Question

This assignment will ask you to look at your own finances. For this assignment, write a paragraph showing your percentages. I DO NOT want to know how much money you spend or have as income, I am only looking at the percentages. Describe for me what the effect of inflation is on you personally given what you found out.

1. Look at a typical month of your expenditures and income.
2. Create a list of your expenses by category (see below).
3. Create a list of your income (see below).
4. Determine what percentage of your expenses belong to each category.
5. Determine what percentage your expenses are of your income.
6. Do a little research and find out what the overall CPI for year ending December 2019 is and then apply that rate to your expenses (actual dollar amounts) to determine how your expenses might change for the next year (no need to look at the changes per category, just use the overall CPI).
7. Determine if you believe your salary may change for the next year (do you get a Cost of Living adjustment, are you getting a raise?); if so, make that adjustment.
8. Recalculate the percentage your new expenses are of your expected income.
9. Did the percentage change?

Instruction:

the overall CPI you used in your determination.

the percentages from numbers 4, 5, and 8 (from above). how your expense to income percentage did or did not change after inflation.

Include your thoughts about the effects of inflation.

This should not be more than about a paragraph (I am not looking for an entire paper, but I need more than a sentence or two).

please help ,thank you !

Answer 1

Income for month of October 2019
Bonus	$                                500.00
paycheck	$                             1,500.00
Income from Renting	$                             1,300.00
Income from Investing	$                                360.00
Total Income	$                             3,660.00

Total Monthly expenese for the month of October in 2019 categorised and sub categorized.

Expenses of the month of October 2019	Percentage of Exeneses	After Inflation Expenses
Medical	Insurance	$                                 300	10%	$                           306.69
Household	Mortgage	$                             1,000	35%	$                        1,022.30
Household	Electricity	$                                 112	4%	$                           114.50
Household	Water/sewer	$                                   87	3%	$                              87.00
Household	Garbage	$                                   68	2%	$                              69.52
Household	Cell phone	$                                   89	3%	$                              90.98
Household	Cell phone	$                                 112	4%	$                           114.50
Entertainment	Movies	$                                   64	2%	$                              65.43
Food	Groceries	$                                 350	12%	$                           357.81
Food	Dining out	$                                 250	9%	$                           255.58
Personal	Health/Fitness club	$                                 100	3%	$                           102.23
Pets	Food	$                                 240	8%	$                           245.35
Transportation	Fuel	$                                   54	2%	$                              55.20
Transportation	Fuel	$                                   48	2%	$                              49.07
TOTAL EXPENSES		$                             2,874		$                        2,938.09

Overall CPI for the year end december 2019 in the US was 2.23% the changes in shown above. With Inflation rising the expenses with increase to $2938.09 overall from 2874.

Now Suppose I get a raise of $300 to my paycheck and see my overall income to expenses percentage before and after raise and inflation effect.

Bonus	$                                500.00
paycheck	$                             1,800.00
Income from Renting	$                             1,300.00
Income from Investing	$                                360.00
Total Income	$                             3,960.00

Expenses to income percentages before and after inflation effect and raise in paycheck.

Expenses of the month of October 2019	Percentage of Expenses of Income
Medical	Insurance	$        300	8.20%	7.74%
Household	Mortgage	$    1,000	27.32%	25.82%
Household	Electricity	$        112	3.06%	2.89%
Household	Water/sewer	$          87	2.38%	2.20%
Household	Garbage	$          68	1.86%	1.76%
Household	Cell phone	$          89	2.43%	2.30%
Household	Cell phone	$        112	3.06%	2.89%
Entertainment	Movies	$          64	1.75%	1.65%
Food	Groceries	$        350	9.56%	9.04%
Food	Dining out	$        250	6.83%	6.45%
Personal	Health/Fitness club	$        100	2.73%	2.58%
Pets	Food	$        240	6.56%	6.20%
Transportation	Fuel	$          54	1.48%	1.39%
Transportation	Fuel	$          48	1.31%	1.24%
TOTAL EXPENSES		$    2,874	78.52%	74.19%

Thus inflation of 2.23 % increased but expenses and thus reducing my purchasing power and also increase my cost of borrwing in the market. Inflation caused most of the expenses go up and thus will effect my spendings and reduce my total spendings. But with increase in salary it would be to reduce my percentage of total expenses to total income.