Which of the following pieces of information from Carrie's paystub is most important to use when creating her personal budget?

• A. Employer's address
• B. Net pay (take-home pay) after deductions
• C. Employee identification number
• D. Gross pay before any deductions

Answer: (B)

Verified step by step guidance

1. Understand the purpose of a personal budget: A personal budget is a financial plan that helps an individual manage their income and expenses effectively. It focuses on the money available for spending and saving after mandatory deductions.
2. Identify the key information needed for budgeting: To create a personal budget, the most relevant figure is the net pay (take-home pay). This is the amount of money left after deductions such as taxes, insurance, and retirement contributions.
3. Evaluate the options provided: Review each piece of information from Carrie's paystub and determine its relevance to budgeting. For example, the employer's address and employee identification number are administrative details and do not directly impact budgeting. Gross pay before deductions is not as useful because it does not reflect the actual amount available for spending.
4. Focus on net pay: Net pay is the most important figure for budgeting because it represents the actual income Carrie has available to allocate toward expenses, savings, and discretionary spending.
5. Apply this understanding: When creating a personal budget, always prioritize net pay as the starting point for calculating income and planning expenses.