This document contains a midterm test covering personal finance topics. It includes true/false questions about financial concepts, descriptions of common money mistakes, and a sample personal finance and career plan. The test examines understanding of budgets, assets, liabilities, credit reports, inflation, and retirement savings. It also asks students to outline short-term and long-term personal finance and career goals. One exercise calculates total assets, liabilities, cash inflows and outflows to identify a problem - the person's expenses exceed their income.
This document contains a midterm test covering personal finance topics. It includes true/false questions about financial concepts, descriptions of common money mistakes, and a sample personal finance and career plan. The test examines understanding of budgets, assets, liabilities, credit reports, inflation, and retirement savings. It also asks students to outline short-term and long-term personal finance and career goals. One exercise calculates total assets, liabilities, cash inflows and outflows to identify a problem - the person's expenses exceed their income.
This document contains a midterm test covering personal finance topics. It includes true/false questions about financial concepts, descriptions of common money mistakes, and a sample personal finance and career plan. The test examines understanding of budgets, assets, liabilities, credit reports, inflation, and retirement savings. It also asks students to outline short-term and long-term personal finance and career goals. One exercise calculates total assets, liabilities, cash inflows and outflows to identify a problem - the person's expenses exceed their income.
This document contains a midterm test covering personal finance topics. It includes true/false questions about financial concepts, descriptions of common money mistakes, and a sample personal finance and career plan. The test examines understanding of budgets, assets, liabilities, credit reports, inflation, and retirement savings. It also asks students to outline short-term and long-term personal finance and career goals. One exercise calculates total assets, liabilities, cash inflows and outflows to identify a problem - the person's expenses exceed their income.
1.1. A financial plan is an informal report that analyzes past financial decisions. – False 1.2. Borrowers is less likely to be harmed by inflation. – True 1.3. A budget is a record of how a person or family has spent their money. – False 1.4. A cash flow statement uses this equation: Assets - Liabilities = Net worth. – False 1.5. Checking account balance is a liquid asset. – True 1.6. The information gathered from your loan application and the credit bureau establishes your credit rating. – True 1.7. Consumer credit refers to the use of debit cards for personal needs. – False 1.8. Using the Rule of 72, with the value of land in an area is increasing 12.5 percent a year, it will take 5.8 years for property values to double. – True 1.9. Using the Rule of 72, at an annual interest rate of 5.75 percent, it will take 15 years for savings to double. – False 1.10. Purchasing a car is an example of a durable-product goal. – True 1.11. Opportunity costs refer to money already spent. – False 1.12. The problem of bankruptcy is associated with overuse and misuse of credit in the borrowing component of financial planning. – True Question 2: Assignments 2.1. Describe some common money management mistakes that can cause long-term financial concerns? - Case 1: Spending too much on Housing The amount of money you chose to spend on housing and other monthly costs can have a long-term influence on your financial performance. A mortgage is a long-term financial commitment that can continue for 25 years or more. If your mortgage payment consumes too much of your salary, you may find yourself resorting to utilizing credit cards to fulfill emergency requirements and cover other living expenditures. Despite the fact that renting avoids the long-term commitment of a mortgage, high lease payments might have a comparable detrimental impact on what you have left for other financial requirements. One option is to develop a realistic budget that defines how much money you are willing to spend on retirement, an emergency fund, housing, food, entertainment, education, and everything else that is important in your life. - Case 2: Lack of Retirement Planning Regularly thinking many decades ahead is required for retirement planning. One method is to create a monthly or annual savings strategy. Financial advisors often advocate setting away at least 10% of your income for retirement; yet, the average American savings
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https://www.coursehero.com/file/159580213/MIDTERM-TESTdocx/ rate is only 4%. Many people do not have any retirement savings, and fewer than 20% of investors believe that their money management activities will provide them with enough income in retirement. Saving automatically from the beginning of the month through a withdrawal program, rather than saving whatever is left over at the end of the month, is one practical way to improve in this area. Some common wisdom might say it best — “Pay yourself first.” 2.2. Present your plan for making personal financial and career decisions. PERSONAL FINANCE AND CAREER DECISION PLAN
- Save 200 million VND by the end of 2021 (work as a part-time a company providing English education services and a real estate broker)
- Buy a new laptop in the middle of 2022
- Invest in stock by the end of 2022
- Save 450,000,0000 VND by the end of 2023
3. Long-term Plan
- Start-up small-scale in the fashion segment before 23
- Buy a car that has an average price (Mazda, Toyota or Honda) before 24
- Save 4,000,000,000 VND before 26
- Buy an apartment before 27
4. Spending Plan
Essential 45 Expenses %
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https://www.coursehero.com/file/159580213/MIDTERM-TESTdocx/ Health and Risks 20 % Savings 15 % Investment 10 % Entertainment 10 %
II. CAREER DECISION 4.Evaluate alternatives
1. Overall plan
- 2022: Take part in the IELTS exam and reaching IELTS 7.5
- 2023: In the last semester of the course (full-time intern semester), apply for the position staff in the sales planning department of Honda company based in Vinh Phuc
- Summer 2023: After graduation, keep working at Honda, learn more about profession to have promotion and take distance learning couses of Master of Economic Law
- End of 2023: Open a clothing store that sells both online and has 3 locations in Vinh Phuc, Hanoi and Saigon
- 2024: Advance in work and reach the position of deputy manager
- Summer 2024: Take part in the HSK exam and reaching HSK 5
- 2025: Find a part-time job that can handle online and speak Chinese and maintain job at Honda
- Summer 2025: Graduate from Master course
- 2026: Find a new working environment in which English and Chinese are used, related to import-export or international trade
-2027: Open a private company providing international trading services
2. Short-term Plan (in the next 3 years)
- Learn Chinese
- Graduate from university with GPA at least above 3.2/4.0
- Prepare knowledge and skills for the application to Honda and for the investment in stock market
- Have further studies of the work to compete for higher position
3. Long-term Plan (5 years above)
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https://www.coursehero.com/file/159580213/MIDTERM-TESTdocx/ - Graduate from Master course at least from the good level
- Stay active and promote clothing stores to open more agencies
- Manage the company well and sign more contracts to expand the scale of the business
III. EVALUATE ALTERNATIVES
- Consequences of choices: The probability of success in the short-term plan will be
up to 80% but the long-term only accounts for 50% because the salary after graduation and profit from investments cannot be grasped probably.
