8.4 LIVING EXPENSES

TransportationGroceries

Gas/Fuel

Home Insurance

Car Insurance

Education

Rent/Mortgage

Utilities

Child Care

Medical

Emergency Fund

CREATE & BALANCE A BUDGET In order to plan for the future, you need

a budget. Take Simon, a grade 12 student working part time. His budget looks like this:

INCOME ($) EXPENSES ($)

Week 1 136.74 College Savings

200

Week 2 188.20 Insurance 123

Week 3 209.38 Fuel 75

Week 4 173.66 Entertainment

100

Total 707.98 Total 498

Balance (Income – Expenses) = 707.98 – 498 = 209.98According to this balanced budget, Simon is able to save

just over $200 a month

CHANGE IN COSTS Every year, expenses go up, for example:

Car Insurance increases by 5% Grocery Expenses increase by 10% Home Heating Costs rise 15%

Simon’s budget was simple, as the only expenses he had were: College Savings Insurance Fuel Entertainment

Let’s look at what a family budget would look like.

INCOME ($)

Spouse 1 3200

Spouse 2 2900

Total 6100

EXPENSES ($)

Fixed Expenses Variable Expenses (Average)

Mortgage & Property Tax 2040 Groceries 800

House Insurance 32 Electricity 120

Car Insurance 188 Heating 220

Life Insurance 500 Water 65

Long-Term Savings 580 Telephone 35

RESPs 400 Internet 35

Cable Television 30

Medical 170

Clothing 150

Home Repair Account 200

Charities 50

Entertainment 200

Vacation Amount 200

Children’s Accounts 150

Gift Account 100

Total Fixed 3640 Total Variable 2460

Total Expenses 6100

RE-BALANCING BUDGETS Expenses change over time, so one must

be prepared to re-balance a budget What if expenses go up as discussed

before?Car Insurance increases by 5%Grocery Expenses increase by 10%Home Heating Costs rise 15%

The couple would have to rebalance their budget

Which expenses would they have to modify?Variable Expenses

8.4 HOMEWORK p. 472 #1, 3, 6