Question

I'd like some help with this. I need help with equaling "total income" and "total expenses" to zero

LESSON 2.4
TRACKING EXPENSES-PART ONE
DIRECTIONS: Read about Caitlyn's situation, then create a zero-based budget based on the income and expenses provided in the scenario. NOTE: not all of Caitlyn's expenses will add up to equal her income-there will be some extra money to spend after all her expenses have been totaled up. That means you'll get to decide what additional expenses you think Caitlyn should plan for so her income minus her expenses will
equal zero!
BUILDING CAITLYN'S BUDGET
Caitlyn is a high school sophomore who works part time at the grocery store, earning $10 per hour and working 20 hours a week. Twenty percent of her monthly paycheck goes toward taxes. Her parents pay her a commission of $2 for every chore she completes around the house, and she plans on doing 60 of those chores this month. Caitlyn also babysits her neighbor's kids 4-Tuesdays of each month from 5-10pm at $12 an hour.
Every month, she gives 10% of her take-home pay (which is her income after taxes are taken out) to her church.
Caitlyn has $500 saved in her emergency fund already. She doesn't own a car yet, but she has started saving. She currently has $1,200 saved and would like to buy a car for $6,000 by her 16th birthday, which is 12 months away. She is also saving for a dress for homecoming, which is in three months. She estimates the dress will be $150.
Caitlyn is responsible for her cell phone bill, which is $65 per month. Her parents pay for most of her clothes, but if Caitlyn wants to spend more than what her parents have budgeted for, she'll need to pay the difference. She usually contributes $40 per month for clothing. She recently borrowed $100 from a friend to buy a concert ticket. She's going to pay her friend back this month.
Caitlyn always makes sure to have a miscellaneous line item in her budget so that she has money for last-minute expenses that she didn't plan for.​

Answer 1

To create a zero-based budget, we need to equal "total income" and "total expenses" to zero. First, let's calculate Caitlyn's monthly income:

Earnings from grocery store job:

$10/hour x 20 hours/week x 4 weeks/month = $800

Taxes:

20% of $800 = $160

Commission from doing chores:

$2/chore x 60 chores = $120

Babysitting:

$12/hour x 5 hours/night x 4 nights/month = $240

Total monthly income: $1,320

Now let's calculate Caitlyn's monthly expenses:

Emergency fund contribution: $0 (already saved $500)

Church donation: 10% of $800 = $80

Saving for car: $6,000 - $1,200 = $4,800 / 12 months = $400

Saving for homecoming dress: $150 / 3 months = $50

Cell phone bill: $65

Clothing: $40

Concert ticket repayment: $100

Miscellaneous expenses: $50

Total monthly expenses: $785

To equal our "total income" and "total expenses" to zero, we need to add an additional $535 of expenses for Caitlyn to plan for. This could include things like entertainment, dining out, or hobbies. Once we have accounted for those costs, Caitlyn's final budget would look like this:

Total monthly income: $1,320

Total monthly expenses:

Emergency fund contribution: $0 (already saved $500)

Church donation: $80

Saving for car: $400

Saving for homecoming dress: $50

Cell phone bill: $65

Clothing: $40

Concert ticket repayment: $100

Miscellaneous expenses: $50

Additional expenses: $535

Total: $1,320

Hope this helps!