But can you afford it?

There are many occasions when you have to make difficult decisions about how to use your money. The complete unit looks at five sorts of situations which you might face at some time. In each case you will be considering ‘But can I afford it?’ Here is an example from the unit.

Hello John got a new motor?

When making decisions about using your money it’s a good idea to know what your income and expenditure is likely to be. In this first task you have to advise John on how to organise his weekly budget. 

John earns £250 a week. His outgoings (what he spends his money on) are  on average, as follows:

Accommodation                                            £60
Bills (telephone, gas, electricity)                     £40
Council tax                                                   £10
Food                                                            £35
Essentials (clothes etc)                                 £15
Luxuries (outings, drinks etc)                         £15
Savings for holidays                                      £10
Transport to get to work by bus                      £20

1. How much money does John have left each week?
2. John does some research into the cost of buying a car. He estimates  that the running costs would be as follows:

           Insurance                                              £5
           Tax                                                      £2.50
           Petrol                                                  £10.50
           6 monthly service                                 £6

 
How much will it cost John to run his car on the basis of these figures?

3. If he decides to buy a car, how much will he now have left each week? (remember, he no longer needs to spend any money on public transport)
4. In order to do this he needs to buy the car. He has found one that he can buy, but will have to pay instalments on the purchase of car of £40 per week.

Can he afford this?