By examining the spreadsheet below, what part of the financial plan might be missing?
| | | B |
|---:|:---------------------|--------:|
| 1 | Cash Inflows | |
| 2 | Disposable income | $7,350 |
| 3 | Interest on deposits | $80 |
| 4 | Income from investments | $50 |
| 5 | Total Cash Inflow | $7,480 |
| 6 | | |
| 7 | Cash outflows | |
| 8 | Mortgage | $4,500 |
| 9 | Cell phone | $125 |
| 10| Car payment | $515 |
| 11| Savings account | $150 |
| 12| Investments | $200 |
| 13| Retirement plan | $1,100 |
| 14| Groceries | $300 |
| 15| Recreation | $200 |
| 10| Totai Cash Outfiow | $7,090 |
A. plan for managing income
B. plan for financing
C. plan for protecting assets
D. plan for retirement
Answer (2)
The spreadsheet details cash inflows and outflows, covering income management and some financing aspects.
Retirement planning is addressed through contributions to a retirement plan.
The spreadsheet lacks explicit strategies for protecting assets against unforeseen events.
Therefore, the missing part of the financial plan is a plan for protecting assets. c
Explanation
Analyzing the Spreadsheet The spreadsheet provides a snapshot of cash inflows and outflows, which helps in understanding income management. It also shows how money is being allocated to savings, investments, and retirement, indicating some level of financial planning. However, it doesn't explicitly detail how assets are protected against unforeseen events.
Identifying Missing Components The spreadsheet includes income (disposable income, interest, investments) and expenses (mortgage, cell phone, car payment, etc.). This covers managing income and some aspects of financing (mortgage, car payment). Retirement planning is also present (retirement plan contribution). The area that seems least addressed is protecting assets.
Determining the Missing Part A comprehensive financial plan includes managing income, financing, protecting assets, and planning for retirement. The spreadsheet shows income management (cash inflows), financing (mortgage, car payment), and retirement planning. However, there's no explicit mention of insurance (health, life, property), emergency funds beyond the savings account, or other measures to protect assets from risks like lawsuits or major unexpected expenses.
Concluding the Missing Part Based on the analysis, the most apparent missing part of the financial plan is a plan for protecting assets. This involves strategies and tools to safeguard one's financial resources against potential risks and losses, which are not explicitly detailed in the provided spreadsheet.
Examples
Imagine you're building a house. You have a budget (managing income), a loan (financing), and a retirement fund (retirement plan). But what if a storm damages your house? Protecting your assets is like having insurance for your house – it safeguards your financial well-being against unexpected events, ensuring that a single incident doesn't wipe out your savings and investments. This could include insurance policies, emergency funds, and legal protections.
The spreadsheet lacks a clear plan for protecting assets, which is an essential part of a comprehensive financial plan. While it details income and expenses, it does not address how to safeguard against unexpected risks and expenses. Therefore, the missing part is a plan for protecting assets.
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