Working within a budget

At home, at work and at school, working within a budget is of vital importance.

Budgeting is listing estimated income and expenditure for an event or given period of time.

You can then make informed choices about money you earn or gain, and how much you spend based upon this budget.

Planning for an event

Once you have a budget you can use it to plan spendng on special events.

For a special occasion, such as a holiday, a savings plan is very helpful.

Example one

Last year the Watters family went on holiday to Spain for two weeks.

The cost of flights and their hotel rooms was $$\pounds2500$$. Mrs Watters calculated the cost for meals and excursions during the two weeks was $$\pounds900$$. Holiday insurance, taxis to and from airports and car hire (other costs) added a further $$\pounds430$$ to the cost of the holiday.

The family would like to go on the same holiday this year and are planing to save equal amounts over the course of the next ten months to cover the total cost of the holiday.

Question

Based on last year's holiday costs how much would the family need to save each month?

Total cost of holiday = cost of flights and hotel room + cost of meals and excursions + other costs

Total cost $$= \pounds2500 + \pounds900 + \pounds430$$

Total cost $$= \pounds3830$$

The Watters family have to save $$£3830$$ over ten months.

Monthly amount to save $$= \pounds3830 \div 10 = \pounds383$$

Example two

Mrs Watters discovers the cost of the flights and hotel room have increased by $$20\%$$ this year.

Question

Calculate the amount the family must save each month to be able to pay the new total cost of their holiday.

Increased cost of flights and hotel rooms $$= 20\%$$ of $$\pounds2500$$

$$20\%$$ of $$\pounds2500 = \pounds2500 \div 5 = \pounds500$$

New cost of flights and hotel rooms $$= \pounds2500 + \pounds500 = \pounds3000$$

Total cost of holiday $$= \pounds3000 + \pounds900 + \pounds430$$

Total cost $$= \pounds4330$$

The Watters family have to save $$\pounds4330$$ over ten months.

Monthly amount to save $$=\pounds4330\div10=\pounds433$$