Antonio is trying to determine if he can afford to move into an apartment and make the $500 monthly rental payment?
| Monthly Budget | Old Budget | New Budget |
|----------------|------------|------------|
| Income Wages | $1500 | $1500 |
| Expenses | | |
| Food | $250 | $ |
| Cell Phone | $175 | $ |
| Savings | $200 | $ |
| Entertainment | $200 | $ |
| Car Expenses | $300 | $ |
| Net Income | $375 | $ |
A. Antonio could keep his budget the same and hope he gets a raise at work.
B. Antonio 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.
C. Antonio could live at his parent's 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.
D. Antonio could reduce his monthly entertainment expenses by $75 and his food expenses by $50 to pay the monthly rent. He could take $200 out of savings once for the deposit.
Answer (2)
Antonio needs an additional $125 monthly to afford the $500 rent. The best option is to reduce entertainment by $75 and food expenses by $50, which meets the additional income requirement. Therefore, the best choice for Antonio is Option D.
;
Calculate the additional monthly income needed: $500 (rent) - $375 (net income) = $125.
Evaluate option d: Reducing entertainment by $75 and food by $50 yields a total reduction of $125.
Option d covers the additional income needed for rent.
Therefore, option d is the most feasible solution. D
Explanation
Understanding the Problem Antonio needs to find a way to cover his monthly rental payment of $500. Let's analyze his current budget and the proposed options to see which one works best.
Calculating Additional Income Needed First, let's determine how much additional income Antonio needs each month. His current net income is $375, and he needs $500 for rent, so he needs an extra $500 - $375 = $125 per month.
Evaluating Each Option Now, let's evaluate each option:
a. Option a: Keeping the budget the same and hoping for a raise is unreliable. We don't know if he'll get a raise or if it will be enough to cover the $125 shortfall.
b. Option b: Reducing entertainment by $100 only partially covers the $125 needed. He would still be short $25 each month. Also, taking $200 out of savings for the deposit is a one-time action and doesn't affect his monthly budget.
c. Option c: Living at his parent's house for one month and saving his net income would give him an extra $375. This option requires knowing the deposit amount. If the deposit plus one year's rent ($6000) is less than or equal to the deposit + $375, then this option works. However, without knowing the deposit, we cannot definitively say if this option is feasible.
d. Option d: Reducing entertainment by $75 and food by $50 results in a total reduction of $75 + $50 = $125. This exactly covers the additional income needed for the rent. Taking $200 out of savings for the deposit is a one-time action and doesn't affect his monthly budget.
Determining the Best Option Based on our analysis, option d is the most feasible because it allows Antonio to cover the monthly rent by adjusting his expenses.
Final Answer Therefore, the best option for Antonio is to reduce his monthly entertainment expenses by $75 and his food expenses by $50 to pay the monthly rent. He can take $200 out of savings once for the deposit.
Examples
Budgeting and expense tracking are essential skills for managing personal finances. This problem demonstrates how to analyze income and expenses to make informed decisions about allocating funds. For example, understanding how to adjust spending habits to afford necessary expenses like rent can be applied to various financial goals, such as saving for a down payment on a house, paying off debt, or investing for retirement. By carefully evaluating different options and making strategic adjustments, individuals can achieve their financial objectives and maintain a healthy financial life.
