Section 1: Creating a Two-Month Budget

Imagine that you are a college student who lives away from home. You have a work-study job at your college library, and you earn about $600 each month. You have one major long-term goal: you want to save up money to visit your family soon, and you need at least $100 for your train tickets.

1.Please do a budget that will allow you to save at least $100 by the end of October. (10 points)

Make sure your budget includes these fixed expenses:

The cost of rent ($250 each month for your shared apartment)

The cost of your bus pass ($40 each month)

The cost of books ($150, but only in September, at the beginning of the school year)

Make sure your budget considers these variable expense categories:

The cost of food

The cost of clothing

Discretionary spending (money to spend freely)

Personal Budget

Income and Expenses

September

October

Income

Total income

Fixed expenses

Total fixed expenses

Variable expenses

Total variable expenses

Total

Total savings

2.If changes happen during September or October, which expenses will you be able to change most easily? Give an example of how you could make a change. (5 points)

3.In which month did you save more money? (5 points)

Section 2: Adapting to Changes

Throughout your life, you will need to adapt your budget to respond to changes in your income and expenses. Now, it is time to practice making changes to a budget.

4.Change your previous budget to reflect these new factors. (10 points)

Your school announced that you will not have to pay for a bus pass to get to classes, because a new school program will cover this expense for all students.

You just found out that your books will cost more than you had expected. You will now need to spend an additional $100 on books in October.

You got an unexpected raise at work; you will now be making $650 each month.

Make sure that you are still meeting your overall goal of saving $100 by the end of October.

Personal Budget

Income and Expenses

September

October

Income

Total income

Fixed expenses

Total fixed expenses

Variable expenses

Total variable expenses

Total

Total savings

5.After your budget changed, which month had greater fixed expenses?

(5 points)

6.Which variable expenses did you change in order to maintain your goal of saving at least $100 by the end of October? (5 points)