Question

planning ahead
you currently share an apartment with a friend, and you would like to buy your own condominium. the condos you have been looking at cost around $200,000.00 and they require a down payment of at least $10,000.00. your goal is to move out in 3 years (36 months).
you have three tasks to complete:

1. construct a conservative budget that plans ahead.
2. analyze the budget by comparing to the spending guidelines.
3. deal with a \what if...\ question with your budget.

task 1: conservative budget

1. income and expenses

(reference: chapter 1.1 and 1.2)
to construct a monthly budget for yourself, you first need to determine your net income and expenses for each month. for this section, categorize your income and expenses for each month in the given tables.
a. calculate your fixed gross income per month. show your work
hint: there are 52 weeks in 12 months (1 year). this means that 52/12 represents how many weeks there are per month. on your calculator enter 52/12 and then multiply this value by the $ per week.
b. calculate your fixed net income per month. show your work.
hint: deductions occur on each paycheque and you are paid twice per month.
c. what is your variable income per month?

Explanation:

Step1: Calculate fixed gross income per month

Since there are 52 weeks in a year and 12 months in a year, the number of weeks per month is $\frac{52}{12}$. Let's assume the weekly income is $w$. Then the fixed - gross income per month $I_{g}=\frac{52}{12}w$.

Step2: Calculate fixed net income per month

Let the amount of deductions per paycheck be $d$, and since you are paid twice a month, if the gross income per paycheck is $p$, then the net income per paycheck is $p - d$. The fixed net income per month $I_{n}=2(p - d)$.

Step3: Determine variable income per month

Since no information about variable income sources is given in the problem - statement, if we assume there are no variable income sources, the variable income per month $I_{v}=0$. If there are sources like bonuses, commissions etc., we would sum up the expected amounts from each source for a month.

Answer:

a. Fixed gross income per month: $I_{g}=\frac{52}{12}w$ (where $w$ is the weekly income)
b. Fixed net income per month: $I_{n}=2(p - d)$ (where $p$ is the gross income per paycheck and $d$ is the deductions per paycheck)
c. Variable income per month: $I_{v}=0$ (assuming no variable income sources)