1. According to the text, a personal balance sheet is a statement of your net worth. It is an accounting of what you own as well as what you owe. Using the information provided, prepare a personal balance sheet for Jamie Lee.

2. Using the table found in Ratios for Evaluating Financial Progress on page 51, what is Jamie Lee’s debt ratio? When comparing Jamie Lee’s liabilities and her net worth, is the relationship a favorable one?

3. Using the table found in Ratios for Evaluating Financial Progress on page 51, what is Jamie Lee’s savings ratio? Using the rule of thumb recommended by financial experts, is she saving enough?

4. Using Exhibit 2-6: Typical After-Tax Budget Allocations for Different Life Situations found on page 57, calculate the budget allocations for Jamie Lee, using her Net Monthly Salary (or After-tax Salary) amount. Is she within the recommended parameters for a student?

MANAGING A BUDGET 

Jamie Lee Jackson, age 24, now a busy full-time college student and part-time bakery clerk, has been trying to organize all of her priorities, including her budget. She has been wondering if she is allocating enough of her income toward savings, which includes accumulating enough money toward the $9,000 down payment she needs to open her dream cupcake café. 

Jamie Lee has been making regular deposits to both her regular and her emergency savings accounts. She would really like to sit down and get a clearer picture of how much she is spending on various expenses, including rent, utilities, and entertainment, and how her debt compares to her savings and assets. She realizes that she must stay on track and keep a detailed budget if she is to realize her dream of being self-employed after college graduation.

Current Financial Situation

Assets:

Checking account: $1,250

Emergency fund savings account: $3,100

Car: $4,000

Liabilities:

Student loan: $5,400

Credit card balance: $400

Income:

Gross monthly salary: $2,125

Net monthly salary: $1,560

Monthly Expenses:

Rent obligation: $275

Utilities obligation: $125

Food: $120

Gas/Maintenance: $100

Credit card payment: $50

Savings:

Regular savings: $150

Emergency savings: $25

Entertainment:

Cake decorating class: $35

Movies with friends: $50