Build a MONTHLY budget for the fictional couple found below. Decide (and fill out in the template)

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Question:

Build a MONTHLY budget for the fictional couple found below.

Decide (and fill out in the template) PROJECTED amounts (ignore ACTUAL amounts for this exercise). Fill in as much as you can on the budgeting worksheet.

DECIDE: Does the couple need to make changes in their financial life? Will they be able to save/invest enough money to help them meet their financial goals?

How much CAN they save each month (without making any changes)?

What suggestions do you have to help them logistically achieve their budget (should they automate cash flows and payments, use cash in envelopes, use tracking/budgeting apps, use budgeting software??)

BACKGROUND:

BJ and his wife Honey have been married for 11 years. BJ makes $100,000 per year in salary from his job as a marketing manager. Honey works part-time and helps raise their two children, ages 5 and 8. Honey earns between $1,000 and $1,500 per month (it varies) working as a fitness trainer.

Currently, they spend about 17% on federal income taxes and an additional 7% on state income tax. BJ puts 6% of his gross income into a 401(k) plan. His employer deducts about 5% of BJ's salary to cover health insurance premiums. The couple own a home and have a mortgage payment of $1,665.00 per month (including mortgage, property taxes, and homeowners insurance). Their water, sewer, and garbage bill averages $100 per month.

BJ and Honey own two cars. They are currently making payments on both cars. BJ's car payment is $355 per month. Honey's car payment is $623 per month. They tend to spend about $1,500 per year on car maintenance and repairs (mostly on BJ's older car). Car insurance totals $110 per month for both cars. And fuel averages about $200 per month (total). Other than their house and two cars, BJ and Honey do not have any other loans.

BJ and Honey got rid of their cable TV recently and replaced it with streaming video services that total $75 per month. Internet service costs them an average of about $100 per month (with some months costing more, depending on how much they use). The family has two cell phones, costing a total of $110 per month (unlimited call, text, and data).

BJ recently replaced both the water heater and the furnace in their home, resulting in substantial savings in their utility bills. They spend an average of $80 per month on electricity and $50 per month on natural gas. BJ did notice, however, that for three months in the summer (June, July, August) the electric bill was in excess of $250 per month! He is wondering if their air conditioning unit needs service (or replacement)...it does not seem as efficient as it used to be. BJ and Honey have not spent much money on home maintenance and repairs in the last few years, but BJ is concerned that they may need to start spending some money in this category. Aside from the air conditioner, the roof may need some maintenance soon. Also, some of their appliances are getting old and beginning to malfunction (such as their dishwasher).

BJ and Honey don't eat out a lot, except for on weekends....they probably spend a total of $300 per month at restaurants. Their weekly food bill (other than eating out) averages about $200. Honey doesn't spend much time bargain shopping when she gets groceries. She tends to just grab what she needs without calculating costs.

BJ and Honey joined a fitness center last year. Their monthly membership bill is $30 for the two of them. BJ and Honey seem to be spending more each year on entertainment and travel (mostly centered on their two children). Last year, they spent an average of $50 per week on entertainment. They also took two trips (Disneyland and Hawaii) totaling $7,000.00.

BJ loves music. He spends about $40 per month purchasing music in various media formats (mostly iTunes, but some CDs). He mostly listens to music via his phone. Honey's only vice is that she loves to get her nails done. She spends about $45 per month on nail and hair care. The family has good health insurance through BJ's employer; however, they still average about $1,500 per year in medical expenses. BJ and Honey have no legal expenses or child support payments. They do not have student loans or credit card bills. They have no other forms of consumer debt.