Predict how much money can be saved without having a negative actual net income.
| Monthly Budget | Budgeted Amount | Actual Amount |
| :------------- | :-------------- | :------------ |
| Income | | |
| Wages | $1025 | $675 |
| Expenses | | |
| Rent | $300 | $300 |
| Utilities | $100 | $100 |
| Food | $175 | $200 |
| Cell Phone | $75 | $75 |
| Savings | $300 | $ |
| Net Income | $75 | $ |
A. It is not possible to save any money this month without having a negative actual net income.
B. $350 can be saved resulting in an actual net income of $0.
C. $200 can be saved resulting in an actual net income of $75.
D. Because there is a $75 budgeted net income, that $75 can be put towards savings.
Answer (2)
Calculate total actual expenses: $300 + $100 + $200 + $75 = $675.
Calculate actual net income without savings: $675 (actual income) - $675 (total expenses) = $0.
Determine the maximum savings amount: Since the actual net income without savings is $0, no money can be saved without a negative net income.
Conclude that it is not possible to save any money this month without having a negative actual net income, so the answer is It is not possible to save any money this month without having a negative actual net income.
Explanation
Analyze the budget table First, let's analyze the given budget table. We have the budgeted amounts and the actual amounts for income and expenses. We want to find out how much money can be saved without having a negative actual net income.
Calculate total actual expenses To determine the maximum savings, we first need to calculate the total actual expenses. The actual expenses are:
Rent: $300 Utilities: $100 Food: $200 Cell Phone: $75
So, the total actual expenses are:
Sum the expenses 300 + 100 + 200 + 75 = 675
Calculate actual net income without savings Next, we calculate the actual net income without considering savings. The actual income (wages) is $675. So, the actual net income without savings is:
Actual Income − Total Actual Expenses = 675 − 675 = 0
Determine maximum savings amount This means that after covering all the expenses, there is no money left for savings if we want to avoid a negative net income. Therefore, the maximum amount that can be saved without having a negative actual net income is $0.
Choose the correct answer Now, let's examine the given options:
a. It is not possible to save any money this month without having a negative actual net income. b. $350 can be saved resulting in an actual net income of $0. c. $200 can be saved resulting in an actual net income of $75. d. Because there is a $75 budgeted net income, that $75 can be put towards savings.
Since we found that the maximum savings is $0, option a is the correct one.
Examples
Understanding personal finances is crucial for making informed decisions about spending and saving. This problem demonstrates how to analyze a budget and determine the maximum amount that can be saved without incurring debt or a negative net income. For example, if you are planning a vacation, you can use this method to calculate how much you can save each month to reach your goal. By tracking your income and expenses, you can identify areas where you can cut back and increase your savings rate, ensuring financial stability and helping you achieve your financial goals.
The analysis shows that total actual expenses amount to $675, leaving an actual net income of $0. Therefore, no money can be saved without resulting in a negative net income. The correct answer choice is A.
;
