ANNUAL PERSONAL BUDGET ASSIGNMENT

Everyday you make financial decisions that determine how much you spend, save and invest. How good are you at managing your money? Can you take charge of your own financial affairs, be smart with money, independent and plan for your future?

Answer the questions below and start on the road to financial literacy.

While making decisions about how you spend and save your money stop first and think about how environmentally responsible lifestyles can contribute to a healthy, and sustainable environment. As well, reflect on the reasons why you would choose one dollar amount over another amount.

Number each question, and type your numerical answers in Word, followed by an explanation of your choice.

Use your answers to prepare a spreadsheet of your budget showing monthly net income, expenses, and savings.

Follow the instructions below and you will be on your way to being financially independent versus financially dependent.

PART 1 -CAREER & INCOME

Choose an Ontario career from indeed (www.indeed.com)

Do research on that career and select a starting gross salary (before taxes)

1. What career have you chosen?

2. What is a reasonable starting salary for your preferred profession?

3. Gross monthly income ________________ (divide yearly salary by 12)

4. Net monthly income ________________

About 35% of your gross monthly income is subtracted from your pay cheque every month. Certain deductions are taken off (e.g.Income Tax, Canada Pension Plan, Health Insurance etc

Calculate the deductions for the net income using https://neuvoo.ca/tax-calculator/

PART 2 -EXPENSES

Pretend you have graduated from Lambton College in Toronto, have your first real job, and are living in a rented apartment in the town/city where you work. Prepare a budget for yourself for a one year period. To help you get started, you must first answer the following questions with an explanation after each.

1.Savings

Always pay yourself first by saving 10% of your net income. This is savings that is automatically deducted from your paycheque or withdrawn from your bank account. Explain what you are going to save for in the near or distant future.(e.g. car, house, emergency fund)

2. Rent

What is your monthly rent for an apartment or townhouse in your chosen city? You can share an apartment with a friend or two if you like.

3. Food

Create a weekly shopping sample menu and get prices for your food items. Multiply your weekly total $ amount of groceries by 4.3 to come up with an estimated monthly total. Compare your monthly total with themonthly average that follows: Groceries including snacks, plus household cleaning supplies: Daily average $12.50 to $15.00 per person. (12.50 X 30 days = $375/month) Ask yourself, is my monthly grocery bill realistic or not?

4. Transportation

Your options are: taking the bus, leasing (or renting) a car, or purchasing a used car. A city bus pass costs $150.00 a month. Please explain why you would be taking a bus, instead of having a car, and tell me why it would benefit you. Research your monthly car or lease payment by checking out such websites as www.autotrader.ca www.leasebusters.com and www.driverlane.com/calculator/calc.asp Car loans or lease arrangements usually are for 3 to 5 years. (take a photo of the ad and submit with your assignment)

5. Automobile costs

Car operation (gas/oil) $150 to 175 per month (consider such factors as: environment, car usage, season, distance, supply and demand)

6. Car Insurance($3000-$6000 per year

7. Cellphone

Options: 1) Pay as you go appox (20$ per month) 2) Contract $45.00 to $90.00 per month

8. T.V. & Internet

Basic cable & Internet $35 to $75 per month. Choose one or both (Factors: high-def, speed of modem, number of channels etc.)

9. Credit Card

Payments- usually $64 to $74 per month (avoid credit where possible) Explain in detail the types of items you are putting on your credit card each. (e.g. you might put $64 worth of items in one month and then have $74 in another month) Be realistic.

10. Grooming

Haircuts, personal hygiene products, soap, shampoo, toothpaste, cosmetics, medications, $35 to $70 per month (what would your money go towards each month e.g Haircut in one month, hygiene products the next etc.)

11. Recreation

Movies, books, magazines, DVD rentals, concerts, eating out, $50 to $100 per month. Explain what you would spend your money on each month)

12. Utilities

Heat, hydro, water, depends if it is covered in your rent or not, $50 to $100 per month (Factors: amount of usage, time of year)

13. Hobbies

Depends what you do, $25 to $50 per month (describe what interests you would spend your money on)

14. Employment expenses

Coffee fund at work, work social committee fund, buying your lunch, $10to $200.00 per month (explain how much money you would contribute and why?)

The following 8 categories dont require any explanation. Just indicate the realistic amount on your budget spreadsheet:

15. Clothingboots, shoes, bathing suits, jackets, suits etc. (remember to consider all seasons)

16. Health and Life Insurance

17.Sports club membership-$25 to $50 per month

18. Maintenance/Repairsredecorating, household repairs $15 to $20 per month

19.Buying Gifts for othersbirthdays, Christmas etc. $35 to $50 per month

20. Travel/Vacationonce a year and/or small holidays throughout the year $50 to $85 per month

21. Charitygifts of money to charitable organizations like world wild life, cancer society, food bank, church, $15 to $20 per month.

22. Loan payment

23. Tuition Fees

24. Books

PART 3 REFLECTION

Once you have completed the budget in Excel, reflect on how you are spending your money. You may discover you are spending more than you are making or have little money left. Describe in 3 to 4 paragraphs what you would do differently to cut down on your monthly expenses and to try and save money. ( so that you have more surplus or profit each month) (e.g. you may be spending $10 per day at Tim Hortons on campus, which would equal about $200 a month, so you might consider brown bagging it and save that money for a vacation, or maybe work out at home, instead of paying for a gym membership)

Keep in mind that you have more control over your variable expenses then your fixed expenses. Look at all your variable expenses first and see if you can save some money.

Fixed expenses are expenses that dont generally change from month to month, like rent, most utilities and car payments.

Variable expenses are expenses that can easily change, like the amount spent on food, entertainment or clothing.

Total your fixed expenses per month=___________________

Total your variable expenses per month=___________________

PART 4 INVESTMENT

You have inherited $100, 000 from the passing away of your Great Aunt.

Create an investment plan in the attached chart, showing how you will invest the money. Fill in the Amount of each investment, Type of Investment and a description of what you are saving up for. In full sentences in Word, comment on your choice of lifestyle, level of risk and expectant return and why you chose the investment type that you did.