ECO FP1100 Capella University Economics Financial Plans

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Economics

ECO FP1100

Capella University

ECO

Description

  • Develop a personal financial plan in a scenario where you are moving to another city and must decide what to do with your current house, as well as your housing options in the new city. Complete a budget based on your decisions and projected new income, as well as explain your rationale for the choices that you made.Note: Assessments 2 and 3 build on each other. Please complete Assessment 2 before completing Assessment 3.

    Planning for Peace of Mind

    When #WithMyNextPaycheckIWill first began trending on Twitter, instead of the usual witty responses, most retweets lamented about the daily financial struggle of living paycheck to paycheck in the United States. The vicious cycle of working just to pay bills, while never getting ahead, is an effect of both our economy and the rising cost of living. Yet, there are financial planning measures you can use in your own life to help you take control of your finances and your future.By learning how to build a financial plan, you will equip with yourself with a tool and an approach to help build your financial well-being. Understanding how to create a financial plan based on both economic trends and your personal goals will not only make you more productive toward reaching those goals, it can also help free you from the trap of endless financial stress. It isn’t possible to plan for all of life’s challenges and surprises, though, so you'll need to use your agility skill to weather the uncertainties and adapt your plan so you can feel confident that you’re prepared for your future.This assessment will help you practice your productivity skill (by using planning and templates to help you be more efficient) and your agility skill (as you practice responding to a sudden life change in the scenario).SHOW LESS

    Getting Started With a Financial Plan

    As you begin assembling your financial plan in this course, here are some simple techniques you can use to improve your productivity and reach your financial goals:
    • Track expenses and income.
      • If you want to see where your money is going rather than merely guessing, you can keep a daily record of all your financial transactions, including paychecks and bills. Here are some common third-party applications that professionals use to track their expenses. (Note: These are only recommended tools and do not represent tools that are specifically endorsed by Capella. Use of any of these tools is entirely at the user’s risk and may involve the transmission of personal information. If you are not comfortable transmitting your personal information, do not use the tool.)
        • Mint: A budget management tool that syncs with your accounts to track spending.
        • PocketGuard: Gives you a snapshot of how much you can spend at any moment.
        • Clarity Money: Tracks your spending and online subscriptions.
        • Excel: Allows you to build, track, assess, and visualize budgets from the ground up.
    • Reduce your expenses.
      • Could you cut back on takeout lunches or negotiate a better data plan with your cell phone company? Once you start looking at how you’re spending, there are bound to be ways to save. For instance, you may be able to receive a lower interest rate on your credit card simply by asking.
    • Consider your values.
      • To keep a balanced budget, you will need to make decisions around regular spending versus achieving your goals. One person may be fine cutting out the fancy latte to add more to their weekly savings, but another person may really need that daily reward to keep them motivated. Once you have a sense of how the items in your financial plan rank in relation to each other, you can more effectively plan for your future.
    • Set financial goals.
      • Maybe, you want to pay for an extra degree, a night out at a cool new restaurant, or a vacation to Mexico. Everyone has goals. The more specific yours are in your plan, the more focused and motivated you’ll be to make it happen by saving, paying off debt, and growing your funds.
    • Try the 50/20/30 rule.
      • This easy-to-follow budget organizes your income like this:
        • 50 percent for fixed expenses.
        • 20 percent for financial goals.
        • 30 percent for variable expenses (Hayes, 2019).
    These simple techniques will not only bolster your personal financial plan; they will help you stay on track to achieving the future you want to earn

