8. Jim and Jennifer have two children. Jim’s net pay is $700/week and Jennifer’s is $1,150 bi-weekly (every two weeks). Their living expenses are as follows: Mortgage and taxes $1,320/month Food $150/week Clothing $2,000/year Utilities $500/month Charity $100/month Entertainment $250/month Loan payments $200/month Savings $100/week Vacation Fund $100/month Transportation $250/bi-weekly Gifts $1,200/year Spending money $120/week Day Care $150/week
a) Design a monthly budget for Jim and Jennifer and determine whether they are earning enough to cover their expenses. Classify each of their expenses as fixed (F) or variable (V).
b) What changes to their budget would you suggest? Explain fully.
+633 First, Jennifer's weekly pay is $575 ($1,150 / 2 = $575)
Add that to Jim's, and you get $1,275/week
Since there is a little over 364 days in a year, we can round this number to make it easier to manage:
Family's income/year: $1,275/week * 52 weeks/year = $66,300/year
Now, convert all of the expenses to years to make it easier to manage:
Mortgage + taxes= $1320/month * 12 months = $15,840/year
Food: 150/week * 52 weeks/year = $7,800/year
Clothing: $2,000/year
Utilities: $500/month * 12 months/year = $6,000/year
Charity: $100/month * 12 months/year = $1,200/year
Entertainment: $250/month * 12 months/year = $3,000/year
Loan payments: $200/month * 12 months/year = $2,400/year
Savings: $100/week * 52 weeks/year = $5,200/year
Vacation Fund: $100/month * 12 months/year = $1,200/year
Transportation: $250 bi-weekly / 2 = $125/week --> $125/week * 52 weeks/year = $6500/year
Gifts: $1,200/year
Spending money: $120/week * 52 weeks/year = $3,640/year
Day care: $150/week * 52 weeks/year = $7,800/year
Total expenses: $7,800 + $3,640 + $1,200 + $6,500 + $1,200 + $5,200 + $2,400 + $3,000 + $1,200 + $6,000 + $2,000 + $7,800 + $15,840 = $63,780
They are making a surplus of $2,520. If they needed to cut something, they could try taking out the charity, entertainment, and vacation fund categories. I would, as of now, recommend putting more into the savings category.
