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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.

Nov 1, 2017

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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