    Financial Planning for Peace of Mind

    Financial uncertainty is the single greatest stressor in Americans’ lives. When you’re stressed, it’s difficult to stay productive toward your personal and professional goals because your mind is busy focusing on that stress. A financial plan can help you improve your overall well-being and eliminate stressors that get in the way of productivity. And there are a number of daily practices you can also use to take control of the stressors in your life (Hill, 2018).
    • Exercise.
      • Getting your blood pumping at least 30 minutes each day will help your mental clarity and focus during work. It doesn’t have to be all at once, or even athletic; you can walk the dog or play with your kids.
    • Reward yourself.
      • We are motivated by rewards, even small ones. Find little ways to push yourself to stay productive, like treating yourself to a morning muffin.
    • Limit your online distractions.
      • It’s challenging not to get sucked into the latest posts or headlines when you’re trying to get work done. You can limit your Internet distractions by reducing how often you check your e-mail or social media posts.
    • Take short, strategic breaks.
      • Taking breaks every 90 minutes has been proven to keep your brain more relaxed and refreshed. Don’t break for too long, though, or you may lose sight of what you were working on. A 10–15-minute break will keep you sharp.
    • Tap into your body’s rhythm.
      • Learning to ride your natural wave of energy throughout the day can help you stay productive. For many people, working on bigger tasks early in the morning is best because they are more alert and focused.
    • Don’t ignore burnout.
      • Balancing your work and life is sometimes difficult to manage, but being honest with yourself and paying attention to your body can keep you from feeling stuck or getting sick. Here are some tips to avoid burnout:
        • Make sure you’re getting enough sleep.
        • Avoid foods that make you feel too tired or full.
        • Go outdoors at least once every day, even for 5 minutes.
        • Focus on what you’re passionate about.
        • Modify what you can to feel fulfilled, but don’t get hung up on things you can’t control.
    • Adopt an agile mindset.
      • All of the stresses and worries in our life can spin out of control, crowd our mind, and stifle our success. Protect your mental agility by worrying less about what others think or things you can’t control, asking questions when you need help, trying new things that push you outside of your comfort zone, and reducing negative self-talk. By staying mentally flexible, you’ll find it easier to adapt your mind to new scenarios and to come up with unique solutions to problems.
        • You can discover further successful strategies for strengthening your agility skill in the Put Agility to Work media in the Resources.
    By taking control of your personal well-being, you’re setting yourself up to stay productive at home, work, and school.
    References
    Hayes, M. (2019). 5 types of budgets and how to make one that actually works for you. Retrieved from https://www.marketwatch.com/story/5-types-of-budgets-and-how-to-make-one-that-actually-works-for-you-2019-01-03Hill, C. (2018). This is the no. 1 reason Americans are so stressed out. Retrieved from https://www.marketwatch.com/story/one-big-reason-a...
    Competency Map
    CHECK YOUR PROGRESSUse this online tool to track your performance and progress through your course.
  • Toggle Drawer

    Resources

    Budgeting, Financial Plans, and Well-Being

    A key tool in your financial well-being toolbox is a financial plan. A financial plan is similar to a budget as it looks at your income and expenditures. However, financial plans also take into account forward-looking goals, as well as projecting known variables such as the value of assets or planned large expenditures. Also, knowing your budget is often a needed starting point for creating a financial plan. Having a budget and a plan can help you manage your time and productivity, which can help improve your well-being. The following resources will help you build an understanding of these items, as well as help you to complete this assessment.SHOW LESS

    Personal Finance, Housing, and Real Estate

    For many, personal finances are closely tied to our housing situation. Understanding housing options, and the how choices related to housing options are tied to our finances, is key for making any financial plans. The following resources will help to build your understanding of these topics and prepare you to complete this assessment.
    • Grable, J. E., & Palmer, L. (2019). Introduction to personal finance: Beginning your personal journey. Hoboken, NJ: Wiley. Available in the courseroom via the VitalSource Bookshelf link.
      • Chapter 6, "Loans and Housing Decisions."
      • Chapter 8, "Investments."
        • Section 9, "Investing in Real Estate."
    • Chilton, K., Silverman, R. M., Chaudhrey, R., & Wang, C. (2018). The impact of single-family rental REITs on regional housing markets: A case study of Nashville, TN. Societies, 8(4), 93–103.
    • Putting Agility to Work [PDF].
      • Discover further successful strategies for strengthening your agility skill.
    • Real Talk: Eat the Frog!
      • Mark Twain once said, “If your job is to eat a frog, it’s best to do it first thing in the morning.” Because, if you have something hard to do, it’s best to tackle it first. In this media, Nicole Lapin breaks down Mark Twain’s classic advice and demonstrates how eating the frog or tackling the most unappetizing tasks—for example, doing your taxes—has real-world benefits that will increase your productivity.
      Capella Talks: Be Productive: Your Spending Plan Is Your Friend.
      • In this video, Nicole Lapin shares the strategies that made her more productive with her own spending. And, you’ll learn one way to create a spending plan that fits your life, stays within your budget, and still allows for extras. By putting a plan in place to manage your money, you’ll be on the most productive path to reaching your financial goals.
    • Capella Talks: 50 Dollars a Week: Saving for Your Dream Investment.
      • In this video, friends from Philadelphia take the road to financial freedom when they team up to strengthen their productivity by purchasing an investment property.
  • Assessment Instructions

    Note: Assessments 2 and 3 build on each other. Please complete Assessment 2 before completing Assessment 3.

