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.
Introduction
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).
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, January 4). 5 types of budgets and how to make one that actually works for you. MarketWatch. https://www.marketwatch.com/story/5-types-of-budgets-and-how-to-make-one-that-actually-works-for-you-2019-01-03
Hill, C. (2018, December 17). This is the no. 1 reason Americans are so stressed out. MarketWatch. https://www.marketwatch.com/story/one-big-reason-americans-are-so-stressed-and-unhealthy-2018-10-1
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 Templat 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.
