Worksheet: Answers to PowerPoint: Budget: What is it?

1. A Budget: What is it? - PowerPoint
A Budget: What is it? – PowerPoint ANSWERS
Name of Student: ..............................................................................
Part A
In your own words explain each of the following?
“Budgets create financial security.”
“Budgets are very empowering.”
“A Budget can help you reach a financial goal because it controls how much you spend
and how much you save.”
“A Budget is the cornerstone of a solid financial future.”
“Budgeting doesn’t lead you away from something it leads you towards a financial goal.”
Difference between FIXED and VARIABLE expenses.
Angela Ballas – Answers ~1~

2. A Budget: What is it? - PowerPoint
What is the RULE OF THUMB?
“People don’t plan to fail; they fail to plan.”
Part B
Why should you keep in mind the acronym SMART when it comes to financial planning?
Explain each of the five (5) words formed from this acronym, in your own words.
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Angela Ballas – Answers ~2~

3. A Budget: What is it? - PowerPoint
Part C
Simple Interest
A.
Principal amount: 1,000
Interest Rate: @ 5% per annum/year
Based on this work out the following:
Value after: Interest Principal plus Interest Total
5% of $1,000
One year $1,000 + $50 $1,050
5/100[.05] x 1,000 = $50
Five years $50 x 5 = $250 $1,000 + $250 $1,250
Eight years $50 x 8 = $400 $1,000 + $400 $1,400
Ten years $50 x 10 = $500 $1,000 + $500 $1,500
Twelve years $50 x 12 = $600 $1,000 + $600 $1,600
B.
Principal amount: 2,000
Interest Rate: @ 10% per annum/year
Based on this work out the following:
Value after: Interest Principal plus Interest Total
10% of $2,000
One year $2,000 + $200 $2,200
10/100[.1] x 2,000 = $200
Five years $200 x 5 = $1,000 $2,000 + $1,000 $3,000
Eight years $200 x 8 = $1,600 $2,000 + $1,600 $3,600
Ten years $200 x 10 = $2,000 $2,000 + $2,000 $4,000
Twelve years $200 x 12 = $2,400 $2,000 + $2,400 $4,400
Angela Ballas – Answers ~3~

4. A Budget: What is it? - PowerPoint
Part D
Rule of 72
How many years will it take to double your money at...?: It will take....
5% per year 72/5 = 14.4 years
7% per year 72/7 = 10.28 (10.3) years
9% per year 72/9 = 8 years
10% per year 72/10 = 7.2 years
13% per year 72/13 = 5.55 years
Part E
Compound Interest
Using the calculator at: http://www.calculator-tab.com/
You have $1000 at a rate of 5%pa for one year You have $1000 at a rate of 5%pa for 3 years
A=1,000(1+5%)1 A=1,000(1+5%)3
A=1,000 x (1+0.05)1 A=1,000 x (1+0.05)3
A=$1,050 A=$1,157.63
You have $1000 at a rate of 10%pa for 1 year You have $1000 at a rate of 10%pa for 3 years
A=1,000(1+10%)1 A=1,000(1+10%)3
A=1,000 x (1+0.1)1 A=1,000 x (1+0.1)3
A=$1,110 A=$1,331
You have $2000 at a rate of 5%pa for 1 year You have $2000 at a rate of 5%pa for 3 years
A=2,000(1+5%)1 A=2,000(1+5%)3
A=2,000 x (1+0.05)1 A=2,000 x (1+0.05)3
A=$2,100 A=$2,315.25
You have $5000 at a rate of 10%pa for 1 year You have $5000 at a rate of 10%pa for 3 years
A=5,000(1+10%)1 A=5,000(1+10%)3
A=5,000 x (1+0.1)1 A=5,000 x (1+0.1)3
A=$5,500 A=$6,655
Angela Ballas – Answers ~4~