6/5/2019 Budgeting - Google Docs

Assessment : Financial Budgeting

In this module, you have created a realistic personal budget that includes costs for education, savings,
housing, transportation, food, and other items. You have considered the how and why of staying (or getting)
out of debt, building credit, and saving for short and long term expenses. For your assessment, please show
that you have considered carefully all these items.

Part I: Net Salary

1. Please explain what you see as some of the benefits and challenges of creating and sticking to a
budget.
While budgeting, you always know how much money you have going out, how much money is
coming in, and how much you have available to spend. You’ll never have to worry about late
payments, missed payments, or other financial issues. However, it is almost impossible to predict
the ups and downs of life; as result, it is almost impossible to budget for unexpected expenses
since you have no clue what they will be ahead of time.

2. Using the budget you created in the module as a guide, explain at least five items that should be part
of a budget and provide a brief explanation of why these items are important to include.
In my opinion, the five most important things to include in a budget are monthly rent, utilities
such as electricity and gas, groceries, monthly savings and retirement, and mobile phone. Rent
should definitely be apart of a budget because one should always account for their monthly cost of
living when creating and planning a budget. Rent is probably the biggest costs associated with
finances and money. Along with that, accounting for utilities such as gas and electricity is
important in order to have necessities including light, heat, and air conditioning. Groceries are
important to include in a budget because food is essential to our health and wellbeing. Food is also
a basic necessity that allows us to survive and thrive. Monthly savings and retirement are
important because we should always be looking into the future and making sure that we are setting
ourselves up for comfort and ease when we get older. Finally, accounting for costs associated with
mobile phones is important because in this day and age, phones are essential to communication
and connection.

Part II: Savings Strategy

3. Using the budget you created in the module as a guide, explain why someone would save every
month for both short term and long term expenses. State how much is reasonable every month to
save according to your personal budget.
It is almost impossible to budget for unexpected expenses since you have no clue what they will
be ahead of time. Considering this, people might save every month to account for those
unexpected expenses in the short and long run. Having money set aside will lessen the impact.
Additionally, people might save money every month to work towards a goal, such a putting a
down payment on a house or buying a car or another expensive item. According to my personal
budget, I think around $100-$150 is reasonable to save every month. This amount will not impact
the remaining money, and it will also allow me to have extra money on the side for those reasons
listed above.

Part III: Surplus or Deficit

4. In the end, does your budget end with a surplus or a deficit?
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6/5/2019 Budgeting - Google Docs
My budget ends with a surplus of $44.

5. What decisions did you make about your budget that led to that final outcome?

NOTE: If your budget ended with a deficit (you were spending more than you were taking home
each month), this is not sustainable. You would need to redo your budget until your net income
covers all of your monthly expenses.

I rented an apartment with one roommate, which lessened the monthly costs for rent. This also
meant that I would split internet, home phone, and utilities. I also decided on saving five percent
of my monthly income for both retirement and savings, as opposed to ten percent because I would
have ended with a deficit. I chose the lowest cost grocery and dining out plan, and I opted away
from using public transportation and instead chose to have a car. Although I originally chose NYC
as where I wanted to live, I chose not to because housing is very expensive and ate up most of the
allocated budget.

Part V: Summary
6. Identify two lessons you learned by completing this salary-based budget.

First and foremost, I realized that a lot more money goes into rent, utilities, and other bills than
originally expected. I never understood the immense costs associated with obtaining the basic
needs that I took for granted. I now understand that paying bills takes up a large portion of the
money. The second thing that I learned is that the life that I might have to change some of my
lifestyle choices if I want to budget my money correctly. For example, I eat out a lot. I would be
unable to do with the given salary out of college. Budgeting money based off of my salary has
shown me that I need to make better economic and financial decisions if I want to make sure my
money is being used correctly and efficiently.

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