Question

Jacob is ready to move into his own apartment. He has a great job earning $1680 per month. What is the best way Jacob’s budget can be modified to help him make the $600 monthly rental payment?
Monthly Budget
Old Budget
New Budget
Income
Wages

$1680

$1680
Expenses
Rent
Food
Clothes
Savings
Recreation
Car Expenses

$0
$200
$75
$700
$400
$300

$____
$____
$____
$____
$____
Net Income
$5
$____
a.
Jacob could spend less on food and clothes to make his $600 monthly rental payment.
b.
Jacob could spend less on recreation and reduce the amount that he is saving to make his $600 monthly rental payment.
c.
No modifications to his budget would be necessary as long as he takes on a part-time job on the weekends to increase his income and help pay his rent.
d.
Jacob could spend less on food and recreation to make his $600 monthly rental payment.

Answer 1

Old expenses: 0 + 200 + 75 + 700 + 400 + 300 = 1675, so net income = 1680 − 1675 = $5.
With a $600 rent, he needs to cut expenses by 600 − 5 = $595.

Check choices:
- (a) Food + clothes = 200 + 75 = $275 (not enough).
- (b) Recreation + savings = 400 + 700 = $1100 (enough but requires cutting savings a lot).
- (d) Food + recreation = 200 + 400 = $600 (enough).

Best answer: d. Spending less on food and recreation provides the needed $595 (and exactly covers the $600 rent).