    Overview

    We all have financial goals and it can be challenging to figure out how exactly to save toward these goals, given the numerous expenses of daily living. A financial plan helps you identify how you can reach your short- and long-term goals, and leverage planning and organization strategies to make meaningful, incremental progress toward realizing these goals. This assessment gives you the opportunity to apply what you’ve learned about personal financial planning, productivity strategies, and the use of Excel to develop a personal financial plan aligned to your financial goals.Build your productivity skill by creating a plan for reaching a specific financial goal within an identified time frame. You will use productivity strategies to break financial planning into manageable, organized steps, and use Excel to develop a realistic plan that is aligned to your financial goal and considers economic drivers, requirements, and resources.

    Preparation

    Read the scenario below to understand the context for this assessment. Review the Assessment 2 Excel Template [XLSX] and Assessment 2 Word Template [DOCX]. These completed templates will be your deliverables for this assessment. Make sure you have completed all sections of the Excel template and are providing at least one paragraph (4–7 sentences) per section in the Word template.
    Scenario
    You were offered a promotion in another city. You need to consider whether to turn your home into an investment (rental) property or sell it. In both scenarios, consider what this will do to your ability to purchase a new home in a new city. Do you need to rent first in your new city? Or can you make the purchase of a new home?Congratulations on your promotion!

    Instructions

    Using what you have learned about budgeting, financial planning, and Excel, complete the Assessment 2 Excel Template [XLSX]. Pay attention to the cells that are marked for you to fill in versus those that you should not modify. Then, complete the Assessment 2 Word Template [DOCX] to explain and reflect on your rationale for the choices you made in your financial plan, as well as reflect on the productivity strategies you used during the process. Remember to turn in both completed templates once you are finished.For this assessment, complete the following steps:
    • Step 1: Use the Assessment 2 Excel Template [XLSX] to create your financial plan. Pay attention to cells with red triangles on the top right corner. These indicate that there are comments (notes) that could help you in your budgeting or data entry.
      • Scoring guide criteria: Create a personal financial plan that estimates new salary and housing options: value of home, profit for sale of home, or profit from rental revenue.
        • 1a: Identify an annual income as a starting point for your financial plan. Use an annual income value that you feel comfortable using for this assessment.
          • You can find the average or median income of career fields at Careeronestop and O*Net Online. Consider what career field you would want your promotion to be in and then research it and its salary information.
        • 1b: Consider the value of your home. This includes a fair market value estimate and potential profit from sale of your home or revenue from rent that you could expect.
          • If you do not currently own a home, use the median home value for your area.
            • Use the Internet to research median home values in your area.
          • If you do not currently own a home, assume you still owe 65 percent of the home value on your mortgage.
          • For finding out the amount of rent you could expect to collect on your home, use the Internet to research rental prices of similar homes in your area.
            • If you do not own a home, research potential rental income based on properties for rent that are similar to the average home in your area.
        • 1c: Select one of the following goals:
          • Option 1: Buy a home in your new city.
            • Use the Internet to find a home that you like and would fit your family's needs.
            • Deduct the profit (from sale of home or rental property revenue). Enter that cost in expenditures.
            • See comments (notes) in the cells about making this calculation.
            Option 2: Rent a home in your new city.
            • Use the Internet to find a home that you like and would fit your family's needs.
            • Estimate what this cost is by deducting your profit (from sale of home or rental property revenue). Enter that cost in expenditures.
            • See comments (notes) in the cells about making this calculation.
            Option 3: Rent, then buy a home in your new city.
            • Use the Internet to identify a rental property and property to purchase that would both fit your family's needs.
              • Estimate how long you will be paying expense of your original home plus the expense of your home or rent in the new city. Enter that cost in expenditures.
              • Consider how many months you would be renting before purchasing a home.
              • See comments (notes) in the cells about making this calculation.
          1d: Complete your annual budget in the Excel template. Remember to only edit the cells that have been marked for you to edit.
    • Step 2: To complete this and next steps, use the Assessment 2 Word Template [DOCX]. Consider the housing goal from your financial plan. Report a realistic time frame for reaching this goal.
      • Scoring guide criteria: Identify a realistic time frame for reaching new housing goal.
        • What is your time frame for reaching your new housing goal?
          • How did you arrive at this? Think about how long you expect it to sell or rent your current home, the price of purchasing or renting in your new city, et cetera.
            • Use research from the course resources or outside sources to support your time frame.
    • Step 3: Look at your goal, decision about what to do with your original home, and the other expenditures you chose in your financial plan. Write about why you chose the housing option you did (both in terms how what you did with your original home and you housing goal in your new city). Also, discuss how your other expenditure decisions help support achieving your housing goal in your new city.
      • Scoring guide criteria: Explain choice of housing option and how it supports achieving the selected financial goal based solely on expense consideration (both housing and non-housing related expenses).
    • Step 4: Think about the productivity resources that were presented in the course. Then, think about the process you used for completing your financial plan. Write about how you used one or more of the productivity strategies or resources to help you create a more effective and/or organized process for researching and completing your financial plan.
      • Scoring guide criteria: Reflect on the productivity strategies one used to break down the financial plan into smaller steps to help stay organized and productive.
    • Step 5: Review your assessment to ensure your written responses are relevant and clear and that you are thoroughly addressing the prompts in the template.
      • Scoring guide criteria: Convey purpose in an appropriate tone and style, incorporating supporting evidence and adhering to organizational, professional, and scholarly writing standards.
    Remember, you need to submit both the completed Assessment 2 Excel Template and Assessment 2 Word Template for this assessment.
    Additional Requirements
    Your assessment should also follow the following requirements:
    • Written communication: Communicate in a manner that is scholarly, professional, respectful, and consistent with expectations for professional practice in education. Original work and critical thinking are required regarding your assessment and scholarly writing. Your writing must be free of errors that detract from the overall message.
    • Font and font size: Times New Roman, 12 point.
    • Sources: Two sources are required. One of these sources can be one of the course readings or videos. The second source must be obtained from the Capella library databases.

