3.

04 MAKING A BUDGET AND SAVINGS PLAN

Economics

The average income by household is $63,784. Apply the 50/30/20 rule to this income using the following basic yearly budget:

1. Set up your budget using the following sub categories. Some categories have been completed for you, but the rest is up to you.

50% for necessities

(0.5 x 63784 = $31,892)

Subcategory Amount

Housing 20% $12,756.60

Food and Household items $7,130.40

Utilities National Average $2,060.00

(electricity/water/sewage)

Phone/Internet $2,535.00

Transportation $2,535.00

Healthcare $4,875.00

Total $31,892

30% for discretionary spending

(0.3 x 63784 = $19,135.20)

Subcategory Amount

Entertainment $3,827.04

Apparel/Cosmetics $1,913.52

Travel $3,827.04

Hobbies $1,913.52

Miscellaneous $9,653.08

Total $19,135.20

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20% for savings/investment

(0.2 x 63784 = $12,756.8)

Subcategory Amount

Savings $6,378.40

Investment $6,378.40
(Use this amount to complete the next
section.)

Total $12,756.80

2. How much did you choose to set aside to invest for the year? How much is that monthly?

$6,378.40 for the year.

This is $531.53 per month.

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3. Choose which methods you would like to use to save or invest. How much would you like to remain liquid? Highlight the products and put
in the monthly/yearly amount you’d like to invest. Make sure the total adds up to your answer to #2!

Investment Type Minimum Rate Monthly/Yearly Investment

Money Market Account SAVINGS $500 0.5%

$531.53 monthly

Stocks $100 5 year rate: 20% (or Enter number here (if
loss) applicable)

Mutual Fund INVESTMENTS $1000 5 year rate: 12% $6,378.40 yearly

CD $1000 5 year rate: 1% APR Enter number here (if

applicable)

4. What would you say your risk tolerance is? How does it affect your savings choices?

My risk tolerance is moderate, which means I am willing to accept some investment risk for
higher potential returns but not too much that could put my savings at risk. It affects my
savings choices as I would prefer to invest in a mix of low-risk and moderate-risk investment.

5. Do you think it is possible to save or invest 20% of the average income, or would you need to realistically spend more on necessities in
your area?

Saving 20% of the average income may be challenging depending on the cost of living.
However, it is possible with proper budgeting, planning, commitment and discipline. This
involves taking a closer look at one's expenses and identifying areas where cuts can be made.
For example, it may be possible to reduce unnecessary entertainment expenses, such as

3.04 MAKING A BUDGET AND SAVINGS PLAN | ECONOMICS 4

 eating out or going to the movies, and redirect that money towards savings or investments.It
may require making sacrifices in the short term, but the long-term benefits of building a strong
financial foundation can be well worth it.

Rubric
___/75 points

Highly Proficient Proficient Developing Beginning Incomplete

Criteria
15 to >12 pts 12 to >7 pts 7 to >3 pts 3 to >0 pts 0 pts

Yearly Budget Yearly budget is Yearly budget is Yearly budget is Response is Criterion is missing
complete and mostly complete and somewhat complete inaccurate. from submission.
balanced. mostly balanced. and/or somewhat
balanced.

Investment amount Answer accurately Answer mostly Answer somewhat Answer is Criterion is missing
identifies the yearly accurately identifies accurately identifies inaccurate. from submission.
and monthly the yearly and the yearly and
investment amounts. monthly investment monthly investment
amounts. amounts.

Investment plan Investment options Investment options Investment options Answer is Criterion is missing
are selected and add are selected but are selected but inaccurate. from submission.
up to the answer to exceed the answer don’t add up to the
#2. to #2. answer to #2.

3.04 MAKING A BUDGET AND SAVINGS PLAN | ECONOMICS 5

 Highly Proficient Proficient Developing Beginning Incomplete
Criteria
15 to >12 pts 12 to >7 pts 7 to >3 pts 3 to >0 pts 0 pts

Identifying Risk Answer completely Answer mostly Answer somewhat Answer is inaccurate. Criterion is missing
Tolerance explains both the explains both the explains both the from submission.
student’s risk student’s risk student’s risk
tolerance and how tolerance and how tolerance and how
that affects savings that affects savings that affects savings
and investment and investment and investment
choices from #2. choices from #2. choices from #2.

Response to 20% Answer completely Answer mostly Response includes a Answer is inaccurate. Criterion is missing
Savings Plan responds to the explains the students yes or no answer, but from submission.
possibility of a 20% opinion regarding the doesn’t explain
savings and possibility of a 20% further or refer to the
investment plan. savings and cost of living in the
investment plan. area.

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