Assignment 122 Zerobased Budgeting Guide for Excel Spreadsheet Introduction: This exercise is worth 15 points. It provides you with an opportunity to practice managing a zerobased budget using practical scenarios. Assume, with limited work experience and a college education, that you nd a job with a starting salary of $40,000 per year. You are fully nancially responsible and accountable for all outlays. Instructions: In the corresponding Excel spreadsheet for Assignment 12.2 " Zero-based Budgeting Worksheet in Excel," insert the proper amounts in the designated within columns D and E based on your choices. You will earn full credit by allocating all your income. This will occur when $0 appears in F OTAL ALLOCATED, cell C3 and lZERO BALANCE, cell CHE]. Step 1. Consider your net pay from your job. As you saw in a previous exercise, you can expect to take home $36,000 in annual net pay if you gross $40,000 yearly. This translates into $3,000 once a month or $1,500 if you are paid twice a month. Go to your budgeting spreadsheet. See that $1,500 has been entered in the ink cell D82 "Paycheck for 1st of Month" and the pink cell E82 cell "Paycheck for 15th of Month." I Scroll up the spreadsheet to see these amounts automatically appear in ells D3 and E3 for "Paycheck for 1st of Month" and "Paycheck for 15th of Month," respectively. Step 2. Plan to allocate all of the $1,500 taken home on the 1st and 151'1 of each month. Do so with purpose and intent to achieve nancial goals. Items can be split between paycheck 1 and paycheck 2. Just enter your total committed amounts into the appropriate cells. As you enter amounts, you will notice that [lTAL ALLOCATED , cell Ci, will decrease by the amount entered in paycheck 1 (l and paycheck 2 (El) columns. To achieve a zero-based budget, your [TOTAL ALLOCATED, cell C11, should ultimately read "$0" or zero. This means that you are purposely planning where to place all of your net income -- every cent. Zero-based budgeting helps you strategically assign every dollar coming into your household with the purpose of helping you make financial decisions that help you reach your goals and achieve nancial security! Step 3. Now look below. Consider the following expense information and different scenarios with regards to how you assign your paychecks. Remember, your take-home pay can be allocated for different purposes, including but not limited to spending, saving, investing, paying off debt, and giving. Consider tradeoffs and opportunity costs in a zero-balanced budget world. If you spend today, you have less to spend tomorrow. If you spend on X you may not be able to spend on Y. If you save today, you have funds for the future. If you invest in a welldiversied portfolio today, you can generate investment income for the future. If you borrow today, you commit yourself to repaying in the future. If you choose not to pay a balance in full, you commit This is the property of Common Sense Economics (2010, 2016}. 1
