Project 2 1

Emilia Vazquez
Step 1: My Current Budget
Currently, I make $1200/month. This income is used to cover all my needs and perks. The
management textbook defines needs as the physical or psychological requirements that must be
met to ensure survival and well-being (Williams 268). The tables below show how much I
currently spend in dollars on needs and perks on a monthly basis.
Needs
Rent
Utilities
Groceries
Cell phone
Car Insurance
Fuel
Total Spent on Needs
Total Spent Monthly
Total Income

Current
300
40
250
90
101
90
871

Perks
Gym
Spotify
Booze
Eating Out
Entertainment
Total Spent on Perks

Current
25
5
69
130
100
329

1200
1200

Step 2: Experiencing a 25% Income Reduction

If I experienced a 25% reduction in my income, my income would drop from $1200/month to
$900/month. In order to account for this reduction in income, I would adjust my budget as shown
in the tables below.

Needs
Rent
Utilities
Groceries
Cell phone
Car Insurance
Fuel
Total Spent on Needs

Perks
Gym
Spotify
Booze
Eating Out
Entertainment
Total Spent on Perks

Current
300
40
250
90
101
90
871

Current
25
5
69
130
100
329

With 25%
Reduction
300
40
164
90
101
90
785
With 25%
Reduction
0
5
40
50
20
115

Project 2 2

Emilia Vazquez
Total Spent Monthly
Total Income

1200
1200

900
900

In order to adjust my spending to match my lowered income, many perks would need to be cut. I
could cancel my gym membership, as I dont really use it anyways.
My biggest reduction would have to be in how much I eat out; this includes my frequent fast
food trips, as well as my Starbucks breakfasts and coffees. I would also reduce the amount I
spend on entertainment (this includes concerts, shopping trips, and movies) by 80%.
My only need that would be cut in the case of a 25% income reduction, would be how much is
spent on groceries. By shopping at less expensive supermarkets and purchasing generic brands
over brand names, this could easily be done.
Step 3: Retention
I dont believe retention will be an issue for me in cutting out these extra perks. Of my
friends/housemates, I have the most financial stability, and even with a 25% reduction I would
still have more financial stability compared to them. A reduction in my income may give me the
opportunity to understand their financial situations more than I do currently.
Step 4: Reincorporating Perks into my Budget
The perks that would be cut can be described as extrinsic rewards; or rewards that are tangible
(269). By using the components of expectancy theory, I could reincorporate some of my perks
back into my budget. According to expectancy theory, I should be motivated to the extent that I
believe that my efforts will lead to good performance, that good performance will be rewarded,
and that the rewards will be attractive (276). The textbook offers this theory as an equation:
Motivation = Valence x Expectancy x Instrumentality
With my perks (specifically eating out and entertainment), my valence, or the attractiveness of
the rewards (277), is high. With the idea of school, my expectancy, or perceived relationship
between effort and performance (277), is also high. The more time I spend studying, the better I
will do on a test. The better my attendance, the better my participation grade will be, as well as
my understanding of the topics covered. By setting specific goals for myself, my instrumentality,
or perceived relationship between performance and rewards (277), can also be high.
Examples:
Goal: Increase attendance to class
For every week with perfect attendance (not late or absent), reward with an extra $10 to spend
on eating out over the weekend.
Goal: Ending the semester with a better GPA
3.8-4.0GPA=End of semester concert with drinks (approx. $70 for concert, $30 for drinks)
3.5-3.7GPA=End of semester concert (no drinks)

Project 2 3

Emilia Vazquez
3.2-3.4GPA=End of semester shopping (approx $50)
3.0-3.1GPA=End of semester movie (approx. $20)
2.9 and below GPA= No reward

Conclusion
Expectancy theory can only be a useful motivation tool if valence, expectancy, and
instrumentality are all high. If I used getting a gym membership as my reward, my valence
would be low because I dont really enjoy using the gym anyways. Its important to personally,
or as a manager, use rewards that have a higher valence if I am going to use extrinsic rewards to
motivate myself or my subordinates.

Project 2 4

Emilia Vazquez
Works Cited
Williams, Chuck. MGMT: Principles of Management. Mason: South-Western, Cengage
Learning, 2015. Print.