Process

PART 1: Estimate Your Income

    Knowing how much you earn each month is an essential part of creating a realistic budget. How much you earn depends on your occupation. You will be completing the WebQuest for your first significant job. Assume you have just graduated from college. 

1. Open the Budget WebQuest Spreadsheets document, create a copy, and name it Budget WQ: Your Last Name

MAKE SURE YOU DELETE ANYONE's EMAIL ADDRESS THAT APPEARS UNDER SHARING!! 

2. Enter your personal information on the Calculating Paycheck worksheet in the Budget Web Quest Spreadsheet including your full name, intended occupation, pay period (which will be MONTHLY), & marital status (which I hope is SINGLE). 

3. Use the Salary Wizard to find the amount of annual income for your intended occupation you can expect to earn in that occupation right out of college. 

4. Print out the page that displays your occupation and expected salary range. HIGHLIGHT your occupation and salary range.

5. Using the  lowest amount in the salary range, enter the annual starting salary for your job on the Calculating Paycheck worksheet in the cell next to 'Annual Salary', which is cell B8.  Please do not enter an amount greater than $60,000 annual salary. 

NOTE: As you proceed through the Budget WebQuest, make sure you keep your Google Documents for this web quest in your Personal Google Docs Folder. 

6.  Click on the Federal Income Taxes link and do the following:

  • Scroll down to the 2nd calculator on the page
  • Select the current year from the drop-down box
  • Type in your salary under 'Taxable Income'
  • Click on 'Calculate'
  • Print out the page that displays the results and HIGHLIGHT the Tax dollar amount.
  • Take the Tax dollar amount, divide it by 12, and enter that number on your Calculating Paycheck worksheet in the cell next to 'Federal Income Tax Withheld', which is cell B14.

7. The state income tax withholding for PA is always 3%. This is calculated for you already on the worksheet. It is calculated by multiplying your monthly GROSS pay by 3%. If you live in another state it could very well be different. 

8. Under other deductions, enter $100 for the medical insurance deduction in the appropriate cell of the Calculating Paycheck worksheet (this assumes your employer offers a medical insurance benefit and pays a generous portion of the premium).

9.  Finally, enter $250 for the 401K deduction in the appropriate cell of the Calculating Paycheck worksheet. The earlier you begin to save for retirement the greater your chance of reaching your goal of having adequate savings for your retirement. For purposes of this WebQuest, we are going to contribute $250 per month to a 401K retirement plan. (You may later need to change this amount to balance your budget.)

                                    

PART 2:  Budgeting For Savings & Unexpected Expenses

   Saving money for a rainy day or future goals and dreams is another important part of your budget. 

Remember, pay yourself first!

   Let's talk about that rainy day first. You should set aside approximately 3 to 6 months worth of living expenses by creating an Emergency Fund, or Reserve Fund. Saving for unexpected expenses will be helpful if you become unemployed, if you need unexpected medical attention or if you encounter some other financial problem. AFTER you determine your total monthly expenses, you will better be able to estimate the amount you will need to save for these unexpected expenses. Therefore, you will need to wait until you are finished budgeting your monthly expenses before completing the Emergency Fund section.

   By setting priorities, you identify what is important to you. By setting goals, you begin to translate your priorities into actions. Goals can be categorized into different types of goals. In addition to saving for a rainy day, you can save for short-term goals (5 years or less) and long-term (longer than 5 years) goals and set aside money each month to reach these goals. Begin by writing your personal and financial goals. Well-written personal and financial goals should:

               ~ be realistic.
               ~ be stated in measurable terms.
               ~ have a time frame.
               ~ state the action to be taken.

Examples:

   I would like to save $9,000 for unexpected expenses (monthly expenses will be approximately $1,500 x 6 months) over the next 7 1/2 years. To reach this goal I will have to save $100 per month (9,000/90 months).

   I would like to save $5,000 for a down payment on a new car in three years. To meet this savings goal, I will need to save approximately $140 per month (5,000/36 months).

1.  Open the Financial Goals Document, create a copy, and name it Budget FG: Your Last Name

MAKE SURE YOU DELETE ANYONE's EMAIL ADDRESS THAT APPEARS UNDER SHARING!! 

2.  Enter your personal and financial goals using the Financial Goals document. Enter at least one goal for each type of goal following the format provided above. Remember we have already started to save for retirement by asking our employer to deduct $250 for our 401K contribution. 

3.   Enter the names of your savings goals and their respective monthly saving amounts from your Financial Goals document into the proper cells of the Personal Monthly Budget worksheet. 


