The Financial Plan Answers

What is meant by the term financial planning?a.Long-term goals are reached over an extended period of time, so your current income does not affect them.b.It is creating a road map of everything you do with your money.c.It is hoping you will have enough money to pay all your bills on time. d.If your income exceeds your expenses, you will be able to save money for the future.

Which of the following would not be listed under cash outflows in a financial plan?a.car paymentsb.insurance premiumsc.interest earnedd.mortgage payment

The Anderson family wants to look at their cash flow over a year. They decide to write out their cash flow for 4 months as given in the spreadsheet below. In which of the months did they have the greatest net cash flow? a. January b. April c. August d. December Please select the best answer from the choices provided

Planning for the possiblity that your home might get struck by lightning and catch on fire is part of a plan for _____.a.financingb.managing incomec.managing liquidityd.protecting assets

Kendra is working on her financial plan and lists all of her income and expenses in the spreadsheet below. What is Kendra’s net cash flow? a. $295 b. $285 c. $275 d. $255 Please select the best answer from the choices provided

Jim and Jackie are married with three children at home and a mortgage. Jim’s net pay per year is $67,000 and Jackie does not have income. Their mortgage payment of $2,800 includes insurance on their home. They have additional monthly expenses of $2,700.Jim contributes 15% of his earnings to a retirement fund and they have $5,000 in savings. There is a $500,000 life insurance policy on Jim and a $100,000 policy on Jackie.As their financial advisor, what part of Jim and Jackie’s financial plan would you encourage them to work on?a.They should work on their plan for managing income.b.They should work on their plan for managing their liquidity.c.They should work on their plan for protecting their assets.d.They should work on their plan for protecting their income.

Mariah is single and has a monthly disposable income of $3,200. Her monthly cash outflow is approximately $2,800. Mariah includes contributions to a retirement plan and money for investments as part of her cash outflow. She has car insurance and a life insurance policy. Mariah has saved $15,000, but wishes to use $10,000 for a down payment on a house. She has also purchased furnishings for a house, which she has in the spare bedroom of her apartment. Mariah hires a financial planner to examine her money management, and he determines that her plan needs work. What part of Mariah’s financial plan would he encourage her to work on and why? a. Her plan for managing income. Her net cash flow is negative. b. Her plan for managing her liquidity. She is spending all of her savings on her down payment. c. Her plan for retirement. She does not have a retirement plan set up. d. Her plan for protecting her assets. In case of an emergency, she should have renters insurance for her apartment. Please select the best answer from the choices provided

Tyrone’s hourly wage is $18 and his net pay is 72% of his earnings. Tyrone spends about $1,800 on his monthly expenses. If Tyrone works 40 hours per week and has no other sources of income, what is his total monthly cash inflow? (Hint: Assume that there are 4 pay periods per month.) a. $273.60 b. $1,080.00 c. $1,800.00 d. $2,073.60 Please select the best answer from the choices provided

Based on the spreadsheet below, which of the following is a true statement? a. The net cash flow is negative. b. The net cash flow is zero. c. The net cash flow is positive. d. The net cash flow can’t be determined. Please select the best answer from the choices provided

What should be included in a financial plan to protect assets?a.how much money you will makeb.how much money you will have in savingsc.how much money you will investd.how much insurance you will carry