NGPF Activity Bank

Budgeting #8
Spanish version
Teacher Tip Video

A Salary-Based Budget
In this activity you will:
● choose a potential career path
● determine your take-home pay
● set aside money to pay yourself first
● try your hand at an independent adult’s budget
● and then reflect on the process of budgeting.

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Budgeting #8

STEP 1:
Open the Salary-Based Budgeting1 worksheet, then click
File → Make a copy
Name your worksheet “LAST NAME, FIRST INITIAL Budget”
Close the original Salary-Based Budgeting worksheet

Use your copy of the worksheet to record all the work for
this project.
1
How To: Entering & Editing Data

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STEP 2:
Visit Glassdoor’s Salary Index.
To locate the salary for your future career:
● Type the career in the box and push SEARCH.
● Use the lowest entry in the given salary range, because
you’ll be making the starting salary at first.
○ Remember, these are averages, so you could start lower or higher in reality.

Once you find your career, record the salary as your Annual
Gross Wage on step 2 of your budget worksheet.
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STEP 3:
Calculate your monthly Gross Wage.
Gross Wage (monthly) = Annual Gross Wage / 12
Record on your budget spreadsheet.

*While “wage” and “salary” are different (in how your are paid), for this
activity both refer to the money earned from working
**From this point on, you’ll use MONTHLY amounts for all budget entries.

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STEP 4:
Use the ADP Salary Paycheck Calculator to find your Net Pay (the wage you
actually take home each month, after deductions). To do the activity
correctly, choose the state you’ll be living in and then use these values:
Gross Pay = Your Gross Wage (monthly) → PER PAY PERIOD
Pay Frequency = Monthly
Federal Filing Status = single
# of federal allowances = 1
Leave all other values as they are.

Record “Net Pay” on budget spreadsheet under “Net Wage (monthly)”

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STEP 5:
“Pay yourself first” by putting aside a percent of your net salary
into a savings account. Choose one of the percents below, and
calculate how much you’ll be saving off your net salary.
5% → this is low, but better than nothing
10% → this is a good goal for your first career; increase later
15% → terrific savings goal!

Savings = Net Wage (monthly) * % savings (remember 5% = .05)

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STEP 6:
It’s never too young to start saving for retirement. You want to
set aside another portion of your net salary to put toward
retirement.
5% → this is low, but better than nothing
10% → this is a good goal for your first career; increase later
15% → terrific retirement goal!

Retirement = Net Salary (monthly) * % retirement (5% = .05)

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STEP 8:
Calculate the monthly amount you have to budget.
**Savings is NOT an expense; it’s the money you’re setting aside for your
own future. However, it’s also money that you shouldn’t spend on other
things each month, so it gets taken out BEFORE you do your monthly
budget.

Monthly Amount to Budget = Net Salary (monthly) - Total Savings

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STEP 9: RENT
To determine how much you will spend on rent, choose the type
of living situation you see yourself in.

Option A: Live at home

Option B: Live in an apartment/house by yourself
Option C: Live in an apartment/house with roommates

Go to the slide for your choice to determine your rent cost.

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STEP 9A: RENT (Live at home)

Option 1: If you’re planning to live at home or with other
relatives, estimate how much they’re going to charge you per
month. Do not assume they’ll let you live rent free! Record the
answer in Monthly Rent.

If you’re planning to live on your own or with roommates,

continue on.

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STEP 9B: RENT (Live in an apartment/house by yourself )

If you want to live completely on your own, calculate 25% and
35% of your monthly pay and pick a number between the two.
The average American spends about this much per month on
rent/mortgage payments.

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STEP 9C: RENT (Live in an apartment/house with roommates)

Option 3: If you are willing to live with roommates ($ saving!), calculate 25% and 35% of
your monthly pay and pick a number between the two. The average American spends about
this much per month on rent/mortgage payments. Then consider how many roommates
you’ll want and divide the rent evenly.

Monthly Rent = rent price / # of people living there

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STEP 10: Renter’s Insurance

You want to have renter’s insurance, to cover replacement of

your belongings in case of theft or apartment-wide damage
(flood, fire, etc).

