Question

Tristan has found a good job as a bookkeeping clerk after finishing his associates degree at the local community college. He is making a beginning annual salary of $19,760. How can this increased income affect his financial decisions? Compare his previous budget when he worked part time while finishing his degree with his current budget after getting a full time job.
Monthly Budget
Previous Budget
Current Budget
Income
Wages

$786

$1646
Expenses
Rent
Utilities
Groceries
Savings
Car Expenses
Entertainment

$300
$60
$130
$120
$150
$20

$600
$120
$200
$350
$150
$120
Net Income
$6
$106

a.
Tristan is spending too much money on groceries and entertainment.
b.
Tristan is earning quite a bit more in his full time job. He is spending more on rent, utilities, food, and entertainment, as well as saving $350 each month.
c.
Tristan is earning double his previous wages. He should double his expenses, as well.
d.
Tristan's increased income should have no effect on his financial decisions.

Answer 1

Answer: b.

Explanation: His monthly income rose from $786 to $1,646. With the higher income he’s increased spending on rent, utilities, groceries and entertainment, but he also boosted monthly savings to $350 and raised his net monthly surplus from $6 to $106. This reflects a substantial income increase while still improving savings.