Conducting Your Personal Financial Analysis: Months 1–3

Data Visualization

I selected bar charts because they are the best to use when comparing multiple data. The bar charts were very simple and easy to understand. I noticed that it can be very easy to identify the trend of my goal using the bar chart. I visualized the numerical data in a way that helped me to clarify the pattern of my financial expenditures. I did not use graphs because it was difficult for me to read the exact values from them. It was very difficult for me to compare my data sets. Thus, I found them to be inappropriate for the analysis.

Financial Analysis of Months 1–3

I made a few adjustments to my budget on month 2 and 3. I needed to accommodate new expenditures for medical bill and school fees. However, there is a problem that emerged, which I need to solve in future. I will need to plan for uncertainties. I had not projected a need to cater for medical bills when I have paid for health insurance. I also did not think there can emerge a need to increase my expenditures for school fees. Thus, I will need to set aside some funds that I can spend in unforeseen situations. Given the impact of the extra income, I had a surplus of $3346, $1932, and 932 in month 1, month 2, and month 3, respectively.

Projection

Inflation could impact my spending next year because it could trigger an increase in the prices of goods and services. For instance, if the prices of food increase, I would be forced to adjust my budget. I would need to reduce the amount I save. Unemployment would also affect my spending because it would trigger a decrease in wages. I would have less money to spend, which would force me to reduce the amount I spend on various items. Some of the items that I would need to adjust their expenditures include food, house rent, and entertainment. Changes in interest rates would also affect my budget. An increase in interests’ rates would cause inflation because there would be an incentive for investors to hold money. Otherwise there would be deflation. In case of deflation, the price of goods and services would reduce. Therefore, I would have more money to save.

Reflection

Completing this assignment will help me because I will be effective in planning for uncertainties. I will always consider the unforeseen situations when planning my budget. Besides, I would be effective in the management of my money to ensure that I don’t run out of cash when uncertainties occur.

Productivity Plan

My financial goal is to save $25000 for education. I plan to achieve this goal within three years. I have prepared my budget for the amount I intend to spend within these three years, including the amount that I intend to save each year. When creating my budget and financial plan, the first step I took was to creating a spreadsheet where I documented my annual expenses, income, and goals. After listing my goals in step two, I researched the costs of each goal and analyzed them based on my annual income. In step three and four, I entered the various elements of my budget in the spreadsheet I created in step two. In step four and five, I determined my yearly expenses by reviewing my credit card and bank statements. I adjusted my budgeted expenses using the 50/20/30 guideline in step six to determine the surplus that I can use for savings. In the last step I select the goal that matches the savings amount possible and enter the goal savings amount in the budget spreadsheet.

Financial Savings Goal and Time Frame

My financial goal is to save $25,000 for education (personal, child, family, etc.) over a time frame of two years. The goal that matches the savings amount possible is education. I will save $25,000 for education within three years. My desire is to advance my education. I will reduce my expenditures on house rent, entertainment, fast food, and imported food. I chose to save $25,000 in three years time to make my goal realistic. Depending on my current expenditures, it would be unrealistic to save $25,000 in less than three years. Therefore, I decided to save for three years to ensure that I achieve my goal.

Housing Choice

My housing option is to rent an apartment for $12,000 per year. My annual income is $97,000 and I am not expecting any change to my income within the three years that I intend to save for education. Currently, I am renting a house in an apartment. My monthly rent is $2000, which amounts to $24,000 a year. I will shift to a cheaper house where I will pay a rent of $1900 per month ($22,800 annually). By making this change, I will save $1, 200 a year, which will help me to achieve my financial goal.

Non-Rent Expenditures

Since I aim at saving $25,000 in three years (approximately $8,334) a year, I will cut my expenditures on; entertainment (from $5000 to $3025), fast food (from 4000 to 2000), imported food (from 2000 to 1200), and family care from (21000 to 18900). I will increase my expenditures for natural food from $8000 to$10, 400 to compensate for decrease in the expenditures on fast food and imported food. These adjustments will help me save $8348 a year amounting to $25,044 by the end of year 3. I reached the conclusion to cut these expenditures after analyzing my spending habits. Planning helped me to know the areas that I can make adjustments. By being effective in planning, I determined the best way of achieving my goal.

Reflection on Productivity Planning

They step by step plan allowed me to basically look into things that meant the most of what I needed and what I did not. In sometime we tent to go without to make a better sense of it all and sooner rather than later you are able to see growth.

The instructions for the excel spreadsheet is listed below.

BREAK DOWN YOUR ANNUAL PLAN

To create the three monthly budgets for this assignment, you will need to break down your annual expenses into monthly amounts. The budget you created for Assignment 2 is for 12 months, so you will simply divide each budgeted amount by 12 to calculate the amount for 1 month. You will then enter these monthly amounts into the Assignment 3 spreadsheet that you will download later on this page.

To create the three monthly budgets, you will need the annual amounts you budgeted as part of Assignment 2. You will then divide each annual budgeted amount by 12 to calculate the amounts for 1 month.

Locate the spreadsheet template file in your computer’s Downloads folder and open the file using Microsoft Excel. (If it opens in Protected View, click “Enable Editing” in the toolbar at the top of the window.)
Save the spreadsheet to your Documents folder or another folder you like. Name the file “Lastname_ECO110_A3” adding your last name as part of the filename so that you can find it later.

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