- Evaluate risks: The risk for securities is quite high due to the market, other activities are almost risk-free.
IV. REVIEW AND REVISE PLAN
Currently, my salary for a part-time job has been around 10,000,000 to 40,000,000 a month. Besides, I still maintain the consulting and sales of real estate. Along with that, I have built some relationships so that after graduation, my starting salary will be from 30,000,000 and the cost of living will remain at a higher level than the current maximum of 5,000,000 to 10,000,000 per month.
Question 3: Exercises
3.1. Use the following items to determine the total assets, total liabilities, net worth, total cash inflows, and total cash outflows. What is the problem with this person’s personal finance situation?
Unit: US$
Rent for the month 880 Monthly take-home salary 4,250
Spending for food 490 Cash in checking account 1,400
Savings account balance 2,550 Balance of educational loan 3,580
Current value of automobile 11,000 Telephone bill paid for month 150
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Personal computer 1,500 Value of stock investment 950
Clothing purchase 2,400 Restaurant spending 2,500
Total Asset = Saving account balance + Current value of automobile + Video equipment + Personal computer + Cash in checking account + Household possessions + Value of stock investment = 2,550 + 11,000 + 350 + 2,800 + 1,500 + 1,400 + 15,000 + 950 = 35,200 Total liabilities = Credit card balance + Balance of educational loan = 3,500 + 3,580 = 7,080 Net worth = Total assets – Total liabilities = 35,200 – 7,080 = 28,120 Total cash inflows = Monthly take - Home salary = 4,250 Total cash outflows = Rent for month + Spending for food + Lunches/parking at work + Clothing purchase + Telephone bill paid for month + Loan payment + Payment for electricity + Donations + Restaurant spending + Auto insurance = 880 + 490 + 220 + 2,400 + 150 + 140 + 100 + 180 + 2,500 + 350 = 7,410 According to the calculation, we can see that this person is spending more than what he/she can earn, which may lead him/her to serious debts if they cannot balance.
3.2. Consider Minh’s budget worksheet for March, and then answer the questions:
Unit: US$
Income Spending
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https://www.coursehero.com/file/159580213/MIDTERM-TESTdocx/ Date Source Amount Date Purpose Amount
7/3 Wages 850.5 3/3 New clothes 180.5
9/3 Birthday gift 55.7 12/3 Motorbike 125.7
insurance
21/ Wages 660.5 15/3 Rent 380.9
3
23/ Part-time job for 120.5 23/3 Credit card bill 380.5 3 Circle K
30/ Savings interest 25.7 25/3 Telephone bill 25.5
3
26/3 Grocerries 280.7
29/3 Doctor’s visit 150
a. How much was Minh able to save in March?
Minh was able to save in March = Cash inflow – Cash outflow = (Wages + Birthday gift + Part-time job for Circle K + Savings interest) - (New clothes +Motorbike insurance + Rent + Credit card bill + Telephone bill + Groceries + Doctor’s visit) = 189.1 b. Which sources of her income may not be the same from month to month? Birthday gift, saving interests c. Which types of spending might not be the same from month to month? New clothes, Groceries, Doctor’s visit, Credit card bill, Telephone bill d. Why would a series of short-term budget worksheets be needed to develop a long-term budget? Short-term and long-term financial goals that enable you to achieve life-span goals. You need to think about how your choices may affect your future when choosing your short-
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https://www.coursehero.com/file/159580213/MIDTERM-TESTdocx/ term goals. That is why there is a close relationship between short-term and long-term. A series of short-term budget worksheets helps us to know how much money we are saving and keep an eye on the amount of spending. Besides, short-term financial goals are easier to plan because they involve your current lifestyle and needs. Life-span financial goals are more difficult to plan because they require you to look into the future to plan a progression of steps to achieve these goals. Therefore, it helps us draw a clear vision for long-term financial goals.
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