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Develop a monthly budget for yourself in which you outline your income, expenses (both recurring and sporadic), savings account, and at least one investment. For the savings account, outline an intermediate goal and a long-term goal of how much money you would like to have saved, how much you will contribute to the accounts monthly, and how long you expect to take to meet your end goals. Also, explain which financial institution you chose for your savings account and why. For the investment, outline your projected annual return on investment (ROI), the risks of the investment, and how you will diversify the risks. i chose UFB Direct Portfolio Savings for the savings acccount for thier high apy

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Monthly Budget Overview

Total Monthly Income:

  • Salary: $4,500
  • Freelance Income: $500
  • Total Monthly Income: $5,000

Monthly Expenses

Recurring Expenses:

  1. Housing:

    • Rent: $1,200
    • Utilities (electricity, water, gas): $150
    • Internet: $60
    • Total Housing: $1,410

  2. Transportation:

    • Car payment: $300
    • Insurance: $100
    • Gas: $150
    • Public Transportation: $50
    • Total Transportation: $600

  3. Food:

    • Groceries: $400
    • Dining Out: $150
    • Total Food: $550

  4. Insurance:

    • Health Insurance: $250
    • Total Insurance: $250

  5. Miscellaneous:

    • Cell phone: $80
    • Subscriptions (e.g., Netflix, Spotify): $30
    • Total Miscellaneous: $110

Total Recurring Expenses: $3,020

Sporadic Expenses:

  1. Clothing: $100 (average monthly)
  2. Medical Expenses/Co-Pays: $50 (average monthly)
  3. Entertainment: $100 (average monthly, can include events or hobbies)
  4. Gifts: $50 (for birthdays, holidays, etc.)

Total Sporadic Expenses: $300

Total Monthly Expenses:

Total Recurring ($3,020) + Total Sporadic ($300) = $3,320

Monthly Savings & Investment

Total Remaining After Expenses:

  • Total Income: $5,000
  • Total Expenses: $3,320
  • Remaining: $1,680

Savings Account Goals

  • Savings Account: UFB Direct Portfolio Savings

    • High APY: Chosen for its competitive interest rates (currently around 4.65%).

  • Intermediate Goal:

    • Amount: $10,000
    • Monthly Contribution: $500
    • Time to Reach Goal: 20 months

  • Long-Term Goal:

    • Amount: $50,000
    • Monthly Contribution: $500 (after the intermediate goal is met, savings will be redirected)
    • Time to Reach Goal: 7 years (84 months)

Investment

  • Investment Type: Stock Market Index Fund (e.g., S&P 500 ETF)
  • Initial Investment: $5,000
  • Projected Annual ROI: 7% (average historical return)
  • Risks: Market volatility, loss of principal value, economic downturns.
  • Risk Diversification Strategy:
    • Invest incrementally using dollar-cost averaging to lessen the impact of volatility.
    • Allocate funds across multiple sectors (technology, healthcare, consumer goods) or consider investing in a total market index fund for broader exposure.
    • Rebalance the investment portfolio annually to maintain desired asset allocation between different investment types.

Summary

  • Total Monthly Income: $5,000
  • Total Monthly Expenses: $3,320
  • Savings Contributions: $1,000 total ($500 for intermediate goal and $500 for long-term aim).
  • Investments: $680 will be allocated to the stock market index fund.

By following this budget plan, I aim to strengthen my financial future through diligent savings and strategic investments while also ensuring I manage my current living expenses effectively.