How can I create a zero-based budget for Caitlyn, considering …

Mathematics Questions
Short Answer
Step by Step Solution
Mathematics Questions

Building Caitlyn’s Budget Caitlyn is a high school sophomore who works part time at the grocery store, earning $10 per hour and working 20 hours per week. Twenty percent of her monthly paycheck goes toward taxes. Her parents pay her a commission of $2 for every chore she completes around the house, and she plans on doing 60 of those chores this month. Caitlyn also babysits her neighbors kids four Tuesdays of each month from 5 to 10 p.m. at $12 per hour. Every month, she gives 10% of her take-home pay (which is her income after taxes are taken out) to her church. Caitlyn has $500 saved in her emergency fund already. She doesn’t own a car yet, but she has started saving. She currently has $1,200 saved and would like to buy a car for $6,000 by her 16th birthday, which is 12 months away. She is also saving for a dress for homecoming, which is in three months. She estimates the dress will be $150. Caitlyn is responsible for her cell phone bill, which is $65 per month. Her parents pay for most of her clothes, but if Caitlyn wants to spend more than what her parents have budgeted for, she’ll need to pay the difference. She usually contributes $40 per month for clothing. She recently borrowed 100 from a friend to buy a concert ticket. She’s going to pay her friend back this month. Caitlyn always makes sure to have a miscellaneous line item in her budget so that she has money for last-minute expenses that she didn’t plan for. Create a zero-based budget.

Short Answer

The answer outlines the steps Caitlyn should take to create a zero-based budget, starting with calculating her total monthly income of $1160. After deducting taxes and allocating funds for expenses and savings, she finalizes her budget by assigning every dollar a purpose, resulting in organized financial management that includes savings for specific goals and a miscellaneous fund for unexpected costs.

Step-by-Step Solution

Step 1: Calculate Total Monthly Income

Begin by determining Caitlyn’s total monthly income from all her income sources. This includes her part-time grocery store job, the commissions she earns from chores, and income from babysitting. Here is the calculation breakdown:

  • Grocery Store Job: 20 hours/week * $10/hour * 4 weeks = $800
  • Chores Commission: 60 chores * $2/chore = $120
  • Babysitting: 5 hours * $12/hour * 4 Tuesdays = $240

The total monthly income adds up to $1160.

Step 2: Calculate Deductions and Expenses

Next, you will need to calculate expenses, including any deductions such as taxes. Subtract taxes from her grocery job income to find her take-home pay, and then allocate funds towards other expenses and savings:

  • Taxes: 20% of Grocery Job = $160
  • Take-home Pay: $800 – $160 + $120 + $240 = $1000
  • Expenses: Allocate amounts for tithes, savings, and other monthly expenses like the cell phone bill and loan repayments.

All expenses and savings should total $915, leaving her with a remaining balance for unexpected costs.

Step 3: Finalize the Zero-Based Budget

Finally, ensure every dollar of Caitlyn’s income is assigned a purpose until the budget is balanced with a zero-dollar remainder. This includes savings for specific goals and setting aside a portion for miscellaneous expenses. After allocating all amounts:

  • Allocate to Savings: $400 for a car, $50 for a homecoming dress, and other regular expenses.
  • Miscellaneous Fund: Caitlyn has $85 left for unplanned expenses directly from her remaining budget.

This complete allocation helps Caitlyn meet her financial obligations while also working towards her savings goals effectively.

Related Concepts

Total Monthly Income

The total amount of money caitlyn earns from all sources within a month, including her job, commissions, and babysitting income.

Deductions And Expenses

The process of subtracting mandatory payments such as taxes and allocating funds for various living costs from caitlyn’s total income to determine her available budget.

Zero-Based Budget

A budgeting method where every dollar of income is assigned a specific purpose, resulting in a balanced budget with no surplus or deficit at the end of the budgeting period.

Table Of Contents
  1. Building Caitlyn's Budget Caitlyn is a high school sophomore who works part time at the grocery store, earning $10 per hour and working 20 hours per week. Twenty percent of her monthly paycheck goes toward taxes. Her parents pay her a commission of $2 for every chore she completes around the house, and she plans on doing 60 of those chores this month. Caitlyn also babysits her neighbors kids four Tuesdays of each month from 5 to 10 p.m. at $12 per hour. Every month, she gives 10% of her take-home pay (which is her income after taxes are taken out) to her church. Caitlyn has $500 saved in her emergency fund already. She doesn't own a car yet, but she has started saving. She currently has $1,200 saved and would like to buy a car for $6,000 by her 16th birthday, which is 12 months away. She is also saving for a dress for homecoming, which is in three months. She estimates the dress will be $150. Caitlyn is responsible for her cell phone bill, which is $65 per month. Her parents pay for most of her clothes, but if Caitlyn wants to spend more than what her parents have budgeted for, she'll need to pay the difference. She usually contributes $40 per month for clothing. She recently borrowed 100 from a friend to buy a concert ticket. She's going to pay her friend back this month. Caitlyn always makes sure to have a miscellaneous line item in her budget so that she has money for last-minute expenses that she didn't plan for. Create a zero-based budget.

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