You have recently been hired as an accountant with at an annual gross salary of $40,000. Assuming a 30% factor for Federal taxes, Social Security and Medicare deductions, and other deductions, your monthly net pay is $2,333. Determine a month budget based on this monthly income. Also, since employment, you have a new apartment lease, insurance, and a new car (or used). Research each of these in order to determine which you can afford on this salary. There is no other salary.

There are many individuals with their own theories on budgeting. Each of these individuals, in one way or another, follow these five simple steps. These steps are the foundation of personal, household, and business budgeting. Each are time- tested and will help in developing your personal monthly budget. These include 1. Calculate your Expenses: First, determine exactly how much you're spending each month. The most accurate method is to compare bank statements, bills, and credit card and/ or cash receipts. Be careful and avoid double-counting. Because some expenses are irregular i.e. dentist bill, insurance payments), you'll get the more accurate financial picture if you use an average of six months to a year of expenses. For example, using a 12-month period, determine your expenses for this 12-months, and then divide 12 (the number of months). This will give you an average of your monthly expenses. Remember that being thorough when you add up expenses is important in creating a realistic budget. A forgotten bill really throws a wrench into your savings plan. When calculating your expenses, also factor in unexpected bills, such as unplanned car repairs. One rule of thumb is to add an extra 10 percent to 15 percent. For example, if you've determined that you spend $1,500 a month, add $150 to $225. Determining expenses is an on-going issue. One important key, constantly track your existing expenditures and compare to the monthly estimates. Are you collecting all expenses? You have just determined out how much money you need to stay afloat financially each month, it's time to determine your actual income. 2. Determine your Income: Besides your regular salary, get an accurate picture by adding in any extra funds that come your way throughout the year, such as cash gifts, sale of items online or via garage sales, and don't forget other income sources like alimony, child support, interest, dividends and rental income. 3. Establish Savings and Debt Payoff Goals: In order to determine realistic savings and debt payoff goals, you must find out if you have a budget shortfall or overage. Do this by subtracting your monthly exnenses from vour income. If 3. Establish Savings and Debt Payoff Goals: In order to determine realistic savings and debt payoff goals, you must find out if you have a budget shortfall or overage. Do this by subtracting your monthly expenses from your income. If you determine you're making more money than you're spending, congratulations. This amount can be earmarked for savings and to pay off debt. However, if you determine you're spending more than you're making, it's cutback on expenses so you have something to save and don't go further into debt. The best way to figure out where you can cut from your expenses is to track your spending and record every expense for a month. Seemingly insignificant items such as a cup of coffee add up over time. For instance, even if you spend just $5 a week on snacks, that adds up to $200 a year ($5.00 X 52 weeks=$260), which can be significant. One you have a clear picture of where all of your money goes, be merciless in cutting expenses until your budget is in the black. Cut enough so that you have 10 percent to 20 percent of your income left over each month to add to your savings account. If you are unable to cut a sufficient amount from your budget, consider ways you can increase your income. 4. Record Spending and Track Progress: The best way to stay on top of your budget is to record all of your expense and income. Having to input expenses will cause you to think twice before splurging, and it's especially satisfying and motivating to record when you've met a savings goal. 5. Be Realistic: Aim for sticking to your budget most of the time, and you're bound to reach your financial goals. Breaking your budget occasionally is OK, providing you get right back on track as soon as possible. The end result is three-fold: To reduce expenses and pay-off debt. Second, begin or increase your savings. However, have realistic spending and saving goals. In a successful career, your income will increase over time. Assignment: Determine a monthly household budget based on the following information. You have recently been hired as an accountant with at an annual