Of course! Let's solve this step-by-step using the 50-30-20 budget rule, which allocates 50% of your income to essential needs, 30% to wants, and 20% to savings.
### Step 1: Convert Monthly Essential Costs to Weekly Costs
First, we need to convert the monthly essential costs into weekly costs because the employee is paid weekly.
Given:
- Monthly essential costs = [tex]$2,591
To convert monthly costs to weekly costs:
- Weeks in a month ≈ 4 (since a month approximately contains 4 weeks)
\[ \text{Weekly essential costs} = \frac{\text{Monthly essential costs}}{4} \]
\[ \text{Weekly essential costs} = \frac{2591}{4} = 647.75 \]
### Step 2: Determine the Minimum Paycheck Needed to Cover Essential Costs
The 50-30-20 budget rule states that 50% of your income should go towards essential needs. To find the minimum paycheck required to cover these essential costs, we need to calculate:
\[ \text{Essential costs percentage} = 50\% = 0.50 \]
Since $[/tex]647.75 represents the 50% portion of the paycheck:
[tex]\[ \text{Minimum paycheck} = \frac{\text{Weekly essential costs}}{\text{Essential costs percentage}} \][/tex]
[tex]\[ \text{Minimum paycheck} = \frac{647.75}{0.50} = 1295.5 \][/tex]
### Step 3: Calculate the Amount to Put Aside for Financial Goals (Savings)
Next, we calculate how much should be put aside for financial goals, which is 20% of the paycheck.
[tex]\[ \text{Savings percentage} = 20\% = 0.20 \][/tex]
[tex]\[ \text{Financial goals savings} = \text{Minimum paycheck} \times \text{Savings percentage} \][/tex]
[tex]\[ \text{Financial goals savings} = 1295.5 \times 0.20 = 259.1 \][/tex]
### Step 4: Calculate the Amount Available for Lifestyle Costs (Discretionary)
Finally, we need to calculate the amount available for lifestyle costs, which is 30% of the paycheck.
[tex]\[ \text{Wants percentage} = 30\% = 0.30 \][/tex]
[tex]\[ \text{Discretionary amount} = \text{Minimum paycheck} \times \text{Wants percentage} \][/tex]
[tex]\[ \text{Discretionary amount} = 1295.5 \times 0.30 = 388.65 \][/tex]
### Summary
- Minimum paycheck needed to cover essential costs: [tex]$1,295.50
- Amount to put aside for financial goals (savings): $[/tex]259.10
- Amount available for lifestyle costs (discretionary): $388.65
These values give a clear breakdown of how much you should make on each paycheck and how to allocate it according to the 50-30-20 budget rule.
