A3.1 Assessment : Financial Budgeting
In this module, you have created a realistic personal budget that includes costs for
education, savings, housing, transportation, food, and other items. You have considered
the how and why of staying (or getting) out of debt, building credit, and saving for short
and long term expenses. For your assessment, please show that you have considered
carefully all these items.
Part I: Net Salary
1. Please explain what you see as some of the benefits and challenges of creating and
sticking to a budget.
A budget is a good template that one can follow when trying to allocate their funds in a
reasonable manner. It helps you to spend your money in a sensible fashion that will
allow you to avoid getting into debt.
what you can spend on certain things, but it is meant to keep you safely in check from
going over your financial capabilities.
2. Using the budget you created in the module as a guide, explain at least five items that
should be part of a budget and provide a brief explanation of why these items are
important to include.
Cost of Living: Housing and the other features associated with it, plumbing and
electricity and such, are enormous parts of one’s spending scheme. Without taking
these into account, one could be left without or with paltry services for basic living
needs.
Transportation: Getting from place to place stacks up a lot of money over time, and so it
is essential to know which method of transportation is the best for you, both in terms of
location and cost.
Health: Making sure to note the costs of insurance is critical to staying healthy and safe
from many medical costs.
Food: The costs of our daily meals multiply with each new day, and so we ought try to be
more careful about spending money on certain foods or restaurants.
Wants: While it may look good to only have the most rudimentary of essentials on a
budget, it’s unrealistic for most of us to follow an ascetic lifestyle. We need to have a
least a little bit of wants, since otherwise it decreases the chance that we will follow the
budget at all.
Part II: Savings Strategy
3. Using the budget you created in the module as a guide, explain why someone would save
every month for both short term and long term expenses. State how much is reasonable
every month to save according to your personal budget.
The budget helps you to demarcate the certain percentages that ought be dedicated to
your short-term needs, such as food and transportation and direct purchase, as well as
long term ones such as insurance or loans.
It’s good to save at least 20% of the net
income that one makes a month by putting it into a long term savings account for the
future and retirement, so that they may accumulate better over time.
Part III: Surplus or Deficit
4. In the end, does your budget end with a surplus or a deficit?
My budget ends up with a surplus of $48 or so, which could be used for extra purchases
or charity or in emergencies.
5. What decisions did you make about your budget that led to that final outcome?
NOTE: If your budget ended with a deficit (you were spending more than you were taking
home each month), this is not sustainable. You would need to redo your budget until your
net income covers all of your monthly expenses.
Configuring my budget didn’t involve any major concessions of what I originally would
have wanted about this time. All of my funds are rather condensed without any fluff of
funds to cushion it much, but they all nevertheless still manage to fit together with a
notable surplus still there in reserve in case something that I calculated went above
what I was anticipating. I want to basically maintain my way of life right now,
comfortable but not frivolous or expensive with what I spend things on.
Part V: Summary
6. Identify two lessons you learned by completing this salary-based budget.
I hadn’t really considered insurance to be a part of the mix, and yet it was quite a drag
on my income. Overall there really isn’t any one specific category that occupied an
enormous chunk of my funds, although I could foresee rent or loan payments for a house
to be a major constraint on my finances.
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