Question One
Based on my month/annually budget, my income level exceeds total expenses. The table below shows my income level against expense.
| Details |
Jan |
Feb |
March |
April |
May |
June |
July |
Aug |
Sept |
Oct |
Nov |
Dec |
Year |
| Income |
$5,150 |
$4,700 |
$4,550 |
$4,650 |
$4,895 |
$4,800 |
$4,750 |
$4,775 |
$4,750 |
$5,090 |
$4,850 |
$5,475 |
$58,435 |
| Expenses |
$3,405 |
$3,655 |
$3,230 |
$3,210 |
$3,210 |
$4,035 |
$3,210 |
$3,240 |
$4,030 |
$3,230 |
$3,330 |
$4,255 |
$42,040 |
| Cash extra |
$2,550 |
$2,550 |
$2,550 |
$2,650 |
$2,650 |
$2,650 |
$2,750 |
$2,750 |
$2,750 |
$2,850 |
$2,850 |
$2,850 |
$32,400 |
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Question Two
I usually save three-quarter of cash extra I remain after paying all my bills, while a quarter of cash extra I keep for precautionary motives. However, my monthly savings depend on income levels and total monthly expenses. The table below shows my monthly savings.
| Details |
Jan |
Feb |
March |
April |
May |
June |
July |
Aug |
Sept |
Oct |
Nov |
Dec |
Year |
| Income |
$5,150 |
$4,700 |
$4,550 |
$4,650 |
$4,895 |
$4,800 |
$4,750 |
$4,775 |
$4,750 |
$5,090 |
$4,850 |
$5,475 |
$58,435 |
| Expenses |
$3,405 |
$3,655 |
$3,230 |
$3,210 |
$3,210 |
$4,035 |
$3,210 |
$3,240 |
$4,030 |
$3,230 |
$3,330 |
$4,255 |
$42,040 |
| Cash extra |
$2,550 |
$2,550 |
$2,550 |
$2,650 |
$2,650 |
$2,650 |
$2,750 |
$2,750 |
$2,750 |
$2,850 |
$2,850 |
$2,850 |
$32,400 |
| Savings |
$1,913 |
$1,913 |
$1,913 |
$1,988 |
$1,988 |
$1,988 |
$2,063 |
$2,063 |
$2,063 |
$2,138 |
$2,138 |
$2,138 |
$24,300 |
Based on my monthly saving, I think the amount is enough because I save approximately 30% monthly, which is between the average monthly saving of 20% to 50%. The cumulative salary I save annually is enough to enable me to invest in a substantial business after about three years of saving.
Question Three
Apart from monthly savings, I keep a quarter of cash extra for precaution motives. If a short-term emergency requires a small amount of money, I may use precautionary/emergency saving to address the issue. The table below shows my monthly precautionary savings.
| Details |
Jan |
Feb |
March |
April |
May |
June |
July |
Aug |
Sept |
Oct |
Nov |
Dec |
Year |
| Income |
$5,150 |
$4,700 |
$4,550 |
$4,650 |
$4,895 |
$4,800 |
$4,750 |
$4,775 |
$4,750 |
$5,090 |
$4,850 |
$5,475 |
$58,435 |
| Expenses |
$3,405 |
$3,655 |
$3,230 |
$3,210 |
$3,210 |
$4,035 |
$3,210 |
$3,240 |
$4,030 |
$3,230 |
$3,330 |
$4,255 |
$42,040 |
| Cash extra |
$2,550 |
$2,550 |
$2,550 |
$2,650 |
$2,650 |
$2,650 |
$2,750 |
$2,750 |
$2,750 |
$2,850 |
$2,850 |
$2,850 |
$32,400 |
| Savings |
$1,913 |
$1,913 |
$1,913 |
$1,988 |
$1,988 |
$1,988 |
$2,063 |
$2,063 |
$2,063 |
$2,138 |
$2,138 |
$2,138 |
$24,300 |
|
Precautionary/ Emergency savings |
$638 |
$638 |
$638 |
$663 |
$663 |
$663 |
$688 |
$688 |
$688 |
$713 |
$713 |
$713 |
$8,100 |
Question Four
Saving is essential practice because it will enable me invest in the future without acquiring loans from financial institutions. Savings can also help me meet emergencies, especially those which require a huge amount of money more than my precautionary savings (Aziz & Shah, 2021). My monthly savings mainly depends on net income and total monthly expenses. However, I save approximately 30% of monthly cash extra from enabling address future emergencies and investment.
My tip for maintaining monthly savings is to increase monthly as income levels rise and keep saving at 30% of extra cash when monthly income reduces. Most importantly, people must be financially cautious and disciplined to save enough money to meet unforeseen emergencies. Maintaining monthly savings is essential to accumulate enough savings a person who wants to make future investments.
Question Five
Based on this budget exercise, I learned that budgeting is an important practice that can help people adequately manage their finances. It can also help in balancing savings and expenses (Aziz & Shah, 2021). Therefore, from now on, I would prepare a budget to manage my finances for a better future.
References
Aziz, H., & Shah, N. (2021). Participatory budgeting: Models and approaches. In Pathways between Social Science and Computational Social Science (pp. 215-236). Springer, Cham.
Warren, L., & Jack, L. (2018). The capital budgeting process and the energy trilemma-A strategic conduct analysis. The British Accounting Review , 50 (5), 481-496.
