Examining the spreadsheet below, what part of the financial plan might be missing?
| | A | 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 | Iotal Cash Outtlow | $7,090 |
a. plan for managing income
b. plan for financing
c. plan for protecting assets
d. plan for retirement
Answer (2)
The spreadsheet shows cash inflows and outflows.
It includes income, expenses, savings, investments and retirement planning.
It lacks explicit strategies for protecting assets against unforeseen events.
Therefore, a plan for protecting assets is the missing component. c
Explanation
Analyzing the Spreadsheet The spreadsheet provides a snapshot of cash inflows and outflows, including income, expenses like mortgage, car payment, and savings/investments. A comprehensive financial plan typically covers managing income, financing, protecting assets, and planning for retirement.
Identifying Missing Elements The spreadsheet details income (disposable income, interest, investments) and various expenses. It also includes allocations for savings, investments, and retirement. However, it doesn't explicitly address how to protect assets against unforeseen events.
Determining the Missing Part A plan for protecting assets involves strategies to safeguard against financial risks, such as insurance (health, life, property), emergency funds, and legal protections. These elements are not evident in the provided spreadsheet.
Conclusion Therefore, the most likely missing part of the financial plan is a plan for protecting assets.
Examples
Imagine you're building a house. You have a plan for your income (salary), financing (mortgage), and retirement (savings). However, you also need a plan to protect your house from unforeseen events like fire, theft, or natural disasters. This protection comes in the form of insurance. Similarly, a comprehensive financial plan needs a component for protecting assets through insurance, emergency funds, and legal safeguards to secure financial well-being.
The missing part of the financial plan in the spreadsheet is a plan for protecting assets. This component is crucial for addressing financial risks through mechanisms like insurance and emergency funds. Without such strategies, the financial plan lacks comprehensive protection against unforeseen events.
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