    Competencies Measured

    By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:
    • Competency 2: Develop financial plans to manage budgets and economic goals, while considering economic drivers, necessary resources, and uncertainty.
      • Create a personal financial plan that estimates new salary and housing options: value of home, profit for sale of home, or profit from rental revenue.
      • Identify a realistic time frame for reaching new housing goal.
      • Explain choice of housing option and how it supports achieving the selected financial goal based solely on expense consideration (both housing and non-housing related expenses).
      • Reflect on the productivity strategies one used to break down the financial plan into smaller steps to help stay organized and productive.
    • Competency 5: Develop professional written communication in a well-organized text, incorporating appropriate evidence and tone in grammatically sound sentences.
      • Convey purpose in an appropriate tone and style, incorporating supporting evidence and adhering to organizational, professional, and scholarly writing standards.

Unformatted Attachment Preview

ECO-FP1100: Assessment 2 Do not edit Color Coding =Edit these cells =These info will populate STEP 1d Budget in Year 1 Revenue REVENUE Income STEP 1a Annual $ New Annual Salary Income Salary Dollars $ Sale of Home or Rental Income Total Revenue in Yr 1 $ Expenses STEP 1b Consider what the value of the home is: Current Home Fair Market Value Estimate Option 1 Profit from Home Sale or… Option 2 Revenue from Rent Dollars EXPENSE STEP 1c Annual $ Option 1 Option 2 Option 3 Buy a Home in new city Rent a Home in new city Rent, then buy in new city Total - Housing Food Utilities Transportation Taxes Debt Payment or Savings Soc.Security, Personal Ins., 401k Health Care Entertainment Apparel Miscellaneous Personnel care Moving Expense Percent #DIV/0! #DIV/0! - #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! Average %-Suggested NA 10% 11% 14% 12% 8% 9% 6% 4% 3% 1% 1% NA Assessment 2 Instructions: 1.What is your new salary? Enter this amount in cell E10 (under Step 1a). 2. Establish what your housing options are. Put the dollar number for the home value in cell E15 based on your research (see Step 1b). a. Sell your home. What is the estimated net profit? Put the dollar number in cell E16 b. Turn your current home into a rental (investment) property. What is the annual rent amount? Put the dollar number in cell E17. c. Think about what your new job is and what the salary is for this role. What city are are you selling your home in and where are you moving to? This will help you research home values and help you set you 3. Let's estimate some revenues to decide later what the best plan is based solely on Expenses (Step 1c): A. Option 1: Buy a Home in new city? Deduct the profit (from sale of home or rental property revenue). Enter that cost in cell E21. B. Option 2: Rent a Home in new city? Estimate what this cost is by deducting your profit (from sale of home or rental property revenue). Enter that cost in cell E22. C. Option 3: Rent for a short amount of time, then buy a home in new city? Estimate how long you will be paying expense of your original home plus the expense of your home/rent in t 4. Complete your budget (Go to Step 1d) and fill in yellow cells. Play with the options. Which housing option ends up being the best fit for your overall budget? e plus the expense of your home/rent in the new city. Enter that cost in E23. ECO-FP1100 Assessment 2 Word Template While writing responses to the prompts below, you may need to refer back to the budget you created in the Assessment 2 Excel Template. Make sure you have completed your budget before completing this portion of the assessment. Questions 1. Identify the savings goal and the time frame you determined for reaching your goal. Why is the time frame you identified realistic? How did you arrive at this? Think about how long you expect it to sell or rent your current home, the price of purchasing or renting in your New City, et cetera. Use research from the course reading or outside sources to support your time frame. [Write your response to question 1 here.] 2. Explain why you chose the housing option you did and how it will help you achieve your selected financial goal. a. What considerations, if any, did you give to the following when selecting your housing option? i. Time frame for savings goal. ii. Familial situation. iii. Quality of life. iv. Trade-off decisions. v. Other considerations. [Write your response to question 2 here.] 3. Explain your choices for non-rent expenditures and how they will help achieve your savings goal within the time frame. a. How did you make the choices you did regarding non-housing expenditures? b. How do your expenditures align with the financial goal you selected? [Write your response to question 3 here.] 4. Reflect on the productivity strategies you used to break down your financial plan into smaller steps to help you stay organized and productive. a. How closely did you follow the plan you thought through earlier in the assessment instructions? b. How did a step-by-step and organized approach help you to adjust your financial priorities and financial plan? c. How did the approach you use draw upon productivity strategies that you had previously learned? [Write your response to question 4 here.] 5. Reflect on what your financial analysis might reasonably look like in a year, taking into account income growth and inflation of consumer prices. 1 ECO-FP1100 a. What assumptions can you make about your income from your new position in a year’s time? i. What other sources of income might you have? b. How is inflation likely to impact your non-housing expenditures? c. How will your financial plan look depending on the situation with your new housing and your previous home? d. What other economic concepts will you take into account? How might they impact your financial analysis a year from now? 2
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Explanation & Answer

