Exam 1: Tools for Financial Planning - Planning with Personal Financial Statements

It is possible to budget for irregular expenses paid infrequently.

Student loans,car loans,and mortgages are likely examples of

Which is an example of a possible unanticipated cash flow shortage?

If JT's gross income is $50 000,disposable income is $36 000,and he saves $5000 annually,his savings ratio is 10%.

In order to have a successful budget experience,you must use both the envelope and the pay yourself first methods.

Which of the following would increase your net worth (all else the same)?

Current liabilities include all of the following except

Liabilities can be calculated by

Which cash inflow will probably be discontinued after retirement?

Ben's salary is $3000 per month,taxes are $500,fixed expenses are $1500 and savings are $500.His disposable income is

What is the purpose of creating your personal cash flow statement?

Jason is a stockbroker who is on variable compensation.In good years he receives a healthy bonus that might triple his base salary.During these times he is accustomed to a lavish lifestyle,driving expensive cars and taking exotic vacations.He knows it is important to save for retirement but he makes RRSP contributions only in years in which he receives good bonus cheques.In poor years he will receive only a base salary.During these poor years he finds himself scrambling to pay off debts and meet monthly expenses. He always seems to have more unexpected expenses during these times,too.He always has at least $1000 cash in his wallet and tries to avoid the use of credit cards as much as possible.Jason is funding all short-term goals with current earnings and hasn't set any mid- or long-term goals. He is frustrated by his wildly fluctuating income and his constant concern about his potential earnings at the beginning of each year.How can you assist Jason?

Robert feels his personal finance is not so healthy in terms of managing debt.He has a $12000 credit card liability,a $10000 car loan,and a $300 000 mortgage liability.Robert possesses a car worth $12000 and a house worth $388000.What is Robert's debt-to-asset ratio?

What error do many individuals make in budgeting?

Which of the following has the best debt-to-asset ratio?

If your net worth is not improving over time,you can use your budget to

What is a practical way to make sure you stay within your budget and achieve your savings goals?

Use an example with numbers to illustrate how someone's net worth could increase over a year while their cash flow was negative.

Paying $2000 to reduce your car loan to $5000 would increase your debt-to-asset ratio (all else being equal).

People who have very high incomes are much better savers than those with moderate incomes.