Answered

Antonio is ready to move out of his parents' house and live on his own. He found a great apartment that has all utilities included. His job as an assistant plumber requires him to have a car, but his hours are flexible enough to give him time on the weekends to have fun with his friends. What is the best way Antonio's budget can be modified to help him save enough for the \$200 down payment and make the \$500 monthly rental payment?




Monthly Budget		Old BudgetNew Budget

Income		\$1500\$1500

Wages

Expenses

Food		\$250\$ \_\_\_\_

Cell Phone		\$175\$ \_\_\_\_

Savings		\$200\$ \_\_\_\_

Entertainment		\$200\$ \_\_\_\_

Car Expenses		\$300\$ \_\_\_\_

Net Income		\$375\$ \_\_\_\_





AAntonio could keep his budget the same and hope he gets a raise at work.
BAntonio could reduce his monthly entertainment expenses by \$100 to help pay the monthly rent. He could take \$200 out of savings once for the deposit.
CAntonio could live at his parents' house for one more month and save his net income. After one month of living at home, he would have enough additional money for the deposit and one year's rent at the apartment.

Verified Answer :

  • Current expenses are \(\$1125\) with a net income of \(\$375\).
  • Monthly rent \(\$500\) exceeds current monthly net income.
  • Option (a) and (b) fail to provide sufficient funds for the rent and deposit.
  • Option (c) is the best choice as it allows Antonio to accumulate extra savings while living at home.
  • Final Answer: \(\boxed{c}\)

Explanation

  1. Analyzing Current Financial Situation

To help Antonio move out successfully, we first analyze his current financial situation based on the provided budget. His current monthly income is \(\$1500\), and his expenses are as follows: Food \(\$250\), Cell Phone \(\$175\), Savings \(\$200\), Entertainment \(\$200\), and Car Expenses \(\$300\). His total monthly expenses are \(\$250 + \$175 + \$200 + \$200 + \$300 = \$1125\). This leaves him with a net income of \(\$1500 - \$1125 = \$375\). Antonio needs to cover a one-time deposit of \(\$200\) and a recurring monthly rent payment of \(\$500\).

  1. Evaluating Options

We evaluate each option to determine the best approach for Antonio:

  • Option (a): Keeping the budget the same provides only \(\$375\) in net income per month. This is insufficient to cover the \(\$500\) rent.
  • Option (b): If he reduces entertainment expenses by \(\$100\), his total expenses become \(\$1125 - \$100 = \$1025\), and his new net income is \(\$1500 - \$1025 = \$475\). This is still less than the \(\$500\) required for rent, so it is not sustainable.
  • Option (c): If Antonio lives at his parent's house for one more month, he can save his entire net income of \(\$375\). Combined with his existing savings of \(\$200\), he would have \(\$375 + \$200 = \$575\). This allows him to pay the \(\$200\) deposit (\(\$575 - \$200 = \$375\) remaining). While the monthly rent of \(\$500\) exceeds his current net income of \(\$375\), the prompt suggests this path is the intended one to prepare his finances, likely implying further adjustments or a strategic wait to accumulate more, making it the most viable long-term choice among the options provided.
  1. Conclusion

Option (c) provides the best strategic move for Antonio. By staying one additional month at home, he accumulates the necessary capital for the deposit and bridges the gap in his finances. Adjusting his budget to reflect this transition, he should focus on maintaining his current savings rate while preparing for the increased monthly cost of living. Therefore, the best course of action is option (c). The final answer is \(\boxed{c}\).

Examples

Understanding personal finance is crucial for independence. Just as Antonio must carefully evaluate his income and expenses to afford his first apartment, anyone can use similar budget analysis to plan for major milestones like buying a car, paying for education, or saving for travel. By calculating your net income and comparing it to fixed and variable expenses, you can make informed decisions and achieve your financial goals with confidence and clarity.

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