Unless you have a lot of expensive stuff, you can budget $20 for
Renter’s Insurance.
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STEP 11a: Utilities

● If you’re living with family, they may expect you to chip in full
or partial amounts. (Ask what you owe)
● If you’re living on your own, you’ve got to pay the full costs.
● With roommates, you get to split a lot (but not all) of these
costs. Remember to divide those bills by the # of people!

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STEP 11b: Utilities

Utilities are things like water/gas, electricity, WiFi, etc. An
example of my utilities is below.

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STEP 13: Public Transportation (Buses, Trains, etc.)

● If you’re living in a city that allows you to get where you need
via Public Transportation, and you’re not going to have a car
at all, use one of the figures below:
New Orleans, Los Angeles $90 Honolulu, New York $135

Chicago $105 Washington, DC $195

Miami, San Francisco $120 San Antonio, TX $40

**If you will only use public transportation, skip to Step 18

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STEP 14: Car Payment

● If you’re going to have a car, choose one of the following Car

Payments (3 year loan, 4.75%):

$8,000 car -- $240/mo $10,000 car -- $300/mo $15,000 -- $450/mo

$20,000 car -- $600/mo $30,000 car -- $900/mo $45,000 -- $1340/mo

**If you are using public transportation, you pay $0 for a car

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STEP 15: Car Insurance

National average for auto insurance is $1,621 per year ($136
per month) and the minimum coverage is $676 per year ($56
per month). You must be insured!

STEP 16: Car Maintenance

Assume $100 per month -- some months will be $0, but
some will be expensive!

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STEP 17: Gas

Estimate how many miles you’ll drive per day and use this chart
to find your gas prices (based on $2.82/gallon and
23.6mi/gallon):
Miles Per Day Monthly Cost of Gasoline

25 $90

35 $126

45 $162

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STEP 19:
Choose which meal plan you’re likely to follow for the cost of
Groceries:

Thrifty Low Cost Moderate Cost Liberal Cost

Females $167 $211 $259 $332

Males $188 $242 $303 $373

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STEP 20:
Choose which plan you’re likely to follow for the cost of Dining
Out:
$10/meal $15/meal $20/meal $30/meal

1 meal/week $40 $60 $80 $120

2 meals/week $80 $120 $160 $240

3 meals/week $120 $180 $240 $360

5 meals/week $200 $300 $400 $600

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Calculate the cost of your insurance

STEP 22: Health Insurance - $440/month*

STEP 23: Dental Insurance - $30/month*

STEP 24: Vision Insurance - $18/month*

*You can choose to opt out of these but remember if there’s an emergency you may
go into massive debt.

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STEP 25: Haircare

If you already know how much you pay for a haircut, enter it. If
you’re not sure, use the US averages:
Men $28 Women $44
**If you only get a haircut every 3 months, divide the cost by 3.

STEP 26: Other Grooming/Hygiene

Everyone’s different, but let’s assume $25/mo for other hygiene,
medication, grooming, or personal needs.
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STEP 27: Gym Membership

Remember, the first step to wealth is health!

If you don’t workout, or you do it free outside or at home, $0.

Otherwise, assume $38/m for a gym membership.

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STEP 29: Student Loan Payments

Choose your best estimate based on how much debt you’ll have when done with
college or other post-high school education:

Debt $10,000 $20,000 $30,000 $40,000 $50,000

Monthly $115 $230 $345 $460 $575

Loan
Payment

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STEP 30: Discretionary Spending

So far, your budget is neglecting FUN STUFF (clothes, going out
with friends, entertainment, new technology, gift giving,
donations, travel, vacations, a morning coffee, etc).

In the Wants category, record how much you’d like to be able to

spend on these items (total) per month.

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STEP 32: Balance

At the end of the month, how do your finances look?
● Do you spend less than you earn? You have a surplus, or
money left over -- that’s good!
● Do you spend more than you have in your budget? You have
a deficit, or expenses not covered by your earnings -- that’s
bad!
Balance = Monthly Amount for Budget - Total Costs

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Now that you’ve done the budget once through, you have a basic
understanding of the components of a typical adult’s budget.

Next, save your spreadsheet as an Excel file and email it to me at

[email protected]

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