insurance. A realistic amount would be 10-30% less than your gross monthly wages.

Show work here:

Monthly Take-home Pay

$

Step 2: The 50/30/20 Strategy and Monthly Expenses (10 points)

Review the information at this link on the 50/30/20 budgeting strategy.

Using your monthly take home pay from Step 1C, calculate your monthly expenses for each category below, and enter into the following table. It might help you to think about items on a weekly basis and then multiply by 4 to calculate a monthly budget amount.
The total budgeted amount should equal your monthly take-home pay
.

Remember, if you are not comfortable sharing your own salary you can do this using your state’s median salary with realistic estimates.

Budgeted Category

Examples

Budgeted Amount

Housing

Rent or mortgage payment

$

Food

Groceries, lunches, coffees, dinners out, etc.

$

Transportation

Gas, auto care, parking, tolls, etc.

$

Basic utilities

Phone, electricity, water, Internet, etc.

$

Insurance

Health, auto, home, and life insurance

$

Child care

Day care, babysitting, college tuition, etc.

$

Travel

Airfare, hotels

$

Entertainment

Sporting events, dinners out, movies, and memberships

$

Personal care

Haircuts, massages, etc.

$

Savings

General savings, saving for car, college, wedding, etc.

$

Other

$

Step 3: Categorizing Needs, Wants & Savings (15 points)

Based on the 50/30/20 strategy, expenses can be
needs
or
wants
. However, some categories may not easily fit in with
needs
or
wants
. For example, daycare may be a
need
, but babysitting for date night may be a
want
. For each category, break down the total budgeted (in Step 2 above) into
needs
and
wants
.

Budgeted Category

Budgeted Amount
(Step 2)

Amount toward Needs

Amount toward Wants

Housing

$

$

$

Food

$

$

$

Transportation

$

$

$

Basic Utilities

$

$

$

Insurance

$

$

$

Child care

$

$

$

Travel

$

$

$

Entertainment

$

$

$

Personal Care

$

$

$

Savings

$

Other

$

$

$

Step 4: Calculation of Needs, Wants & Savings (12 points)

A. Calculate the total of your Needs column from Step 3. Show all work.

B. Calculate the total of your Wants column from Step 3. Show all work.

Transfer the totals for Needs and Wants from Step 4 as well as your Savings from Step 3 to the following table.

Total

Needs

$

Wants

$

Savings

$

Step 5: Percentage of Wants, Needs & Savings (9 points)

Calculate the percentage of your budget assigned to needs, wants, and savings below. Use the amount from each category in Step 4 and divide it by your monthly take-home pay (Part C in Step 1) salary. Then multiply that result by 100 to calculate the percent. Note: Your percentages may not match a 50/30/20 budget.

Show all calculations in the space provided and then use your work to fill in the table below.

Totals
from Step 4

Monthly Take-home pay
from Step 1C

Percent

Needs

$

$

%

Wants

$

$

%

Savings

$

$

%

Step 6: Using the 50/30/20 Method (6 points)

If you did not do so above, please review the information at this link on the 50/30/20 budgeting strategy.

Using your monthly take-home pay from Step 1C and the 50/30/20 budgeting strategy percentages, calculate the
recommended
amount that should go toward needs, wants and savings.

Show all calculations in the space provided and then use your work to fill in the table below.

Monthly Take-home pay
from Step 1C

50/30/20 percentage

Recommended Distribution

Needs

$

50%

$

Wants

$

30%

$

Savings

$

20%

$

Step 7: Reflection on the 50/30/20 Method (12 points)

Write a 100-word reflection in which you

1. Compare your actual percentages from Step 5 to the 50/30/20 recommended percentages in Step 6.

2. Discuss how well do you feel your budget aligns with the 50/30/20 method. Be sure to discuss each category.

3. What might you need to change in your budget?

Step 7 Answer (100 words)

References

NerdWallet. (2019. December 18). 50/30/20 budget calculator. Retrieved from https://www.nerdwallet.com/blog/finance/nerdwallet-budget-calculator/

World Population Review. (n.d.). Median household income by state 2020. Retrieved from https://worldpopulationreview.com/states/median-household-income-by-state/