Purpose
Review and personalize the attached “Budget Calculator ” and use it as a resource for creating a budget that can help you move forward with your saving, spending, and other goals as you plan for your post-graduation financial situation.
Here’s the spreadsheet again – download it here, fill it out, and upload it
Instructions (these are also on the spreadsheet)
Part I: Gross and Net Income (spreadsheet page 1):
Fill in your projected, post-graduation Annual Gross Income in the orange box with the first blue arrow. This could be based on the job you have and plan to keep, or it could be based on your immediate circumstances after graduation, or it could be based on a projection of what you expect to earn in your first/next professional job.
Type your Standard Deduction into the yellow box, based on your filing status (single/married) and the table above.
Now that you have your Taxable Income, use the Federal Income Tax brackets (to the left) to calculate how much tax you owe. Remember that federal income tax is progressive, meaning you pay higher rates only on the money earned in higher brackets. For example: if you have $29,200.00 of taxable income and are filing as single, you pay a 10% rate on the first $9,875 you earned, then a 12% rate on the other $19,325 you earned. Add together your total tax (from all applicable tax brackets) and put that number into the pink box with the third blue arrow)
Subtract Medicare and Social Security withholding rates (this should be automatic, but here for your reference): https://www.irs.gov/taxtopics/tc751 (Links to an external site.)
After filling in your federal tax burden, based on the table to the left, the spreadsheet will give you your annual and monthly net income. Use the Monthly Net Income value to begin filling in the next spreadsheet page.
*Note: for this assignment, ignore state taxes, as these vary widely (e.g.: Oregon state income tax is up to 9.9%; Texas has no state income tax). Some resources: [https://wallethub.com/edu/best-worst-states-to-be-a-taxpayer/2416] or [https://taxfoundation.org/state-individual-income-tax-rates-and-brackets-for-2020].
Part II: Budgeting a Year (spreadsheet page 2):
Now that you have your monthy net (after taxes) income, fill in your budgeting on this spreadsheet page. Many of these months may look similar in the values you fill in, but if every single month is identical, you will lose points! Why is that? Because in real life, you will spend differently every single month! Remember that in months like November and December (Thanksgiving, Hannukah, Christmas), we often spend much more on entertainment, gifts, dining out, travel, etc., and you will want to budget for that. Other months–perhaps for birthdays, apartment moves, job changes, or other life changes/stressers–you will likely spend more money in certain areas, so try to account for this as practically as possible.
So, some items will be copy-pasted, like rent, internet, and car payments, for instance, but other items will vary month to month, especially something like utilities (electricity/gas are more expensive in winter) and even groceries (seasonal fruits and vegetables can get expensive).
Fill this chart in fully to project out how much a year of post-graduation living is going to cost! This is an opportunity to do two things: first, take a realistic guess at what you’re going to make after college, and also what it’s going to cost you to live. To help with estimating utility costs and transportation costs, consult a Cost of Living Calculator (Links to an external site.) or two (Links to an external site.), or do some other research.
Part III: Summary (spreadsheet page 3):
In these writable boxes, break down the three pieces of your post-graduation spending plan/budget–Income, Expense Budget, and Savings Plans. What did you find as you went through these values? How do you feel about that take-home pay number? Which expenses are set in stone? What can be sacrificed? What can you tell us about your spending and saving after going through this exercise? What challenges/concerns did they bring to mind?
Further, are you happy with your savings? Are you going to be able to cover all your expenses? After taxes, are you going to be struggling to make ends meet?
Do you feel better having laid these numbers out, or are you more stressed after the evaluation? What surprised you?
Submission Details
Once you’ve filled in your spreadsheet, upload it here via the assignment link.
Additional Notes:
If you plan to remain in your current job, you may use this as an opportunity to draw out what your “ideal” budget would look like.
If you are in the military, consider costs of living around military bases.
If you are going to be in graduate school, think realistically about what kind of stipend you might or might not have, and also assume that subsidized student loan repayments will likely still be deferred as long as you’re enrolled at least half-time (though not always).
If you have other plans post-graduation, again, be creative but also realistic about what a budget could look like for you.
Whatever your situation, try to guess as reasonably as possible about your income and expenses. Even if there’s no category for buying Magic cards, if that’s a significant portion of your spending, make a category for it. be honest with yourself.