Basic HTML Version
Q
uantitative
R
easoning &
P
roblem
S
olving
388
© 2014 Pacific Crest
Step
Model
3.
Assign percentages to
each category
Start with the percents as in the methodology, and make the
following changes:
Include 8% for Nursing Home costs
Eliminate the Debts percentage
Reduce Food to 11% (no kids to feed)
Reduce Housing to 5% (no rent or mortgage)
List Savings and Insurance at 12% each
Increase Charity, Entertainment, and Miscellaneous to 8% each
4.
Calculate actual dollar
amounts
Housing
5% $325
Utilities
10% $650
Food
11% $715
Transportation
10% $650
Health care
8% $520
Nursing Home Care
8% $520
Savings
12% $780
Insurance
12% $780
Charity
8% $520
Entertainment/Recreation 8% $520
Miscellaneous/Personal
8% $520
5.
Validate
Calculating each percentage of $6500 gives reasonable amounts
for each category, and the expenses (including savings) add up to
$6500 per month.
M
odel
3: A R
ealistic
F
amily
B
udget
YOUR
TURN!
Scenario:
Assume a family of four has a take-home income (after taxes are withheld)
of $4800 per month plus a Pell Grant that gives the student-parent $200 per
month. The family consists of one parent working full-time, one parent in
college who has a part-time job, and two children, one of which is young
enough to require day care. Create a family budget for them.
C
ritical Thinking Questions
Developing your understanding
1. If a family income is $3500 per month and they have budgeted 25% of their income for housing, how
much money can they spend on housing each month?