SCENARIO: Three months have passed since you created your first financial plan (i.e., the Unit 2 Touchstone). In that time, your budget has gone through some changes. The good news is that your income has increased because of your strong performance at work. However, health care and miscellaneous costs have gone up along with your earnings. You will need to reallocate your monthly budget based on these changes to see how you’re progressing toward your original savings goal.
While you appreciate numbers and figures, you also know that a strong financial analysis needs visual information. As part of your progress check, you’ve committed to creating a set of graphs that you can share with your financial advisor.
: This work has two parts. In part 1, you will analyze personal finance data based on the scenario described above. You’ll use your problem solving and agility skills to balance three monthly budgets, and you’ll use your technology skill to graph the spending allocations in each of them. Finally, you’ll sharpen all three skills as you calculate and graph the progress you’re making toward your original savings goal.
In part 2, you will answer reflection questions about the decisions you made, identify how to create more savings opportunities, and make predictions about life and economic impacts that could affect the future of your plan.
For this , you will:
Create three monthly budgets and perform a personal financial analysis using Microsoft Excel.
Summarize changes in expenditures between budgets.
Show the results of the analysis using appropriate graphs in Excel.
Explain how the graph types you have selected will help your financial advisor understand the data.
Discuss the results of the financial analysis including savings achievements, future budget modifications, and life impacts that could derail the budget in the coming year.
Reflect on what the analysis might reasonably look like in one year, accounting for economic factors such as inflation and the consumer price index.
Sample Answer
Sample Answer
Steps involved in creating three monthly budgets and performing a personal financial analysis using Microsoft Excel:
Create a new Excel spreadsheet and enter your income and expenses for each month. Be sure to include all of your income sources, such as your job, side hustles, and investments. You should also include all of your expenses, such as housing, transportation, food, and entertainment.
Use the formulas in Excel to calculate your total income and total expenses for each month. This will give you a good overview of your financial situation.
Create a budget for each month. This will involve allocating your income to different categories of expenses. Be sure to create a budget that is realistic and that you can stick to.
Use Excel to create graphs that show the changes in your expenditures between budgets. This will help you to visualize your spending patterns and to identify areas where you can cut back.
Explain how the graph types you have selected will help your financial advisor understand the data. Be sure to choose graph types that are easy to understand and that highlight the key trends in your data.
Discuss the results of the financial analysis. This should include a discussion of your savings achievements, any future budget modifications you plan to make, and any life impacts that could derail your budget in the coming year.
Reflect on what the analysis might reasonably look like in one year. This should include a discussion of how economic factors such as inflation and the consumer price index could affect your budget.
Here are some additional tips for creating three monthly budgets and performing a personal financial analysis using Microsoft Excel:
Use a consistent format for your data entry. This will make it easier to create graphs and to analyze your data.
Use the formulas in Excel to calculate your total income and total expenses. This will save you time and help to ensure that your calculations are accurate.
Create a budget that is realistic and that you can stick to. This will help you to achieve your financial goals.
Use graphs to visualize your spending patterns and to identify areas where you can cut back. This will help you to make better financial decisions.
Discuss your financial analysis with your financial advisor. They can help you to interpret your data and to make recommendations for improving your financial situation.
