Budgeting Rules & Equations
What is the general rule of thumb for budgeting?
20-30-50 rule
What percent of the budget rule of thumb is savings?
20%
What percent of the budget rule of thumb is needs?
50%
What percent of the budget rule of thumb is wants?
30%
What is the goal amount in an emergency fund?
3 to 6 months of needs
The income a person receives before taxes and deductions.
Alex gets paid $300 each week for his coaching job, how much of this should he put into his savings?
$60
What are some things that are considered needs (at least 3)
Housing, transportation, food, utilities, education expenses, medical expenses and insurances
Sally makes $80,000 per year, how much can she spend on wants annually?
$24,000
It matters!
Define Net Income
The "take-home" amount (income after taxes and deductions)
Matt makes $18 an hour and works washing cars and works 15 hours per week. If he follows the budgeting rule, how much will he have saved by the end of the year?
$2808
If a person takes home $73,805, how much should they budget for needs monthly?
$1,845.13
Xayden makes $100,000 gross income per year. He has to set asside $7,000 for taxes, how much can he budget for his wants each year?
$27,900
Percent increase is used when the _____ > ________
Final > original
Differentiate between fixed and variable expenses.
Fixed expenses occur on a set basis at a set amount. Variable expenses occur regularly but the amount varies/is less predictable
If Eli makes $106,850 before taxes and taxes are 20%, how much should he budget to save?
$17,096
What should a persons annual net income be if they have an annual need of $28,800?
$57,600
Alan has a monthly wants budget of $2100, how much is his annual net income?
$84,000
Sally needs to have a net income of $2100 per month, what should her gross income be if taxes are an 18% reduction to her pay?
$2560.66
What are the 3 categories for the budgeting rule of thumb?
Needs, wants and savings
What should a persons net income be if they have a monthly savings of $960
$57,560
James has $15,000 in savings after his first year of working. There is an $18,000 difference between his gross and his net income, how much should he be budgeting annually for needs?
$37,5000
Needs and savings are calculated after deductions (so the $18,000 is just a distraction).
Sandy is saving $1500 each month, how much can she spend on wants each year?
$27,000
If a person is taking home $3160 after 21% of taxes and reductions, what is their monthly salary?
$4000