Project 1: Personal Budget

Submit an EXCEL spreadsheet with a personal budget covering a 6 month period. A simplified example is available in Module III. Consider all sources of income and expenditures. I realize that for many students, your life may not yet be too complex. You get a check from your parents, maybe some scholarship money and youll need to buy beer and McDonalds. This doesnt make for a glamorous budget project. If this applies to you, make something up. You can be sure that I wont check into your personal background to determine the accuracy or veracity of your line items. Dont forget to allocate some of your income toward your financial goals. In fact, you should describe how your first attempt to construct a budget failed to allocate enough funds toward your financial goals and the adjustments you had to make (e.g., extra job, fewer movies, cutting back on utilities or must go to Annapolis rather than Cancun at spring break). Also, dont forget the carryovers (whether positive or negative) from one period to the next, and treat those as additions or subtractions to your current income. You need to be warned: a large surplus at the end of each budget period is undesirable. While it beats the heck out of a large deficit, it suggests that you havent done a very good job of allocating your income. An anomalous large surplus (or large deficit that can be financed out of your checking or savings account), is also acceptable, with an appropriate explanation (e.g., My $10,000 fellowship check will arrive this month or My parents wont pay me this month but will double up next month), but otherwise youll maximize your grade if you get the periodic balance as close to zero as you can. Post questions and comments to the Project 1 forum in the DISCUSSION section.

In grading your project, I will be looking for:

1. An explanation of your financial goals. Each financial goal has a specific purpose (save up for a down payment on a new car), a target amount ($10,000) and a target date (Dec. 1, 2022). In that way, you'd know exactly how much to allocate each month toward this goal. Depositing money into a rainy day fund or a retirement account, although beneficial, does not count as financial goals because they do not have those three parameters highlighted above. The goal of saving 10% of your income also does not count as a financial goal for the same reason. The problem with these kinds of "goals" is that they are not specific enough. Because they are so general in nature, it's easy to cheat on these "goals" and use that money to indulge your materialistic whims. It's best to have three financial goals.
2. A description of what you learned from your first attempt at constructing a budget (the one that was discarded because your surpluses/deficits were too high). Do not include this discarded budget on your spreadsheet.
3. A line item for the carry-over of the surplus/deficit from the preceding period that you used to adjust your current income.
4. A low and random surplus/deficit. While this is not always possible (for example, you received your $10,000 fellowship stipend in the first month of the budget), be sure that a violation of this guideline is accompanied by an explanation.
5. A comprehensive list of both fixed and variable expenses (don't forget things like car insurance, personal items, etc. -- even if you live with your parents).

Personal and family Finance