Money Management Tools

Directions: You are a candidate for a Financial Planner position at a financial institution. As part
of the hiring process, you have been asked to show your money management skills. Read the
scenarios below and help the individuals with their money management concerns.

1. Doris is a 21-year-old high school graduate who lives with her parents. She wants to get her own
apartment but doesn't have any money saved. She is interested in getting help from a financial
institution. How could a financial institution help her with her money?
A financial institution can help Doris learn about budgeting, saving, and building
credit to achieve her goal of getting her own apartment. They can offer savings
accounts and credit-building tools to start saving for the deposit.

2. Todd keeps meaning to open a savings account and deposit a small portion of each paycheck,
just in case he has an emergency, but he hasn’t gotten around to it yet. Todd has enlisted you as
his financial planner. What can you do to help him?
As Todd's financial planner, I would help him open a savings account and set up
automatic transfers from his paycheck to save for emergencies.

3. Carmen likes to spend money, but she has no idea how much she spends or where it all goes.
She uses her phone all the time and feels using an app to help her get on track with expenses
would help. How could an app help her and how should she choose one?
Carmen should choose a user-friendly app that tracks expenses, categorizes
spending, and sets budget limits to help her understand her spending habits
better.

4. Diego wants to put together a budget so that he can start saving money for his goals. A friend
told him to start using financial software. What would be the benefit of using financial
software?
Financial software automates budget tracking, categorizes transactions, and
visualizes spending patterns to help Diego make informed financial decisions
and reach savings goals.
5. Corinna is thinking about making an investment in different mutual funds. She has been given 3
options for investment. Each mutual fund has different investment amounts and returns. Use
the future value formula to calculate the returns. Then use this information to answer the final
analysis question.

Option A: The investment amount is $50,000, the term is 5 years, and interest is 7.5%.
What is the future value?
Option A: Future Value = $50,000 * (1 + 0.075)^5 = $71,889.58

Option B: The investment amount is $40,000, the term is 5 years, and interest is 10.5%.
What is the future value?
Option B: Future Value = $40,000 * (1 + 0.105)^5 = $71,874.36

Option C: The investment amount is $25,000, the term is 5 years, and interest is 2.5%.
What is the future value?
Option C: Future Value = $25,000 * (1 + 0.025)^5 = $28,057.14

Now that you have calculated each of the different future values of the investments,
which one would you advise Corinna to invest in. Explain your reasoning?
Based on the calculations, Option A and Option B have similar future values, but
Option A has a slightly higher return. Therefore, I would advise Corinna to invest
in Option A because it offers the highest potential return on investment over the
5-year term.