PART 3: Budgeting for Expenses

Expenses are money you spend on things you need and want. A need is something you must have to survive, such as food, shelter and clothing. A want is something you desire or would like to have or do. For example, if you live in Wisconsin, you need a coat. You may want a leather jacket, but other types of coats could also keep you warm.

Fixed Expenses

Let's start with Fixed Expenses--expenses that do not change from month to month.


Housing Expense 

          Housing will probably be the largest expense in your budget. Experts recommend 25-30% of your net monthly income will be allocated to your housing expense. To determine your housing expense, click here to find an apartment which will fit into your budget. Print a copy of the page you visited that shows your rent amount number and HIGHLIGHT the number. Enter the amount of monthly rent in the appropriate cell in the Personal Monthly Budget worksheet. 

Transportation Expense

       For purposes of this WebQuest we will assume we need to buy a car to provide reliable transportation for work. To help you decide what type of an auto will meet your needs, review the website Choosing A Car That's Right For You

            Using the advice that you just read about, determine the type of car which will best meet your needs. Click on one of the links below to choose a car that matches your results. Print a copy of the car you desire to purchase and HIGHLIGHT the price.

            After you have selected your car, go to Yahoo! Autos Car Loan Calculator. You will borrow (finance) the TOTAL cost of the car. In the 'Auto Loan Calculator' section:

  • Enter the price of price of your car in the 'Loan Amount' area 
  • Keep the Loan Term as 4-years (48 months)
  • Enter 6% for the Interest Rate
  • Choose 'Monthly' under the Amortization area
  • Click on 'Calculate'
  • Print a copy of your calculation that shows your monthly car loan payment amount and HIGHLIGHT the amount
  • Enter the amount of your monthly car loan payment amount in the appropriate cell in the Personal Monthly Budget worksheet

Student Loan 

      Many people take out student loans for college expenses. Assume you borrowed $10,000 if you plan to attend a public or state university or $40,000 if you plan to attend a private university. Using the Financial Aid Calculator, calculate your monthly loan payment:

  • Enter your loan amount (either $10,000 or $40,000)
  • Enter 7% as your loan rate
  • Leave Loan Fees at 0%
  • Enter 10 for the Loan Term (in years)
  • Leave everything else the way it is and click on 'Calculate'
  • Print out the Financial Aid Calculator results, HIGHLIGHT the monthly student loan payment, and enter the amount in the appropriate cell in the Personal Monthly Budget worksheet.

Renter's Insurance Expense

  • Enter $20 for your Renter's Insurance monthly premium amount in the appropriate cell in the Personal Monthly Budget worksheet.

Click here to learn more about renters insurance. 

 

Variable Expenses: expenses that can change from month to month making them more difficult to budget. To determine a reasonable expense level, you can follow the recommended percentages suggested by financial experts or talk to your friends and family to see how your spending compares with theirs.

Food/Dining Out Expenses

      Estimating food costs can be difficult, but keep in mind that you eat 3 meals a day and there are about 30 days in a month. For example, if you figure an average of $3 per meal, you would spend approximately $270 a month for food. Food costs should be about 10 - 15% of your net monthly income. Since everyone's eating habits are different and depending on how often you eat out or eat at home, this amount will vary. 

1.  To find the cost of your food items: 

  • Create a list of food items you feel you will need for ONE WEEK
  • Click on the Giant Food Shopping Online link
  • Click on 'Browse Aisles'
  • When finding an item you want to buy, put in the quantity of the item you want, then click 'Buy'
  • When done shopping, click 'Review Order' on the right hand side and print a copy of your total order that shows the total amount of groceries you are buying for the week. HIGHLIGHT the total amount.
  • Multiply your result by 4.3 (There are 4.3 weeks in a month) to get an amount for your monthly budget.
  • Enter your monthly food expense in the appropriate cell in the Personal Monthly Budget worksheet

2. Determine an average monthly amount for dining out. 

  • You can use any dollar amount you wish, but it has to be REALISTIC!! 
  • Enter the amount in the appropriate cell in the Personal Monthly Budget worksheet

Personal Expenses

     In your new job, you will need clothes appropriate for your workplace. Your college wardrobe may not be acceptable for your new job. Business clothes, even business casual can be very expensive. Certain careers require special clothing items such as safety shoes or uniforms.

       In addition to clothing, other items include personal toiletries, laundry, haircuts, etc. will amount to about 2-10% of your net monthly income.

  Click on any of the links below to find prices on the various items listed in the Personal Expense worksheet in the Budget Web Quest spreadsheet. Enter YEARLY amounts in the yearly column of the worksheet which you feel accurately reflects your need for each item. The monthly numbers will automatically flow through to the Personal Monthly Budget worksheet. The following web-sites are approved for this process and these are the only sites to be used for this section!

