You are paid $11.75/hr you work you work 40 hr/wk your deductions are fica (7.65%) , federal tax withholding (10.75%) and state tax withholding (7.5%)

Question

Assuming your budget a month as 4 weeks, how much are the following: your total realized income, fixed expenses, and discretionary expenses?

How much can you put towards savings each month if you eliminate your discretionary expenses?

Answer 1

Total realized income:

$11.75/hr x 40 hr/wk = $470/wk
$470/wk x 4 weeks/month = $1880/month

Deductions:

FICA: 7.65% x $1880 = $143.94
Federal tax withholding: 10.75% x $1880 = $202.70
State tax withholding: 7.5% x $1880 = $141.00

Fixed expenses:

Assuming fixed expenses are those that do not vary from month to month, such as rent, car payment, insurance, etc., we would need more information to calculate this.

Discretionary expenses:

Assuming discretionary expenses are those that can vary from month to month and include things like entertainment, dining out, shopping, etc., we would need more information to calculate this.

Amount towards savings:

If we assume all discretionary expenses can be eliminated, we can calculate the amount towards savings as follows:

Total income - deductions - fixed expenses - 0 (discretionary expenses) = amount towards savings

Using the deductions calculated above and assuming fixed expenses of $800/month and discretionary expenses of $500/month, we can calculate the amount towards savings as:

$1880 - $143.94 - $202.70 - $141.00 - $800 - $500 = $92.36/month towards savings.