Working with Budgets Budget Assignment - Personal Finance GNED 1066

The total of Parts 1, 2 and 3 is worth 30% of the mark for this course. If one part is missing, it will be
considered an incomplete assignment, and you will be assessed a mark of 0/30.

All submissions are to be made on Blackboard. Hand in both budgeting and tracking worksheet. I will mark
it and return it to you before the next part is due.

Legend:
Month 1: May
Month 2: June
Month 3: July
Month 4: August

Part 1 – Due on Blackboard by END OF WEEK #5:

Include Completed Workbook in each upload

Worksheets are in the "Budgeting Expense Worksheet 4 Month Period" Excel document, and
this is the document you will enter the information in.

1. (3 marks) Record the money received (inflows) on the “Summary of Revenue and Expenses”
worksheet and money spent (outflows) for “Month 1 Expense tracking” worksheet

2. (2 marks) Create a budget for the months 2, 3 and 4 in the Budget Column for each month on the
“Summary of Revenue and Expenses” worksheet. Use Month 1 inflows and outflows to help estimate
the budget for the other months.

3. Submit the Excel Document on Blackboard.

Part 2 – Due on Blackboard by END OF WEEK #9

Include both Budgeting and Tracking Sheets on Blackboard.

Worksheets are in the "Budgeting Expense Worksheet 4 Month Period" Excel document, and
this is the document you will enter the information in.

1. (3 marks) Record the money received (inflows) on the “Summary of Revenue and Expenses”
worksheet and money spent (outflows) for June on the “Month 2 Expense tracking” worksheet

2. (4 marks) For each Inflow or Outflow item with a variance (positive or negative) of over $20 in (Month
2), provide a comment as to why the Actual and Budget numbers differ. Please use the following
format:

Budget Item Inflow/Outflow Variance

Pay Inflow -200.00
 Comment
Pay was lower than planned due to fewer hours being available.
Budget Item Inflow/Outflow Variance
Groceries Outflow 65.25
Comment
Food costs were lower than planned as received more care packages from
home with food.
See reverse for more information on variances.

3. (3 marks) Update monthly budgets for Month 3 and Month 4. You may see from the variances that
some of your budget amounts for Month 3 and Month 4 need to be increased or decreased. If you
change your budget, make notes in point form of items you have amended in your budget and why. If
you do not change your budget, comment on why you believe the budget items remain valid.

4. Submit the Excel Document on Blackboard.

Part 3 – Due on Blackboard by END OF WEEK #13

Include both Budgeting and Tracking Sheets on Blackboard.

Worksheets are in the "Budgeting Expense Worksheet 4 Month Period" Excel document, and
this is the document you will enter the information in.

1. (3 marks) Record the money received (inflows) on the “Summary of Revenue and Expenses”
worksheet and money spent (outflows) for July on the “Month 3 Expense tracking” worksheet

2. (2 marks) For each variance (positive or negative) over $20, provide a comment as to why the Actual
and Budget numbers differ. Please use the format above.

3. (2 mark) (Month 4) budget. You may see from the variances that some of your budget amounts for
(Month 3) need to be increased or decreased. If you change your budget, make notes in point form of
items you have amended in your budget and why. If you do not change your budget, comment on why
you believe the budget items remain valid.

4. (3 marks) In point form, list 3 benefits of working with a budget and provide your reasoning. List 3
challenges of working with a budget and provide your reasoning.

5. Submit the Excel Document on Blackboard.

The following notes are intended to assist the reader in working with the Excel “Summary of Revenue and
Expenses” worksheet which is available on Blackboard under Assignments.

Calculating Variances
A variance is the difference between what you planned and what you actually achieved.

Inflow Variance
For inflows the variance is determined by subtracting the Budgeted amount from the Actual amount.
Example:
Item Budget Actual Variance
Part-Time Earnings $2,000 $2112 $112
Interest on Investments $200 $154 -$46
Total Inflows $2,200 $2,266 $66

Outflow Variance
For outflows the variance is determined by subtracting the Actual amount from the Budgeted amount.

Example:
Item Budget Actual Variance
Food $400 $352 $48
Entertainment $200 $258 -$58
Total Outflows $600 $610 $-10

In simple terms, if you get more cash than you planned, that is a positive, and if you spend more than you
planned, that is a negative.

Understanding Variances

When looking at budgets to measure progress, you are looking at the differences between your budget plan
and what actually occurred. The first pitfall you need to avoid is assuming a budget deficit or significant
negative variances are a sign that you are not controlling your money well. More often than not, when you
start working with a budget, you will need to make adjustments until you find the right numbers. This is more
likely if you have relied on historical information from a shorter period.

Therefore, the first thing you want to consider when reviewing your variances is whether or not the original
budget amount was appropriate. If not, you will want to amend the item for future periods. If the budget
amount was good then you will want to understand why your actual result was different.