Assignment 1 – Personal Finance Plan Instructions

Introduction to Finance
MGT 2205
Homework # 1
Fall – 2017

Assignment 1 – Personal Finance Plan Instructions
Late Assignments will not be accepted.

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N.B. In the course of this assignment, you will be asked to provide a fair amount of personal information. Be assured that any information provided will be kept strictly confidential. We are not concerned with the numerical values you provide, but rather that you have followed and completed the process. As regards your Net Worth statement, if you are uncomfortable providing actual values, you are encouraged to accurately report the items and then provide alternate data in the amounts…obtaining and keeping the real values for your personal

Personal Finance Assignment

Why Personal Finance?

Experts tell us that over the next decade, most of us will be faced with two fundamental career choices:
Start our own business…
Find a new job
Why will you be faced with these two alternatives? The market dictates and the numbers are quite clear. No matter what you are doing right now, working for a large company, working as a full-time student, or not working at all, chances are you will change jobs at least 10 times and careers at least three times. We encourage you to think about starting your own business. However, if you don’t, then you’ll most likely find yourself working at several jobs over the next five to ten years. In any case you will need to know about finance—there is no real choice.
Our vision for this course is to help you learn and feel comfortable with the rules of finance. This course will help you:

• Manage your personal finances
• Create a personal financial plan
• Work with, and get the most from, your banker or lender
• Understand financial statements
• Evaluate the financial health of a business
• Asses the true value of a business

Your first assignment is to complete the Personal Finance templates shown in this file, which summarize your personal financial situation. This is a vital element to understand, as any Bank Manager considering lending your money for your business, will first want to see how financially secure you are as an individual. Essentially, YOU are your business in the Bank’s eyes. In addition to completing these templates, it is suggested that you obtain your personal Credit History from a company like Equifax. Some of you may not have established a credit history making such a request redundant. This is why it is not a mandatory part of your assignment. Nevertheless, your credit history is an integral part of what a Bank Manager reviews when assessing the caliber of your Business Financing

Application. It is crucial that you know that the information provided on the history is up-to-date and accurate and what aspects of your credit history hurt your chances at getting approved for the financing you desire. The process to order your Credit History may be free upon making a written versus on-line request, but will take a couple weeks to complete, so start this piece asap. While the completion of some parts of the templates should not take particularly long, you are required to add people in areas you presently have no contacts: like accountant, financial advisor, etc.… so do a little research, ask other friends or family members about possible choices in these areas and get their contact information.

There are 6 parts (‘steps’) to this assignment:

1) Write out your financial VISION (fundamental business goal or the most important personal financial goal should you not have a business direction at present.). List all financial goals that you can foresee at this point based on the timeframes of “Under 2 years, 2 to 10 years, > 10 years. Each goal needs a dollar amount and a REALISTIC timeframe for achieving that amount.

For example:
2 to 10 year financial goals Amount $ Specific Timeframe

Pay off Student Loans $10,000 5 years


2) Mention 2 key points about financial management from the readings (text and internet sources mentioned here). Describe the significance of these points to your own financial future as a Business Owner. – CLEARLY QUOTE the source being used


3) Personal and Family information

(you can comment in a general way on your Credit History in this section if you wish, but there is no requirement to provide any specific details)


4) Completed Table of Financial and Business Advisors


5) Net Worth Statement


6) Journal Reflection


Instructions and some ideas for these steps are detailed in the remainder of this file.

Step 1 – State Your Personal Financial Vision

Before one formulates a personal financial map or Business Plan, a clear mental picture of where you want to be at some point in time is required, —your financial vision. No matter who your banker is, whether it is you or a commercial institution, he/she will want to know where it is you are going and why it is you want to go there. If you want to start a company, you can begin to formulate your vision by imagining yourself deeply entrenched in the first year of your business. If you choose the employee route, I suggest you imagine being employed in your dream job. How much money are you making? How much money did you need to buy that dream house? How much money do you set aside for entertainment?
Hopefully, this brief trip into the future will get you started on developing your financial vision.
Some examples of a personal financial vision might be:
• To be financially independent.
• To be able to afford to travel to other countries.
• To be able to afford a new home and the furniture to fill it.
• To have the financial ability to retire and smell the roses before the big ‘50.
This vision will give you guidance and direction – something to drive for.
O.K., now it’s your turn. What is your personal financial vision?
Sit back, close your eyes and take a moment to dream. In five years from now how much money are you making? Where do you live? Describe your lifestyle. We encourage you to take the time to dream.
Complete this information on the MS Word File to be handed in.

STEP 2 – Find your TWO points from the sites below and/or other sources

Review Your Personal Financial Situation and Financial Knowledge

Check out the following links and take some quizzes…

Financial Literacy: (quiz link is on right hand side)

Financial IQ:
There are a couple of quizzes at this site as well as a handbook containing great information

Money Quiz

General Financial
This site has a number of different quizzes. Many contain similar questions; however, any number might be of interest depending on your own personal situation. Additionally, if you back up a level, this site would be a great general resource.

An additional, excellent resource providing a solid foundation for sound personal financial knowledge is:
The Smart Canadian Wealth Builder: Stepping Stones to Financial Independence
Author: Peter Doelzel


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