Budgeting
A budget is a plan of how you intend to spend and save your money. Here is an example of a household budget for one month:
Expendable or disposable income
Expendable income is the money you have left after you pay for essentials such as food and bills. It is also known as disposable income.
Question
Rhys has just finished his degree and has got a job that pays £2,110 a month. His monthly income after tax is £1,800. Here are his monthly outgoings for the month:
What is his expendable income?
Firstly, let’s add all items:
£654 + £32 + £57 + £16 + £30 + £13.50 + £12 + £54 + £18.90 + £25 + £45 + £28 = £985.40
We’ll now deduct this from his income:
£1,800 - £985.40 = £814.60
Rhys’ expendable (or disposable) income is £814.60.
Question
What percentage of his income is spent on his mortgage?
\(\frac{£654}{£1,800}\)\(\times~{100} = {36.33\%}\) rounded to two decimal places.
