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, providing a rationale for your choices.
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Introduction
Note: Assessment 3 builds on Assessment 2; you are strongly advised to complete Assessment 2 before beginning 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 our economy and the rising cost of living. Yet there are financial planning measures you can use 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 to help build your financial well-being. Understanding how to create a financial plan based on economic trends and your personal goals will make you more productive toward reaching those goals and help free you from the trap of endless financial stress. It’s impossible 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 the future.
This assessment will help you practice your productivity skill through the use of planning and templates to increase efficiency—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 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. Following are some common third-party applications that professionals use to track their expenses. (Note: These tools are not 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 uncomfortable 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.
- 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. Following are some common third-party applications that professionals use to track their expenses. (Note: These tools are not 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 uncomfortable transmitting your personal information, do not use the tool.)
- 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, you’re bound to find 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 their daily latte to add more to their weekly savings, but another person may really need that 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 additional education, a night out at a cool new restaurant, or a vacation to Mexico. Everyone has goals. The more specific your goals, the more focused and motivated you’ll be to achieve them by saving, paying off debt, and growing your funds.
- Try the 50/20/30 rule to organize your income:
- 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’ll 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 hard to attend to 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 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 complex 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 five 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.
- 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:
- 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 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 circumstances and 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.
- 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 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 circumstances and come up with unique solutions to problems.
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: Please be sure to complete Assessment 2 before beginning Assessment 3.
Overview
Figuring out how exactly to save toward our financial goals can be challenging, 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 following scenario for the assessment context as well as the Assessment 2 Excel Template [XLSX] and Assessment 2 Word Template [DOCX]. The completed templates will be your deliverables for this assessment. Do not create your own version of this template. You must download these templates and fill them in as part of your analysis. Make sure you have populated all sections of the Excel template and are providing at least one 4–7 sentence paragraph per section in the Word template.
Scenario
You were offered a promotion in another city. You must consider whether to turn your home into an investment (rental) property or sell it. Consider what each option implies for your ability to purchase a new home in a new city. Do you need to rent first in your new city? Or can you buy 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. Pay attention to the cells that are marked for you to populate and those you should not modify. Then, complete the Assessment 2 Word Template to reflect on the choices you made in your financial plan and why you made them, as well the productivity strategies you used during the process. Remember to submit in both completed templates when finished.
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:
- Use the Assessment 2 Excel Template to create your financial plan. Important: Pay attention to cells with red triangles at the upper right corner. They contain helpful comments for your budgeting or data entry.
- Complete your annual budget in the Excel template. Remember to edit only the cells that have been designated for you to edit.
- Select one of the following goals:
- 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.
- 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 this cost 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.
- Rent, then buy a home in your new city.
- Use the Internet to identify a suitable rental property as well as a property to purchase.
- Estimate how long you will be paying the expense of your original home plus the expense of your home or rental 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.
- Use the Internet to identify a suitable rental property as well as a property to purchase.
- Buy a home in your new city.
- 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 currently own a home, assume you still owe 65 percent of the home value on your mortgage.
- To determine the amount of rent you could expect to collect on your home, use the Internet to research rental prices of similar houses 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.
- 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. Choose a career field and research that field and its salary information for your role.
- Identify a realistic time frame for reaching your new housing goal.
- Use the Assessment 2 Word Template to complete this and next steps. Consider the housing goal from your financial plan. Report a realistic time frame for reaching this goal.
- What is your time frame for reaching your new housing goal?
- How did you determine the time frame? Think about how long you expect it to sell or rent your current home, the price of purchasing or renting in your new city, and so on.
- Use research from the course readings or outside sources to support your time frame.
- Explain your choice of housing and how it supports achieving the selected financial goal based solely on expense consideration (both housing- and nonhousing-related expenses).
- Look at your goal, decision about what to do with your original home, and the other expenditures you chose in your financial plan.
- Explain why you chose the housing option you did (what you did with your original home as well as your housing goal in your new city).
- Discuss how your other expenditure decisions help you reach your housing goal in your new city.
- Reflect on the productivity strategies used to break down the financial plan into smaller steps to help stay organized and productive.
- 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.
- Convey purpose in an appropriate tone and style, incorporating supporting evidence and adhering to organizational, professional, and scholarly writing standards.
- Review your assessment to ensure your written responses are relevant, clear, and address the prompts in the template thoroughly.
Submit your completed Assessment 2 Excel Template and Assessment 2 Word Template.
Competencies Measured
By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and scoring guide 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 from sale of home, or profit from rental revenue.
- Identify a realistic time frame for reaching a new housing goal.
- Explain a choice of housing and how it supports achieving a financial goal based solely on consideration of housing- and nonhousing-related expenses.
- Reflect on strategies used to break down a financial plan into smaller steps to maintain organization and productivity.
- 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.
Resources
Use the resources linked below to help complete this assessment.
Budgeting, Financial Plans, and Well-Being
A financial plan is a key tool in your financial well-being toolbox. It’s similar to a budget, as it looks at your income and expenditures; however, financial plans also take goals into account and project changes in known variables such as the value of assets or planned large expenditures. A budget is often needed before beginning a financial plan. Having a budget and a plan can help you manage your time and productivity, which in turn can improve your well-being. The following resources will help you build an understanding of these items and complete this assessment.
- Careeronestop. (n.d.). https://www.careeronestop.org/
- Assessment 2: Budgeting, Financial Plans, and Well-Being reading list.
- The 80/20 Rule [PDF].
- This reading will help you explore a powerful strategy for budgeting your time, which can be a key consideration in managing your well-being.
- U.S. Department of Labor, Employment and Training Administration. (n.d.). O*Net Online. https://www.onetonline.org/
- Your Productivity Toolbox [PDF].
- This toolbox is designed to remind you what being productive looks like and will show you ways to increase productivity in your everyday life.
Personal Finance, Housing, and Real Estate
Personal finances are usually closely related to housing situations. Understanding housing options and how housing choices are tied to our finances is key for any financial planning. The following resources will help to build your understanding of these topics and prepare you to complete this assessment.
- Boies, C. & Lord Fairfax Community College. (n.d.).Personal finance. Lumen Learning.
- Read Part IX. Module 8: Investment.
- Read Part VI. Module 5: Housing.
- Capella Stories: 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.
- 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. 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.
- Assessment 2: The Impact of Single-Family Rental REITs on Regional Housing Markets: A Case Study of Nashville, TN reading list.
- Putting Agility to Work [PDF].
- Discover further successful strategies for strengthening your agility skill.
- Real Talk: Eat the Frog!
- Mark Twain reportedly said, “If your job is to eat a frog, it’s best to do it first thing in the morning,” meaning that if you have something hard to do, it’s best to tackle it first. In this video, Nicole Lapin shows how prioritizing the most unappealing tasks can have real benefits for your productivity.