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PERSONAL FINANCIAL PLAN
DECISIONS
Option 3: Rent, then buy a home in your new city.
First, I will choose to lease the current house, and the income generated from it will be used in
paying rents in the new city. The current house will generate an average of 1600 USD a month,
and assuming that the new house will cost a higher price of about 1800 USD for a 3-bedroom
house. Leasing the house and not selling it is because the current house can still act as a source of
income, and since the house in the new city is assumed to be quite expensive, the earnings from
my previous house will help lower my expenses in the new city.
The cost of buying a 3-bedroom house is around 20000$ for a medium house, thus for my
monthly salary of 5316$, and from the leasing of my house for 1600 $will give me a total of
6916$ a month.
Time frame
From the financial plan, I have a total expenditure of 5204 and savings of 342.368, and if I am to
save to purchase a new home, I will then have to save up to 58 months so as to purchase my new
home.
Strategies to improving income
INCOMES AND EXPENSES, I will watch over expenses in the new city and compare them to
monthly income. I will consider ways of reducing expenses, for example, choosing an estate
where housing is not more than my budgeted amount, and also consider the transport cost. I will
also ensure that I save at least 20% of the monthly income.
PROJECTED INCOME.
The assumption, the net income will be higher compared to the previous one. I will need to set
new goals, e.g., investing and saving.
FINANCIAL GOALS
For the financial plan to be effective, I will consider doing the following financial goals.
Identify the main source of income and find ways of improving it- either by working hard and
putting in more efforts so as to obtain more income.
Organize expenses, i.e., fixed expenses, such as rent, electricity, and water bills, and variable
expenses such as telephone rate, food clothing's and transport in order of priority
Consider ways of reducing variable expenses, e.g., use public transport instead of using a taxi.
Open a trading platform- there are several trading platforms where I can be offered a chance to
trade. With as little as 10$, I can trade on gold, bitcoins, silver, etc., and get some cash at the end
of it.

Start an online trading business- I can make an extra shilling by selling products online such as
women's clothes, perfumes, online food kiosks, etc.
Charity platform- giving back to society is one form of satisfaction, too; with the little profit that
I am able to make, I can support a charity home or buy food for the street families.
Savings account- for the purpose of the future, saving is necessary; saving as little as 20% of the
total incomes will help in catering for emergency problems that may come up or for days that I
will not be able to make any income.
Insurance- insurance is one of the best ways of reducing financial uncertainties and making
accidental losses manageable. This will help to create emergency funds for unexpected expenses
such as sudden illness, theft, inflation.
Avoid unbudgeted expenses- one way of wasting money is purchasing when not have planned. I
should have a clear plan on the things I am to purchase and those that I am not to.
FINANCIAL PLANNING FOR PEACE OF MIND
A financial plan can help me improve my overall well-being and eliminate stressors that get in
the way of productivity. And there are a number of daily practices I can also use to take control
of the stressors in life.
Exercise- this helps to make the body fit; morning exercises and meditations always prove
effective.
Getting your blood pumping...


Anonymous
Really great stuff, couldn't ask for more.

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