To solve the problem of identifying the simplest change that can be made to the budget to produce more savings next month, let's analyze the various expense and income categories in the budget.
Here are the key components from the budget:
1. Net income/Total income: Actual [tex]$375.00
2. Fixed expenses (Rent, Bus pass): Actual $[/tex]220.00
3. Variable expenses (Food, Discretionary): Actual [tex]$175.00
4. Savings: Actual -$[/tex]20.00
We are given the following four options for changes:
1. Add to fixed expenses: This would not help in increasing savings, as increasing expenses would reduce savings further.
2. Decrease food expenses: This seems like a viable option, as food expenses can be potentially adjusted or reduced.
3. Reduce rent payments: While this could significantly impact savings, it's often difficult to renegotiate rent easily in a short period.
4. Increase total income: This would surely increase savings, but it is not always the simplest change to achieve, as it might require finding additional work or a new job.
Given these options, let's focus on the food expenses:
- Budgeted food expenses: [tex]$75.00
- Actual food expenses: $[/tex]125.00
- By reducing the food expenses to the budgeted amount of [tex]$75.00, we can decrease the overspending.
The reduction in food expenses would be:
\[ \$[/tex]125.00 - \[tex]$75.00 = \$[/tex]50.00 \]
Now let's see the impact on overall savings:
- Current variable expenses: [tex]$175.00
- New variable expenses after food expense reduction:
\[ \$[/tex]175.00 - \[tex]$50.00 = \$[/tex]125.00 \]
To calculate the new savings:
- Net income: [tex]$375.00
- Total (fixed + new variable) expenses:
\[ \$[/tex]220.00 + \[tex]$125.00 = \$[/tex]345.00 \]
- New savings:
[tex]\[ \$375.00 - \$345.00 = \$30.00 \][/tex]
Thus, by decreasing the food expenses by [tex]$50.00, the new savings at the end of the month will be $[/tex]30.00.
Therefore, the simplest change to produce more savings next month is to decrease food expenses.
