Sunday, April 15, 2018

Component 3 Instructions (AQR Final Project)

The first page of this component will ask you to make a monthly budget. The second page will ask you to calculate your savings.

Page 1

Before you get started, look at your monthly take-home income from Component 1. This is how much money you have to put in your budget. Keep in mind for this part that you want to spend by the 20/30/50 rule. That means:
-20% of your take-home monthly income put savings
-30% of your take-home monthly income spent in wants
-50% of your take-home monthly income spent in needs

So as you're making your budget, make sure you're spending about those amounts in the correct places. For each "Expense Type" you will need to write the "Expense" (the amount it will cost per month), whether it is "Need/Want," and finally cite your source (as a link or reference to another component of your project.

Expense types:
Housing: write the monthly cost of your housing as calculated in Component 2. When citing, say "Refer to housing section of project."
Utilities: write the monthly cost of your utilities, as calculated in Component 2.  When citing, say "Refer to housing section of project."
Transportation: write your monthly car payments or monthly cost of public transportation, as calculated in Component 2. DO NOT include insurance or gas prices here (those are listed separately). When citing, say "Refer to transportation section of project."
Gas and Maintenance: write your monthly cost for gas, as calculated in Component 2, and add $50 for maintenance. If you chose public transit in component 2, put "0" here. When citing, say "Refer to transportation section of project."
Care Insurance: write your monthly cost for car insurance, as calculated in Component 2. If you chose public transit in component 2, put "0" here. When citing, say "Refer to transportation section of project."
Clothing/Makeup: Go to www.texasrealitycheck.com . Click on "Quick View Calculator." Click on the city in which you plan to live (if city is outside of Texas, you will have to Google this cost in your city separately and cite your source). Scroll down to the "Clothing" section and write down the expense amount that fits you best. Add onto this cost the amount you'd expect to spend on makeup per month. Cite "Texas Reality Check."
Gifts: How much would you spend on a gift for your cousin for their birthday? This is about the amount you should write for gift expense per month. Cite "personal estimate."
Personal Hygiene: Go back to the "Quick View Calculator" on www.texasrealitycheck.com . Scroll down to the "Personal Care" section and write down the expense amount that fits you best. Cite "Texas Reality Check." (If city you'd like to live in is outside of Texas, you will have to Google this cost in your city separately and cite your source).
Medical Care/Insurance: Go back to the "Quick View Calculator" on www.texasrealitycheck.com . Scroll down to the "Health Care" section and write down the expense amount that fits you best. If you're not sure if your employer would pay for health care or not, Google it! Cite "Texas Reality Check." 
Restaurants: Assume the average fast food meal costs $9. The average restaurant meal costs $12. Estimate the amount of times you'd get fast food or restaurant food in a month and then calculate the total amount you'd spend at both. For citation, show your calculation work.
Groceries: The average meal from groceries costs $3. Estimate the number of times you will eat meals from groceries in a month and calculate the total cost of groceries in a month. For citation, show your calculation work.
Cell phone/internet/cable: Go back to the "Quick View Calculator" on www.texasrealitycheck.com . Scroll down to the "Utilities" section. Write down the total amount based on if you want to get a cell phone, internet for your home, and/or cable. Cite "Texas Reality Check." (If city you'd like to live in is outside of Texas, you will have to Google this cost in your city separately and cite your source).
Education Loan Payments: Find your total expected education debt from Component 1. Divide this number by 72, and you will get your  approximate monthly education loan expense. When citing, say "Refer to education section of project."
Blank spaces: This is where you can be creative based on your own preferences and needs. For example, Mr. Young-Saver takes about one plane flight per month, so he would use a row in this budget table to estimate his monthly plane travel cost. Some people may use this space for children costs, electronics costs, pet costs, or for vacation costs. It's up to you! Just make sure to provide a full link to the source from which you get your information. You can also leave these blank if you so choose.
Miscellaneous: Things come up in life you have to pay for unexpectedly. You may have to buy batteries, buy a new pair of shoes, buy a new lightbulb, buy a Christmas tree, etc. This is the category for all unexpected costs. The best estimate here is about $200 if you plan to live in Texas, $300 if you live in a big city like LA or New York, and $150 if you plan to live in rural area. For citation, you can put my website: mr.dashyoung-saver.com.

Page 2

Savings Summary
For the first line, put in your take-home monthly income.
For the second line, put in the total expenses from the budget you just made.
For the third line, subtract your total expense from your take-home monthly income to figure out how much you save per month.

Savings information
-Fill in first box with savings projected over one year and 40 years. Make sure to show all calculations on right side. 
-Fill in the second box with percentage spent on each category. Here is the formula for that calculation:

Example: Needs
(Amount spent on needs / take home monthly income)*100