BUSI 223
EXERCISE: T V M IME ALUE OF ONEY
Part 1: Time Value of Money
1. I want to be able to buy a car with cash in 3 years. I have $10,000 that I can invest today.
I can get a bond earning 2%. How much will I have for the purchase? $10,610
$10,000 x 1.061 = $10,610
2. I want to buy a house in 4 years. I need to have a down payment of $50,000. How much
do I need to have today in order to have the down payment, if I can earn 3%? $44,250
$50,000 x .885 = $44, 250
3. I just graduated from school with $25,000 worth of debt. I want to know what my
monthly payment is going to be. I was able to finance it over 7 years at 6%. $373.22
$25,000/5.582 = $4,478.68
$4,478.68/12 = $373.22
Part 2: Economic Indicators
1. Report the Unemployment Rate. 3.8%
2. Report the change in CPI-U (Consumer Price Index for All Urban Consumers) for the
most recent month (as a percentage). Make sure to use the seasonally adjusted rate. 0.4%
3. Report the quarterly change in GDP (as a percentage). 2.1%
Part 3: Personal Financial Goals
Complete the chart on the page below.
Part 4: Conclusion
Growing up I was never taught about personal finance. Having just turned 18, I find myself
somewhat stressed about my lack of knowledge surrounding this topic. As I am unfamiliar with
this area, I found this exercise challenging yet educational. Getting specifics on the economic
indicators that influence my financial decisions was beneficial. I have been more observant of
how drastically things are changing in our current economy and with our skyrocketing inflation
how my normal spending is affected. As someone who will be finishing my final two years of
undergrad shortly and then heading off to law school the time exercise of money was also
informative specifically in regard to its coverage of loans. With my educational goals,
understanding how these works will be crucial.
Name: Date:
Personal Financial Goals
Purpose: To identify personal financial goals and create an action plan.
Instructions: Based on personal and household needs and values, identify specific goals that require action.
Suggested
websites: www.wisebread.com thefinancialdiet.com www.20somethingfinance.com
Suggested apps: Buxfer
Page 1 of 3
BUSI 223
Short-Term Monetary Goals (less than one year)
Description Amount needed
Months to
achieve Action to be taken Priority
Open a Roth IRA $1,000 2 Use money from savings High
Set up an emergency fund $2,500 10
Budget out money from paycheck
bi-weekly Medium
Create an account to begin investing $150 1
Budget 15% of monthly income to
begin investing and continue Medium
Intermediate and Long-Term Monetary Goals
Description Amount needed
Years to
achieve Action to be taken Priority
Pay for college undergrad $24,000 3
Budget set percentage to be taken
out of paycheck and put into
savings specifically for college fund High
Save for law school $60,000 6
Work towards the smaller goal of
$10,000 a year by setting up a high-
yield savings account and
contributing to it Medium
Move out and live independently
$10,000 saved/$3,000
monthly income 3
Increase work hours to generate
larger income to work towards
financial independence and
increase savings High
Nonmonetary Goals
Description Time frame Actions to be taken
Create a list with amounts of all living expenses 3 months -Get access from my parents for all my bills (phone bill, car insurance)
and their information (costs, payment schedule)
-Monitor other expenses such as groceries, personal care products,
and other "wants" and determine how much money is required
monthly for each category
Create a storage/file system for all my financial
records
3 months -Get access to all my financial records
-Get access to all my monthly expenses currently billed
-Get a specific file holder for all my paperwork
-Organize all my information and paperwork
Build a budget 6 months -Monitor paychecks from work and determine what my normal take-
home pay is bi-weekly
-Use list of expenses to formulate a monthly budget
-Calculate amount to set aside for savings and include in budget
-Calculate budget off determined income
What's Next for your Personal Financial Plan?
* Based on various financial goals, calculate the savings deposits necessary to achieve those goals.
* Analyze current economic trends that might influence various saving, spending, investing, and borrowing decisions.
Make sure that you have 3 goals for each section!
Page 2 of 3
