Section 1: Explore 2 | MoodleHUB 🎓

1. Section 1

1.18. Explore 2

Mathematics 20-3 Module 1

Section 1: Personal Budgets

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Next, you will create a budget based on several months of expense and income information. This will be a conservative budget. The budget will be designed so that at the end of each month there will be a surplus, or money left over. A conservative budget is set up to avoid running into a deficit and to ensure there is enough income to cover any unforseen month-end expenses.

Example

Marcel works as a clerk in a hardware store during the day. In the evenings, he supplements his income by tutoring young students in mathematics. Marcel would like to save money each month for a proposed trip to Europe next year. Marcel has reviewed his income and expenses for the past six months. Help Marcel create a conservative budget to achieve his goal.

The following chart summarizes Marcel’s income and expenses for the last six months.

Marcel’s Income and Expenses
Income		Expenses		Income		Expenses
January				April
Regular	$2210	Rent	$600	Regular	$2210	Rent	$600
Tutoring	$200	Food	$285	Tutoring	$190	Food	$345
		Vehicle	$300			Vehicle	$410
		Insurance	$200			Insurance	$200
		Clothing	$125			Clothing	$210
		Entertainment	$230			Entertainment	$290
		Other	$300			Other	$340
February				May
Regular	$2210	Rent	$600	Regular	$2210	Rent	$600
Tutoring	$150	Food	$310	Tutoring	$230	Food	$295
		Vehicle	$420			Vehicle	$420
		Insurance	$200			Insurance	$200
		Clothing	$250			Clothing	$75
		Entertainment	$170			Entertainment	$280
		Other	$250			Other	$355
March				June
Regular	$2210	Rent	$600	Regular	$2210	Rent	$600
Tutoring	$180	Food	$318	Tutoring	$325	Food	$328
		Vehicle	$350			Vehicle	$395
		Insurance	$200			Insurance	$200
		Clothing	$300			Clothing	$125
		Entertainment	$340			Entertainment	$240
		Other	$290			Other	$345

Step 1: Estimate Marcel’s monthly income.

Marcel’s income from tutoring varies from month to month. Use a monthly average of his income from tutoring.
Add all the income he receives from tutoring over the six months.	$200 + $150 + $180 + $190 + $230 + $325 = $1275
Divide by 6 to find the monthly average.
Since you want to create a conservative budget, it is wise to underestimate Marcel's variable income. About $200/month is appropriate, as Marcel may not tutor very much in July and August.	Tutoring average income ~ $200/month
Add his regular income of $2210 from the hardware store. This is Marcel's estimated monthly income.	$2210 + $200 = $2410

Step 2: Average the budget categories and predict appropriate monthly amounts.

Rent

recurring expense
$600/month

Food

average

To prepare a conservative budget, overestimate his expenses for food.
Food prices may increase, so rounding $313.50 to $320 per month is likely a reasonable budget estimate.

Vehicle

average

To prepare a conservative budget, overestimate his vehicle expenses.
Fuel and repair costs are likely to increase, so rounding $382.50 to $390 per month is probably a reasonable budget estimate.

You will now finish creating Marcel’s budget by completing Try This 3.