Personal Financial Planning Methods
3. Explain the life cycle of financial plans and their role in achieving your financial goals.
a. Different stages of life determine different financial plans and goals. As we enter adulthood, it becomes all more apparent that financial planning is essential to daily life. Examples of things to financially plan for are a house, family, healthcare, etc. By planning finances, it allows the opportunity to map out goals and future aspirations in a way that is economically feasible.
4. Summarize current and projected trends in the economy with regard to GDP growth, unemployment, and inflation. How should you use this information to make personal financial and career planning …show more content…
If the economy is booming and doing well then the GDP will increase (direct correlation). Unemployment is low whenever the GDP is slow. Currently, unemployment is pretty low. Inflation raises the price of goods and decrease the value of money. Inflation is the most important of the 3 to think about when planning financially. Inflation can result in higher mortage rates, rent, monthly payments, etc. Unemployment and GDP can also make an impact on what to financially plan for. If unemployment is high, it is a good idea to save up.
5. Evaluate the impact of age, education, and geographic location on personal income.
a. Age, education, and geographic location can all play a role in personal income. Lower income tends to be seen in very young and very old populations. IN addition, the more educated you are, the more of an asset you are seen to be for a company (and, thus, paid more). Geographic location can make a difference, as well. If you are in an area that is known for agriculture but has had an environmental crisis, it can cause an impact.
6. Assume that you graduated from college with a major in marketing and took a job with a large consumer products company. After three years, you are laid off when the company downsizes. Describe the steps you’d take to “repackage” yourself for another …show more content…
Why? g. Demonstrate the differences resulting from a $1,000 tax credit versus a $1,000 tax deduc- tion for a single taxpayer in the 25 percent tax bracket with $40,000 of pre-tax income.
1. Deductions are reductions in the amount of taxable income. So, if you are in the 25% bracket and made a $1,000 the income would be $250 reduction. Whereas, a tax credit is an exact dollar amount that is given to reduce tax liability. So, this person would have a full $1000 reduction if given a tax credit. h. Steve and Beth Compton have been notified that they are being audited. What should they do to prepare for the audit?
1. Steve and Beth need to make sure that all of their income has been properly reported and that all deductions claimed are properly reported (For the correct amount). If any deductions were reported, Steve and Beth will need to make sure that they have receipts for all deductions. They should meet with the IRS and if something is not right file a formal appeal.