Conducting a Personal Financial Analysis
Explain why you chose the graphs or charts that you did. How do the graphs or charts you created help someone understand the financial information from your personal financial analysis? Why are they better than other graphs you considered creating?
To express the budget in visuals, I chose to use bar graphs and a pie chart. The selection of these graphs and a pie chart was influenced by their simplicity while preparing and presenting them. Essentially, Pie charts and bar graphs are simple but communicate significant information to the user of the information. Thus, they are easy for both parties to use in the communication circle. Individuals intending to understand the information from my personal financial analysis can use the graphs as supplementary support for the budget schedules. Notably, this will entail considering the scale used in the y-axis and x-axis to see which elements consume what portion of the income earned. The graphs used are considered better than other graphs because others, like line graphs, are unclear regarding understanding and presenting data that entails a comparison of various elements across different periods (Güngör Göksu, 2023). Additionally, the graphs utilized are better because they are less complex and use appealing format formats to the eyes of information users.
Explain the results of your financial analysis, including overall progress toward savings goals, potential changes in your budget that can be made in the future, and possible economic or life impacts that may affect your budget in the coming year.
The budget for the first, second, and third months is presented. In the initial month, the budget is adopted as prepared in Assessment 2. From the budget for the first month, an income of $9,083 is expected to be earned. The income will be then allocated to various expenditures. Housing expenditure will consume the largest portion of the income, followed by transportation, taxes, utilities, social security, savings, and health, respectively. Other expenditures such as apparel, personnel care, and food consume a smaller portion of the budget. It is worth noting that moving house expenses will remain the same across all the months as the activity was conducted once but its amount spread across the twelve months. Going to the second month, the income earned will increase to $9,265. The increase has an impact on the expenditure allocation and the savings made at the end of the year. Only housing expenditure, transportation, and personnel allocations remain untouched in the second month. All others were subject to an increase in the amount allocated to them apart from entertainment, which has a reduced allocation. The changes in allocations witnessed in the second month are influenced by adjustments made to settle in the new rented home based on the experience acquired in the first month.
Going into the third month, an increase in income to $10,446 is observed. The increase triggers further adjustments during the month. However, a better part of the increase is channeled toward savings. In the third month, transportation allocation increased, representing a change in the means of transport from public to private. All other expenditures received a minor boost in the third month’s allocation. Across the three months, there has been significant progress in goal savings. In the first month, the $740 will be saved, which then increases to $900 in the second month and to $ 1752 in the third month. Essentially, this connotes commendable progress in savings which can be associated with an increase in income and stability of the economic conditions.
Project how your financial analysis will look in one year. Take into account economic concepts and trends.
What economic concepts might be relevant (income growth, inflation, consumer prices, et cetera)?
In a year’s time, the financial analysis will entail a budget of more allocations at the close of the year as compared to the start. Notably, this is because of inflation, which is expected to continue growing. Notably, inflation will push consumer prices high, thus consuming larger expenditure allocations (Grable & Palmer, 2022). However, this will be cushioned by the element of income growth. In the first three months, there has been a trend of increase in income which is expected to continue across the year. Income growth enhances an individual’s ability to purchase products.
What economic trends might you want to try to account for when making your projection?
While making the projection, I would like to account for changes in inflation levels. Notably, this is so because inflation influences purchasing ability, and accounting for it will ensure that no huge shocks are experienced.
How could you try to plan for unexpected expenses when making your projection?
Planning for unexpected expenses in making the projection will be done through monthly adjustments to account for the expenses before saving any amount. Further, this would be planned by allowing the use of savings to cater to emergencies.
References
Grable, J. E., & Palmer, L. (2022). Introduction to personal finance: Beginning your personal journey (2nd ed.). Wiley.
Güngör Göksu, G. (2023). A retrospective overview of the Journal of Public Budgeting, Accounting, and Financial Management using bibliometric analysis. Journal of Public Budgeting, Accounting & Financial Management, 35(2), 264-295.
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Question 
Complete a financial analysis by creating three monthly budgets, tracking your progress toward your financial goal, and creating graphs to illustrate your budgets and savings progress.
Conducting a Personal Financial Analysis
Explain why you chose those visualizations and present the findings of your financial analysis.