Mike has a net spendable income of $1,400. He decides to set up a budget before looking for an apartment or a car. He sets up hi
s budget and finds that he has lots of money left over. He puts the extra money into entertainment. Housing $420 Food $168 Transportation $210 Insurances $42 Debts $70 Entertainment $224 Clothing $70 Savings $70 Medical $56 Miscellaneous $70 Why might this budget be a problem? Mike will spend more money than he is earning. Mike does not have enough money budgeted for food or medical expenses. Mike is using the minimum recommended percentages for food, housing, and transportation. The costs are likely to exceed the expenses in each category. Mike has not budgeted all of his money. He will find that he has extra money at the end of the month, which will end up being wasted. NextReset
This budget might be a problem because Mike is using the minimum recommended percentages for food, housing, and transportation. He prepared the biggest sum for entertainment, putting the basic needs under the disadvantage and forgetting about medical emergencies. Therefore, in the end of month there is a strong possibility that he will find out he organized his budget in a wrong way.
