Personal Budget project

Here are the assumptions that the project is based on:

• You have graduated from TOHS
• You are moving out on your own without any financial support from your parents/friends/other relatives (this also means that you cannot rely on family connections for jobs and housing)
  
• You must fully support yourself financially - in other words you can't spend money if you haven't earned it
• You still have all of your current possessions (clothes, computer, etc.) with the exception of any that are related transportation (yes this means you have no car to start with)

This is a research project designed to prepare you for supporting yourself.  For each item that you research you need to provide specific support & documentation (copies of ads, contact info for people you talked to, letters, copies of bills, receipts, etc.). In other words, show me something that proves that your gas bill will be $18.50 a month, your cell phone will cost $79 a month, and so on. You need to hold on to all of work related to your budget.  There will be a series of interim due dates for your research, and the entire project is due on May 18th.

Research completion due dates for 2011:

Job and Checking Account: March 22

Housing, Utilities, and Transportation: April 7

This project should be completed in a professional manner.  Everything you turn in should be neatly typed, organized on a spreadsheet, etc..

Click here for the sample spreadsheet

Click here for the blank menu form
Click here for the blank Activity & Entertainment Calendar

Major Budget Categories (this is how your written budget needs to be organized when you turn it in)

• Income: The first step is to find a job that you can hold with your current skills – calculate monthly pay ($/hour x hours per week x 4.3) then multiply by 0.8 to allow for taxes and health care costs.  These calculations will give you your total income.  You need to find a checking account where you will manage your money (yes this means find the bank you want to use and explain why you chose that particular bank)

• a basic job description
• the number of hours you could work in a week
• the hourly rate of pay
• a disclaimer indicating that this letter is not a legally binding contract of any kind
  
• contact information for your employer
  

From your income you will subtract the following:

• Housing (roommates/solo, house/apartment/spare room) You do not need to come up with the money for first/last & security deposit
• Utilities (cell phone and home phone, water, gas, electric, cable/satellite TV, newspaper, internet, trash - some of these are included with some rental properties but that needs to be carefully documented)

• electricity: $25 per person per month if you are also using natural gas, $40 per person per month without natural gas
• natural gas: $12 per person per month
• water: $15 per person per month
  
• local phone: $25 per month (shared between roommates)
  
• Transportation You need to research the costs of owning a car  in addition to one other option (mass transit, bike/walk,  etc.).  Even if you do not use the car in your final budget you need to turn in your car research with your project. The most straightforward approach for the car is to:
1. Find a reasonably priced reliable used car online (cars.com, CarsDirect, ebay Motors)
   
2. Use an online loan calculator to calculate monthly payments (Edmunds)
   
3. Get an insurance quote (Progressive, eSurance, CarInsurance.com) If you prefer not to get a quote, you may use $115/mo. as your car insurance rate (this is based on average rates for California).
   
4. Calculate the number of miles you will drive for work and entertainment
5. Calculate the gas cost by total miles/mpg of your car * gas price (examples on spreadsheet)
6. Calculate your maintenance cost by multiplying your gas cost by 7%  (.07)
   
• Food – develop a bi-weekly menu (see the example below), price it out at the grocery store & restaurants, multiply the cost by 2.15
• Entertainment/Recreation – what do you do for fun…and how much does it cost?  You need to create an entertainment calendar for the month that details what your doing besides work and giving the cost for each activity.  You can set this calendar up like the menu if you like.
• Additional Categories You Should Consider (you must include two of these categories to be eligible for a B, and all four of them if you want to be eleigible for an A):
• Health Insurance - find price and include the cost of basic health coverage
  
• Clothing - list the average amount of new clothing you would buy in a month and price it out
  
• Savings - set aside some money each month and find the account you're going to put it in
  
• Charitable Donations - even if it's a small amount, how much will you give each month and who will you give it to?
  

You will turn in:

• a spreadsheet that details your income and expenses (I will show you how to do this, the sample is here)  Remember that if you use my sample you need to write out an explanation for each formula - the cells containing formulas are highlighted in yellow.
• a “write up” that describes each of the above budget areas:
• What will your specific housing situation be? Why do you think it's the best possible situation?  What are the key factors that led you to choose your housing situation?  Why are these factors important to you?
  
• What utilities will you need and which will you do without?  Why did you make these choices?  Why did you choose a particular service provider, etc.?
• How will you take care of your transportation needs?  Why is this the best possible solution for you?
• a list of the specific activities you are planning on for entertainment - it's easy to do this like an entertainment calendar complete with prices for  the activities that cost money.  On this calendar you need to account for what you'll be doing with all of your non work time - even if you're just exercising or watching TV.  You also need to calculate the mileage connected to these different activities.
• your bi-weekly menu and grocery list
• all of your research (brochures, copies of bills, contact information for employers, etc.)  Please organize your research so that it matches the order of your spreadsheet and write up.  You should include references in your spreadsheet & write up as to what section of your research holds the supporting information.  Please place each section of research after the corresponding section of your write up (in other words – put your housing research after the housing section, your transportation research after the transportation section of your write up, and so forth)

1. Spreadsheet
2. Income write up and research
3. Housing write up and research
4. Utilities write up and research
5. Transportation write up and research
6. Food write up (this is basically your menu) and research
7. Entertainment write up (this is basically your entertainment calendar) and research

Figure out the groceries you would need to fill out this menu, make a grocery list, and then price them out at a grocery store.  Multiply that cost by 2.15 (this will extend your costs over a month) and then add the costs of items you would need once a month.  Finally, you will take the bi-weekly cost of going out and multiply that by 2.15.

Click here to download a menu form  (in Microsoft Word format)

You will also need to purchase all of the following items once a month:

• Shampoo
• Toilet paper
• Toothpaste
• Soap
• Deodorant
• Basic Cleaning Supplies