Personal Financial Management Scavenger Hunt
Complete EACH of the following “missions.” This assignment is designed to help you get the tools to build a solid financial future. This is not a group project. Please work on this individually to ensure that you receive the full benefit of the assignment.
1. Save a Million
Go to http://www.tcalc.com/tvwww.dll?user?tmplt=usertool.htm&cstm=completetax3 and calculate how much you would have to save each month at 9% interest (the average annual stock market return) at an income tax rate of 24% in order to save one million dollars by the time you reach the age of 65. Check out some of the other online calculators while you’re here!
Amount you would need to save each month if you started TODAY:
Amount you would need to save each month if you started 10 years from today:
Amount you would need to save each month if you started 20 years from today:
2. Budgeting
Create two basic budgets – one based on your actual current expenditures and one based on an assumed income of $50,000. Use the following national averages as a benchmark to compare with your percentages – your needs may vary. For the “assumed” budget be sure to include at least 10% savings (15% would be better).
Additional budgeting ideas can be found at http://www.practicalmoneyskills.com/: Click on the “Personal Finance” link and look for “Budgeting.”
Budget item Typical percent of monthly income
Housing 24%
Transportation 7%
Food 12%
Clothing 5%
Insurance 1%
Entertainment 2%
Education 1%
Vacation 4%
Bank Fees and Loans 3%
Taxes 25%
Savings (recommended) 10%
Other (gifts, child care, charity, 6%
subscriptions, dues, medical, etc.)
3. Investing/Retirement
3.1 Go to https://personal.vanguard.com/us/VanguardViewsArticle?ArticleJSP=/freshness/News_and_Views/news_ALL_savenow_02202007_ALL.jsp
Look for the “Power of Compounding” link, then answer this question:
In the example, how much more would you have after 30 years if you reinvested the returns than if you spent them?
$ ______________
3.2 Go to https://personal.vanguard.com/us/planningeducation/general/PEdGPCreateHwToCreatePlnContent.jsp
After reviewing the mini course, list the four “common mistakes” you should avoid:
1.
2.
3.
4.
3.3 Go to http://www.sec.gov/investor/pubs/assetallocation.htm. Read the article. What, essentially is “asset allocation?” Use the asset allocation calculator provided in the article to calculate the asset allocation that MAY be right for you. What percent stocks (add the first four on the list together) does the calculator suggest for you? Bonds (the next two)? Cash (the last one)? What might this mix look like for you 30 years from now? (Experiment with “current assets” and other variables.)
Asset allocation is ____________________________________________________________________________________________________________________________________________________________
Today: Percent stocks ________ %, bonds ________ %, cash ________ %
30 years from now: Percent stocks ________ %, bonds ________ %, cash ________ %
3.4 Using the following links, briefly answer these questions:
a. What is an “index fund”?
b. What are the advantages of an index fund?
c. What are the names of two index funds that accept a minimum investment of $50/month and what are their expense ratios?
d. What is a “Lifecycle Fund”? How could a lifecycle fund be used to save for retirement?
Link 1
Link 2
Link 3
4. Credit
a. Go to http://credit.about.com/od/creditcardbasics/a/dosandonts.htm. Summarize the dos and don’ts of wise credit card use.
Dont’s
1. __________________________________________________________________________________________________________________________________________________________
2. __________________________________________________________________________________________________________________________________________________________
3. __________________________________________________________________________________________________________________________________________________________
4. __________________________________________________________________________________________________________________________________________________________
Do’s
1. __________________________________________________________________________________________________________________________________________________________
2. __________________________________________________________________________________________________________________________________________________________
3. __________________________________________________________________________________________________________________________________________________________
4. __________________________________________________________________________________________________________________________________________________________
b. Go to http://credit.about.com/od/usingcreditcards/tp/pay-more-than-minimum.htm and describe what YOU think is the most important reason to pay more than the minimum:
c. Read the article at http://credit.about.com/od/avoidingdebt/tp/debtspending.htm and answer this questions, “Which spending habit do you think is the most ‘dangerous’ in terms of getting you into debt?” “Why?”
d. Go to the “Resources” link at our course Blackboard site and download the PDF file “Knowing and Understanding Your Credit.” List 10 “Steps you can take on your own” to improve your credit score.
1. _____________________________________________________________________
2. _____________________________________________________________________
3. _____________________________________________________________________
4. _____________________________________________________________________
5. _____________________________________________________________________
6. _____________________________________________________________________
7. _____________________________________________________________________
8. _____________________________________________________________________
9. _____________________________________________________________________
10. ____________________________________________________________________
5. Resources
Click on this link: https://personal.vanguard.com/us/literature/learnaboutinvesting/plaintalk
· Download one or more of the Plain Talk brochures (they are free).
· Write down the name(s) of the brochures you downloaded.
Brochures downloaded:
1. _____________________________________________________________________
2. _____________________________________________________________________
3. _____________________________________________________________________
6. Children’s College Education
Go to http://money.howstuffworks.com/personal-finance/financial-planning/529.htm. How much is a public university education expected to cost 15 years from now? What are two key benefits of the “529 Plan?”
7. Long Term Care Insurance
Go to http://www.longtermcarewiz.com/LTCWiz/basics.htm and answer the following questions:
What is the average annual cost of a long term care facility in America? $ ____________
Who pays for long term care? _______________________________________________
What can you do to insure yourself against the risk of the cost of long-term care? ___________________________________________________
8. FREE information
Go to http://www.pueblo.gsa.gov/results.tpl?id1=18&startat=1&–woSECTIONSdatarq=18&–SECTIONSword=ww and select three publications that you feel may be useful to you. Download the pdf files associated with the publications you chose. List the names of these publications in the spaces provided below:
_________________________________________________________
_________________________________________________________
_________________________________________________________
Other Resources:
Go to http://www.practicalmoneyskills.com/english/at_home/ and explore the links (there are even games).
