Assessment : Financial Budgeting

In this module, you have created a realistic personal budget that includes costs for education, savings,
housing, transportation, food, and other items. You have considered the how and why of staying (or getting)
out of debt, building credit, and saving for short and long term expenses. For your assessment, please show
that you have considered carefully all these items.

Part I: Net Salary

1. Please explain what you see as some of the benefits and challenges of creating and sticking to a budget.
Benefits: In laying out a budget plan based off of your salary, and savings, one can identify the amount of
money that they need to leave out for each category of spending. If you don’t do this, there are higher
chances that you will mess up your budgeting. For example, you may spend more on something, and in turn,
not have enough money left over for something else.

Challenges: there are certain obstacles in lining up the right amount of money for each section. This also could
raise questions to whether or not you are in the right financial state to be paying for something that you have
already purchased. If you find that you have already bought a home and need to pay off a mortgage, there
may be less money left over for things such as groceries.

2. Using the budget you created in the module as a guide, explain at least five items that should be part of a
budget and provide a brief explanation of why these items are important to include.
- Savings: putting money away for emergency spending is important self insurance for unexpected
events.
- Groceries: knowing what type of groceries you would like to buy, and the amount of money you are
actually able to spend will inform you whether you can buy food luxuries that you do not need
- Home expenses: there are various expense that come with buying a home or living with your parents.
- Retirement: for when you choose to retire from your career, you want to have money left over to live
a nice lifestyle when you are no longer receiving checks
- Transportation: it is important to know how you will be getting to work or to other places; whether it
be by public transportation or paying for gas

Part II: Savings Strategy

3. Using the budget you created in the module as a guide, explain why someone would save every month for both
short term and long term expenses. State how much is reasonable every month to save according to your
personal budget.
Short term expenses allow for paying bills in the moment so you do not fall into to debt, and can afford things
that you need monthly, such as groceries. Long term provides for insurance in emergency situations, and
retirement savings so you have leniency in spending. Within my budget, I chose to spend 15% on both
retirement and savings, as I will still left with enough money to live the type of lifestyle I would like to each
month, and was still left with $756 left. Therefore, I could potentially save a little bit more, such as 18%.

Part III: Surplus or Deficit

4. In the end, does your budget end with a surplus or a deficit?

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 I ended with a surplus of $756.

5. What decisions did you make about your budget that led to that final outcome?

NOTE: If your budget ended with a deficit (you were spending more than you were taking home each month),
this is not sustainable. You would need to redo your budget until your net income covers all of your monthly
expenses.

I chose to pick a budgeting plan that was more modest for the type of salary that I have, but also would allow
me to do things, and buy things that I enjoy having. I also placed about half of my monthly budget into
savings, leaving me with a lower surplus then I could potentially have.

Part V: Summary
6. Identify two lessons you learned by completing this salary-based budget.

I learned the importance in saving your money, for in the long run, this will benefit me when I choose to
retire, or when I feel that I want to go on a nice vacation, or buy a nicer car. The type of job that you choose,
and the salary that falls with this will dictate your personal budget plan, and play a role in the type of lifestyle
that you are able to have. If I chose a job with a lower salary, I would have to change my budget plan to
maybe having a lower savings per month, but still having the same lifestyle budgeting. However, this all
depends on what your prioritize, for putting less money in your savings may benefit you in the present, but
will not be as helpful in the long-run. Therefore, when budgeting, you have to have the future and the present
in mind.