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Develop a personal budget for yourself or a friend for this year

Assuming you would like to purchase a new car next year, develop a personal budget for yourself or a friend for this year. Make sure to include a savings plan to save enough for a down payment, taxes, license, and insurance.

Discuss the situations that might derail the budget along with a plan for you to deal with these issues.

Solution Preview

Budgeting is an important tool to know how to do in order to save for a car.

Let us first look at the cost of a car. Since this is probably your first new car, a mid-priced reliable car would be your best bet - how about a Honda civic? Looking at honda.com, we see the civic costs $15,505. This is the base price of the car, and is good if you know how to drive manual. With automatic it is 16,305.

Let us assume taxes of 15%; the automatic will end up costing $18750.75. If you look carefully, there is a destination charge of $680 - so a total of $19430.75

How we will want to purchase the car - therefore, we would finance it. With financing, we would break up the cost and pay a little every month. There is also an interest rate to consider - I will put it at 5%. We will be paying it off over 60 months. ...

Solution Summary

This solution provides an example of a personal budget.