Utilities Expense

      You will need to budget for utilities, such as gas and electricity, telephone, cell phone, cable, water, etc. (Gas and electricity may already be included in your rent but you will still be required to research this information. Be sure to Insert a Comment on the final worksheet if the amounts are included in the rent.) Below are a couple of websites to help estimate these expenses. You will likely need to search the Internet for additional information.

http://www.myfirstapartment.com/2010/03/how-much-should-you-budget-for-utilities/

Enter the MONTHLY amounts for each utilities expense below in the appropriate cells in the Personal Monthly Budget worksheet.

  • Electricity & Gas Bills
  • Cable Bill
  • House Phone Bill
  • Cell Phone Bill
  • Water, Sewer, & Garbage Bills

Experts suggest you should budget 5 to 10 percent of your net income for utilities.  


Entertainment Expenses                                   

Including leisure time in your life is important to help maintain a healthy lifestyle. Be sure to include leisure and recreation in your budget. Click on any of the links below to find prices on the various entertainment items listed in the Entertainment Expense worksheet in the Budget Web Quest spreadsheet. Enter YEARLY amounts in the yearly column of the worksheet which you feel accurately reflects your need for each item. The monthly numbers will automatically flow through to the Personal Monthly Budget worksheet. The following web-sites are approved for this process and these are the only sites to be used for this section!     


Healthcare Expenses    

The Healthcare category includes expenses beyond the medical insurance premium which we deducted from your paycheck. This category includes co-pays and items not covered by your insurance. Click on any of the links below to find prices on the various healthecare items listed in the Healthcare Expense worksheet in the Budget Web Quest spreadsheet. Enter YEARLY amounts in the yearly column of the worksheet which you feel accurately reflects your need for each item.  For Prescription Co-Pays enter $120. For Medical Co-Pays enter $240. The monthly numbers will automatically flow through to the Personal Monthly Budget worksheet. The following web-sites are approved for this process and these are the only sites to be used for this section!

 

Transportation Expenses

This includes routine travel, such as commuting to work; as well as pleasure or other long-distance travel. Transportation could include bus, train or plane fare, or maintenance on your car and the cost of gas. You may also need to allow for parking fees and auto registration costs. Click on any of the links below to find prices on the various transportation expenses listed in the Personal Monthly Budget worksheet in the Budget Web Quest spreadsheet. Enter MONTHLY amounts in the appropriate cells of the worksheet which you feel accurately reflects your need for each item. The following web-sites are approved for this process and these are the only sites to be used for this section!

 

 

Miscellaneous Expenses        

   Because you cannot predict every monthly expense, the miscellaneous category will include unforeseen expenses that you may incur over the course of each month. Enter a MONTHLY amount in the appropriate cell in the Personal Monthly Budget worksheet that is somewhere between $50-$150 so you can be sure you have planned conservatively. 

 

PART 4:  Putting It All Together

Did You Spend More Than You Earned?

MAKE SURE YOU PRINT OUT YOUR PERSONAL MONTHLY BUDGET WORKSHEET BEFORE THIS NEXT STEP!!

If your spending exceeded your income, you must adjust the savings or expense amounts in  the appropriate worksheets until you have a surplus. 

After you adjust your budget accordingly , open the Budget WebQuest Review Questions document. Create a copy, and name it Budget Review: Your Last NameMAKE SURE YOU DELETE ANYONE's EMAIL ADDRESS THAT APPEARS UNDER SHARING!!  Answer the questions IN DETAIL to summarize your Web Quest results.  

FINALLY, print out the following documents (if you haven't already) and arrange them in the order below. Then staple and place in the appropriate inbox. Make sure your name is on the top Worksheet!!

  1. Original Personal Monthly Budget Worksheet
  2. Adjusted Personal Monthly Budget Worksheet
  3. Web Page of your Occupation & Expected Salary Range
  4. Calculating Paycheck Worksheet
  5. Financial Goals Document
  6. Web Page that Shows Your Calculated Federal Income Taxes
  7. Web Page that Shows Your Apartment and Rent
  8. Web Page that Shows the Car you Purchase and its Price
  9. Web Page that Shows the Car Loan Calculation
  10. Web Page of Your Financial Aid Calculator Results
  11. Web Page of your NetGrocer Shopping Cart
  12. Personal Expenses Worksheet
  13. Entertainment Expenses Worksheet
  14. Healthcare Expenses Worksheet
  15. Budget Web Quest Review Questions & Answers