BUSN235_Week 1 Assignment

docx

School

American Public University *

*We aren’t endorsed by this school

Course

235

Subject

Finance

Date

Feb 20, 2024

Type

docx

Pages

Uploaded by AdmiralAtomAardvark1806

1 Personal Budget and Money Management First Last American Military University BUSN235: Personal Finance Dr. Karl Kinkead February 11, 2024

2 Personal Budget and Money Management A personal budget is especially important for managing your money appropriately to ensure you have enough cash flow to survive, live, and save. I have used an excel based spreadsheet for my personal budget for many years, but it was quite simple. I completed the excel family budget planner template and learned a few things from the experience. The new template was very details and I liked how it broke it down into topics like transportation, loans, insurance, food, and more. I used this experience as an opportunity to plan for life after the military. I am less than eight months from official retirement and will have served 20 years 20 days in the Air Force. Therefore, I projected my retirement pay with an anticipated 50% compensable disability from the Veterans Administration (VA). Income vs Expenses My current income is just over $85,000 and my projected retirement pay plus 50% VA compensation, which is untaxable income, will be $50,676 or a monthly income of $4,223. Prior to completing the excel budget, I anticipated that a post military job would be required. What will be discuss going forward is whether I can get away with a part-time job or need something full-time, which will be answered in this analysis. After completing the excel budget for this assignment, my income does exceed by monthly expenses by $1,901. With my current Active Duty pay, I manage to save between $900-$950 per month. My goal for addressing the deficit is getting a secondary job, at least part-time, in Missouri (which is where I will be staying after retirement). Additionally, another goal will be to cutback on expenses. According to Talent.com research, the average part-time entry-level salary in Missouri is $24,377 per year and the experience work salary is $40,950 per year (“Part Time”, n.d.). In order to make up the difference between my projected income and current expenses, and be able to save the same

3 amount per month, then I would have to get a second job making around $34,320. Therefore, my goal for addressing the deficit is attainable. Short-term Savings My current savings account is only around $8,500, which is a lot less than expected but I started really late in my military career. My estimated savings at the time of official retirement date will be increased by around $5,000. In the event, my retirement and VA pay does not kick in right away, then the total would leave me able to pay about two and a half months of my expenses. If we had a minor housing emergency or something that caused us to travel back home to New York, then we would have just enough savings to handle those situations. Based on previous experience in old homes we owned, we would also have enough to cover some major plumbing issues. Importance of Savings Having a short-term savings account is particularly important, especially for larger families. A general rule of thumb that I was taught growing up was to have at least $2,000 in your savings account for emergencies like taking pet to the veterinarian, medical co-payments, and things of that nature. Of course, short-term savings is situationally dependent. However, most research suggests that you should save three to six months of your core expenses (Burnette, 2024). My core expenses would be about $5,000 per month, so my projecting savings of $13,500 doesn’t leave me with enough to cover three months of core expenses. Right now, I am the only one that brings income home. We have discussed as family, that one of our goals is for my Spouse to get a part-time job to help cover expenses. This would also aid in reaching our long- term savings goals of paying off debt and starting a business.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

4 Advice for the Class My advice for the class regarding how to accumulate savings is start with a detailed budget planner, like the one we used for this assignment. This allows you to focus your efforts and funds in certain areas if you don’t have a lot of income or multiple sources of income. Additionally, make short-term and long-term goals that are SMART. This acronym stands for Specific, Measurable, Achievable, Realistic, and Timely. Make sure you write these down because a goal not written down is just a dream. One of the most important aspects of the goal is timely. With clear start and end dates, you can hold yourself and others (such as spouse) accountable. Lessons Learned for Future Growth The first lesson I learned from this budgeting exercise is knowing the importance of building a short-term savings account early on in your career. I am nearing the end of a 20 year career in the military and that’s always been the biggest regret for me; however, I am ready to start the next chapter with my family and know that we can accomplish all of our goals because we have each other. Moving forward, we are going to work as a family to decrease our monthly expenses, especially when it comes to the Housing and Loans expense. Conclusion Everyone should create a budget and learn to manage their money early on in their career. This budgeting exercise has allowed me to address my projected retirement income compared to my current expenses. I have discovered that I will need another part-time job to offset the deficit. Additionally, we have established short and long-term goals to help our situation. The biggest advice I can give to classmates is to save. Saving five to ten percent of monthly income would be ideal, but the biggest takeaway is to put some money away so you develop good habits.

5 References Burnette, M. (2024, February 8). How Much Should I Have in Savings? . Nerd Wallet. https://www.nerdwallet.com/article/banking/how-much-should-i-have-in-savings Part Time: Average Salary in Missouri in 2024 . Talent.com. (n.d.). https://www.talent.com/salary?job=part%2Btime&location=missouri#:~:text=The %20average%20part%20time%20salary%20in%20Missouri%20is %20%2429%2C250%20per,up%20to%20%2440%2C950%20per%20year.