Sara and Lucas Budget Case Study

6 Month Budget

Lucas and Sara are married! But their budgeting woes have only just begun. They quickly realized that

the projected budget you created before the wedding was not as realistic as they had hoped and that

keeping track of two people spending is harder than they thought. They are committed to getting

out/staying out of debt so that requires a revision of their budget. They also realize that it's important

for them to start saving money for unexpected expenses.

Based on your calculations of their

income, y

our

projected budget

(from the stats case study), and the

a

ctual expenses

from their first month of marriage (found on the excel budget sheet), make a revised 6-

month budget for them for June through November.

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Recommend spending that is reasonable and will get them/keep them out of debt as quickly as

possible. (For example, it would not be reasonable to recommend that they get rid of their cell

phones.)

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Keep in mind that some budget categories cannot be changed easily.

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Use the budget template provided and be sure to submit it with your other materials.

Below you will find Lucas and Sara's current spending situation:

While they are in school, both Lucas and Sara work part-time; 20 hour per week. Lucas presently earns

$11 per hour and Sara earns $15 per hour. They expect taxes to be 15% of income. They will contribute

10.5% of their gross income to their church. They must also consider income tax which they are

estimating will be approximately 15% of their gross income.

They have the following expenses:

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Rent for their apartment will be $850 per month (they are saving $50 per month on rent

because of some painting and tiling they did on the apartment) and they expect to pay $95 per

month for utilities (gas, electricity, and internet).

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Lucas has an old car that runs quite well and is paid for. They will spend about $75 per month

for gasoline. Liability insurance on the car costs $71 per month and in previous years, Lucas has

paid about $480 per year on repairs and taxes.

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They plan to eat at home most of the time and will plan for about $210 per month on groceries.

In addition, they want to set aside about $200 per month on clothing and entertainment.

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Tuition, books, and supplies for each student will come to $1,500 per semester and is due

before each semester starts. They start school on the 1st of September and the 1st of January.

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Both Lucas and Sara expect to work full time at their current jobs for three months during the

summer, when they are not in school. Assume each month is equal to 4.3 weeks.

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They got married in the middle of May right after school was out, so they worked part-time for

two weeks of May, full-time for one week, and honeymooned for the last week. Their

honeymoon expenses were paid by family. Each works part-time during the school year.

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They want to go on a weeklong trip in August just before school starts and will work only 3.3

weeks in August. The trip will cost $720 total.

REFLECT

a.

Will Lucas and Sara have a balanced budget (does their income meet their expenses)? Explain

how you know.

b. Balance their budget. This 6-month budget should allow them to start saving money each

month.

c.

Based on their new projections, list three recommendations you have for Lucas and Sara. (Be

specific!)

a.

b.

c.

AutoSave On Lucas and Sara Budget Case Study Student Version - Saved . File Home Insert Draw Page Layout Formulas Data Review View Developer X. Cut Calibri 12 A" A ab Wrap Text [A Copy Paste BIUY Merge & Center Format Painter Clipboard Font Alignment H14 X fix A C D E F G H INCOME May Jun Jul Aug Sep Oct Nov Budgeted Actual 8 Gross Combined Income 9 Combined Take Home Pay 10 11 12 FIXED EXPENSES 13 Rent $1,450.00 $850.00 14 Education $902.50 $650.00 15 Renter's Insurance $0.00 $0.00 16 Car Insurance $71.12 $71.00 17 18 VARIABLE EXPENSES 19 Utilities $50.00 $95.00 20 Cell Phones $80.00 $170.00 21 Groceries $350.04 $143.00 22 Personal Expenses $252.07 $35.00 23 Household Expenses $40.00 $27.00 24 Health Care $21.75 $15.00 25 Transportation/Car Expenses $196.37 $48.00 26 Charitable Donations $217.60 $219.00 27 Eating out/Entertainment $46.40 $175.00 28 Clothing $100.00 $196.00 29 Miscellaneous $117.85 $89.00 30 Furniture $50.00 $0.00 31 Savings $200.00 $0.00 32 Other Expenses $70.00 $0.00 33 Trip? $50.00 $240.00 34 35 Total Expenses 36 Total Positive/Negative Balance 37 38 39 40 Lucas and Sara Income Table Hourly Pay May Hrs June Hrs July Hrs Aug Hrs Sep Hrs Oct Hours Nov Hours 41 Lucas $11 *assu 42 Sara $15 43 Total Gross Income per month 44 45 6-Month Budget (+