*********************EXCEL EXPERTS ONLY PLEASE****************************
Skill(s) Being assessed: Problem Solving
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Criteria for Success: In this assignment, you will:
- Create three monthly budgets using Excel for a financial analysis.
- Summarize the change in expenditures between budgets.
- Show the findings of your personal financial analysis using appropriate graphs/charts in Excel.
- Explain how the chosen graphs/charts help someone to better understand the presented financial data better than other potential graphs/charts.
- Discuss the results of financial analysis including overall progress towards saving goals, potential changes in budget that can be made in the future, possible economic/life impacts that may affect their budget in the coming year.
- Reflect on what your financial analysis might reasonably look like in a year taking into account income growth and inflation of consumer prices.
What to submit/deliverables: A completed Assignment 3 XLS Template and a completed Assignment 3 Financial Analysis Explanation Word Template.
What is the value of doing this assignment? One way to check your progress towards your financial goals is to conduct a personal financial analysis. This will help you see how well you have stayed on track with your finances over a period of time. Using technology can help you stay organized throughout your analysis, as well as help visualize financial data. Displaying the data visually will allow you to observe general trends in your personal finances and to communicate about them effectively.
For this assignment you will be using Excel as your technology tool to analyze personal financial data and display that data visually. There are many other technologies available for personal or professional use that can be used for this type of analysis. The approach to learning and working with Excel software in this course is one you can apply to other technology tools in your life and career.
Your goal for this assignment is to: Build your confidence and practice in the technology skill by conducting a personal financial analysis using a technology tool. You will use Excel to organize three monthly budgets, visualize this financial data using charts and graphs/charts, and discuss the results of your financial analysis, including progress towards your selected financial goal from Assignment 2.
Steps to complete: In Week 10, submit your assignment in BlackBoard by following these steps:
STEP 1:Read the following scenario and review the
Assignment 3 XLS Template.
Scenario: Three months have passed since you created your initial Financial Plan (from Assignment 2). A friend who is studying to become a financial advisor recommends that you check in on your progress towards your saving goal. She volunteers to help you conduct a financial analysis of your personal budget over three months. You meet with your friend each month to go over your analysis. In her studies she is learning that people understand budget concepts better when they are represented as visuals, so she asks you to create some.
In this assignment, you will make three monthly budgets. Your income increases each month, as shown in the tables in theAssignment 3 XLS Template. Additionally, in months 2 and 3, some cells have been filled in with a formula to represent an unexpected expense in that expenditure category for the month. You will need to reallocate your budget around this.
STEP 2: Use the Assignment 3 XLS Template and take the income and expenditures from Assignment 2 to use as your starting point for your Month 1 Budget.
Remember, that since this is a monthly budget, you will need to divide all of the values from your Assignment 2 annual plan by 12. After you have done this, you will notice that embedded formulas show that your income changes for months 2 and 3, because you received additional unexpected income from other sources.
You will also notice an increase in your “Healthcare” expenditure in Month 2 as the result of an unexpected medical emergency, as well as an increase in your “Miscellaneous” expenditures in Month 3 because of an unplanned for repair expense.
STEP 3: Fill in the cells of each monthly budget table to show how you would choose to allocate your income each month.
STEP 4: Use formulas to fill in the percentage columns for each monthly budget.
STEP 5: Create three appropriate graphs/charts (one for each month) in Excel to show the findings of your personal financial analysis. Each should show how you have allocated your income among the various categories.
STEP 6: Create a graph that shows your progress towards your savings goal across all three monthly budgets.
STEP 7: In the
Word template
, explain the reason why you chose the graphs/charts you did. How do the graphs/charts you created help someone understand the financial data?
STEP 8: Also in the Word template, discuss the results of your financial analysis including overall progress towards saving goals, potential changes in your budget that can be made in the future, and possible economic or life impacts that may affect your budget in the coming year.
STEP 9: Finally, in the Word template reflect on what your financial analysis might reasonably look like in a year taking into account income growth and inflation of consumer prices.
STEP 10: After completing all questions in the Assignment 3 XLS Template, save your responses as a Excel file titled: Your Name, ECO110_Assignment 3 Personal Financial Analysis and upload to BlackBoard in Week 10. Do the same thing with the Word template. Make sure to also review the scoring rubric before submitting.
