Question

In this assignment, you will create two budgets and answer questions about how your budgets have successfully met a long-term goal.

Directions
Gather materials and necessary information.
Ask your teacher which word-processing software you will be using.
Keep your lesson and assignment open in case you need to review what you have learned.
Read and follow each set of instructions carefully.
To create the budgets, type an amount of money into each cell of the tables you have been given. Be sure to ask your teacher for help if you are not sure how to do this.
Make sure you complete the questions on each page.

Imagine that you are a college student who lives away from home. You have a work-study job at your college library, and you earn about $600 each month. You have one major long-term goal: you want to save up money to visit your family soon, and you need at least $100 for your train tickets.
Create a budget that will allow you to save at least $100 by the end of October. (10 points)
Make sure your budget includes these fixed expenses:
The cost of rent ($250 each month for your shared apartment)
The cost of your bus pass ($40 each month)
The cost of books ($150, but only in September, at the beginning of the school year)
Make sure your budget considers these variable expense categories:
The cost of food
The cost of clothing
Discretionary spending (money to spend freely)



If changes happen during September or October, which expenses will you be able to change most easily? Give an example of how you could make a change. (5 points)


In which month did you save more money? (5 points)
Section 2: Adapting to Changes
Throughout your life, you will need to adapt your budget to respond to changes in your income and expenses. Now, it is time to practice making changes to a budget.
Change your previous budget to reflect these new factors. (10 points)
Your school announced that you will not have to pay for a bus pass to get to classes, because a new school program will cover this expense for all students.
You just found out that your books will cost more than you had expected. You will now need to spend an additional $100 on books in October.
You got an unexpected raise at work; you will now be making $650 each month.
Make sure that you are still meeting your overall goal of saving $100 by the end of October.


After your budget changed, which month had greater fixed expenses? (5 points)







Which variable expenses did you change in order to maintain your goal of saving at least $100 by the end of October? (5 points)

Answer 1

To save $100 by October, a college student's budget should initially accommodate fixed and variable expenses with an income of $600, then adapt to an income increase to $650, a free bus pass, and an additional book expense. The variable expenses are adjusted to ensure the savings goal is met, potentially saving more in October.

Step-by-step explanation:

Creating a budget can help manage expenses and reach financial goals, such as saving for a trip to visit family. As a college student earning $600 monthly and aiming to save $100 by the end of October, your budget would need to account for fixed expenses like rent ($250), bus pass ($40, although this will be covered by your school later), and books ($150 in September, and an additional $100 in October due to new information). Variable expenses should include food, clothing, and discretionary spending. With your increased income of $650, here's a simplified example of how your budget could look:

Income: $650

Rent: $250

Bus Pass: $0 (covered by school)

Books: $250 (initially $150 but increased)

Food, Clothing, Discretionary Spending: Adjusted to ensure you still save $100

The variable expenses like food and discretionary spending are the most easily adjusted. For instance, if you usually spend $200 on food and $50 on discretionary items, you might cut back on eating out to save money if needed.

In September, you would save less due to the cost of books, but in October, your expenses would decrease, especially since the bus pass is now free. After adjustments, October likely has greater fixed expenses due to the additional cost of books, but still allows for saving the target $100.

Answer 2

Creating the initial budget to save at least $100 by the end of October:

Income:

- Work-study job at the college library: $600 per month

Fixed Expenses:

- Rent: $250 per month

- Bus pass: $40 per month

- Books: $150 (only in September)

Variable Expenses:

- Food

- Clothing

- Discretionary spending

Now, let's consider the flexibility of expenses in case changes happen in September or October:

1. Changes in Expenses in September or October:

The variable expenses of food, clothing, and discretionary spending can be adjusted most easily in response to changes. For example, if unexpected expenses arise, you could reduce discretionary spending by dining out less frequently, or you could cut back on clothing purchases if needed.

2. In Which Month Did You Save More Money:

Saving more money is easier in September due to lower expenses. In this month, you only have the initial fixed expenses (rent and bus pass) and the books expense. After covering these costs, you can save more of your income.

Now, let's adapt the budget to reflect the new factors:

Income (with raise):

- Work-study job at the college library: $650 per month

Fixed Expenses:

- Rent: $250 per month

- Bus pass: $0 (school program covers it)

- Books: $250 (an additional $100 expense in October)

Variable Expenses (adjusted to meet the saving goal):

- Food: You may have to budget more tightly for food.

- Clothing: Consider postponing clothing purchases.

- Discretionary spending: Reduce discretionary spending further to maintain the goal of saving at least $100 by the end of October.

After these changes, in which month had greater fixed expenses, and which variable expenses did you change to maintain your savings goal:

Greater Fixed Expenses:

- After the changes, October had greater fixed expenses due to the additional cost of books, which was $250.

Changed Variable Expenses:

- To maintain the goal of saving at least $100 by the end of October, you would need to reduce variable expenses. For example, you could cut back on discretionary spending, dine out less frequently, and postpone clothing purchases to ensure you have enough to save while meeting your expenses.