Understanding and Evaluating Associateship Opportunities
Need for a Detailed Personal/Family Budget

Course Author(s): David G. Dunning, MA, PhD; Robert D. Madden, DDS, MBA

Need for a Detailed Personal/Family Budget

An associate’s personal/family budget situation plays a foundational role in negotiating for a position, be it “only” a job or a career track. In view of rising student loan debt and the practice market trends discussed earlier, it is arguably now more important than ever that an associate develop a detailed, retentive personal/family budget so s/he knows fairly precisely what compensation is necessary to meet personal/family needs. Our advice is associate candidates develop a budget before beginning to look for a position. Additional information on personal budgeting is available elsewhere (for example, 23) and websites such as http://feedthepig.org.

A sample budget template is presented in Table 1. Many templates are available online, including Meet Every Dollar.24 The essential point is this: develop a detailed budget using this template or another one! And realize the budget amounts are AFTER TAX dollars, meaning the amount you actually get to “take home.” You may have a guaranteed base of $100,000, but after state and federal income tax and other taxes, you may take home only $75,000.

As any financial advisor would assert: it is vital that a “liquid” (cash available) emergency fund of 3 (for single individuals) to 6 months (for those with dependents) be established as an overall strategy in budgeting.

Table 1. Personal/Family Monthly Budget.

Item $
Estimated take home monthly income  
       Loan Payment  
       Car Replacement Savings Fund  
Nonfood (household cleaning supplies, shampoo, etc.)  
Gifts and Stamps/Postage  
Personal Debt (credit cards, dept. stores, etc.)  
School Debt  
Child Care  
House/Apartment (30%)  
       Natural Gas/Propane  
       Waste and Recycling Services  
       House Maintenance (repairs, etc.)  
       Mortgage Loan Payment or Rent  
       Escrow for Insurance/Real Estate Taxes  
       Replacement Funds (furnace, roof, carpet, furniture, etc.)  
Other Insurance (could be a work benefit)  
       Health Insurance and out of pocket expense  
       Identify Theft  
Entertainment (movies, eating out, etc.)  
Vacation Fund  
Giving to Charities  
Savings/Retirement (could be a work benefit)  
Miscellaneous (newspaper, magazines, haircuts, sports, school expenses for children, etc.)  
Continuing Education (could be a work benefit)  
Contribution to Emergency Fund if Not Fully Funded