Grading for this assignment will be based on the following rubric:
Assignment 2
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Assignment 2 Financial Plan
| Budget |
Excel Template
Budget
| Dollars |
Percent |
| Income |
| $ 50,000 |
– |
| Expenditures |
| Housing |
$ 9,000 |
18% |
| Food |
$ 8,169 |
1
| 6% |
| Transportation |
$ 8,500 |
1
| 7% |
| Education |
$ 2,591 |
| 5% |
| Utilities |
$ 2,060 |
4% |
| Taxes |
$ 2,450 |
5%
| Health Care |
$ 5,660 |
11% |
| Family Care |
$ 3,529 |
7%
| Miscellaneous |
$ 3,041 |
6%
| Savings |
$ 5,000 |
10% |
| Total |
$ 50,000
100% |
Assignment 2 Instructions for Excel Sheet:
1. Identify an annual income. This can be the $50,000 already in the “Income” cell, or you can use an income of your choice. If you use a different annual income, remember to change your income number.
2. Choose one of these five financial goals (remember to set a timeline for yourself that ranges from 1 year to 10 years). The number you put in the “Savings” cell of the budget table should be the cost of the goal you are saving for divided by the number of years you plan to be saving for it.
a. Create an emergency fund of $1,000.
b. Save for a vacation that will cost $2,000.
c. Save to buy a $15,000 vehicle.
d. Save for a down payment of $40,000 to buy a house.
e. Save $50,000 for education (personal, child, family, etc.).
3. Choose one of these three housing options. Put the dollar number in the budget table above for “Housing.”
a. Rent a house. Cost is $15,000 per year.
b. Rent an apartment. Cost is $12,000 per year.
c. Rent a room only. Cost is $9,000 per year.
4. Fill in dollar values for the rest of your expenditures. This can be based on either a hypothetical ideal or what you might typically spend on these categories.
5. Use formulas to calculate the sum for your “Total” cell in the “Dollars” column and to fill in the “Percent” column.
6. Check to make sure your “Total” dollars is equal to the annual income you chose and that your “Total” percent is 100%.
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Financial Plan
Michelle A. Cannon
ECO101
Professor Smith
February 19, 2021
1. Saving goal and Timeframe
Saving goal that has been identified is $5000 annually for eight years to reach $40,000 down payment for buying the house. Eight years is the selected timeframe because it is deemed appropriate and sustainable considering annual income ($50,000) and amount saved annually. Additionally, it is logical to make savings for 8 years to buy a house because this is a long-term personal investment which would increase my value and net worth.
2. Considerations for Choosing Housing Option
There are four factors that I did put into consideration when selecting a housing option for renting a room for $9,000 per year. First, the time frame for the saving goal was put into consideration. When all housing options were analyzed, renting a room for $9,000 was cheaper providing the money needed to finance saving for 8 years which if other options were considered, a set time frame could not be attained because less money would be saved each month. Second, the familial situation is another factor that was considered where the dependency rate was high from others and a slight mistake to go for higher housing option, would make desired financial goal remain a dream. Third, the desire to have improved quality of life is the driving force that caused me to consider renting a room for $9,000. This created an opportunity to have adequate finances to commit to saving to enable meet to buy a house, one asset that I need to have improved quality of life in the future especially at old age. Finally, trade-off decisions is another factor that caused me to choose to rent a room for $9000 instead of a house and apartment for $15,000 and $12,000 respectively. For example, I choose to live in a cheaper housing option to enable me to secure enough savings needed to meet desired financial goal.
3. Consideration for non-rent expenditures
Non-rent expenditures are selected based on their necessity and allocated adequate finances to ensure that no shortfall is experienced to interfere with the saving plan. For example, food is a basic necessity allocated 16%, transportation 17%, healthcare 11% and family care 7% of total income. These non-rent expenditures are given adequate allocation which helps to ensure they are sustained throughout the year with no interruption to established saving goals. Finally, expenditures selected are aligned with selected financial goals because allocations are made in such a way that ensure annual saving are met and, also all expenditures are essential to minimize wastages which could result to failure to meet desired saving goal.
4. Reflection on Productive Strategies
To a higher degree, I followed the plan that I thought through earlier in the instructions provided in the assignment. I considered it important because I was able to determine the main items that matter most in the financial plan and which if not carefully considered could mess up with my entire financial plan. In the preparation of the financial plan, step-by-step played a crucial role because it created an opportunity to establish and review items that should be considered in the preparation of an effective and complete financial plan. Further, an organized approach in the preparation of a financial plan significantly helps to identify areas that need improvement and adjustment in the quest to come up with a refined and realistic financial plan. Finally, an approach that is deployed in preparation of financial considers time utility, affordability, longevity, earning increment capability, planning and step-wise productive strategies. This helps to ensure that the prepared financial plan is attainable and seeks to increase my value.
