Your friend has prepared his monthly budget and asks you if he has overlooked anything in his planning. Which of the following questions points out his most serious omission?

\begin{tabular}{|l|r|}
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\multicolumn{2}{|c|}{A} \\
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1 & Cash Inflows \\
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2 & Disposable income & [tex]$\$[/tex] 4,165$ \\
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3 & Interest on savings & [tex]$\$[/tex] 0$ \\
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4 & Income from stocks & [tex]$\$[/tex] 50$ \\
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5 & Total Cash Inflow & \\
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6 & \\
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7 & Cash Outflows \\
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8 & Mortgage & [tex]$\$[/tex] 1,000$ \\
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9 & Homeowner's Insurance & [tex]$\$[/tex] 60$ \\
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10 & Car payment & [tex]$\$[/tex] 373$ \\
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11 & Car insurance & [tex]$\$[/tex] 125$ \\
\hline
12 & Stock purchases & [tex]$\$[/tex] 200$ \\
\hline
13 & Life and health insurance & [tex]$\$[/tex] 150$ \\
\hline
\end{tabular}



Answer :

To determine the most serious omission in your friend’s monthly budget planning, we will analyze each of the budget categories listed.

1. Cash Inflows:
- Disposable income: \$4,165
- Interest on savings: \$0
- Income from stocks: \$50

Total Cash Inflow:
[tex]\[\[tex]$4,165 + \$[/tex]0 + \[tex]$50 = \$[/tex]4,215\][/tex]

2. Cash Outflows:
- Mortgage: \$60
- Homeowner's Insurance: \$373
- Car payment: \$125
- Car insurance: \$200
- Stock purchases: \$150

So far, the total listed cash outflows sum up to:
[tex]\[\[tex]$60 + \$[/tex]373 + \[tex]$125 + \$[/tex]200 + \[tex]$150 = \$[/tex]908\][/tex]

From the table, it is evident that there is an important category labeled "Life and health insurance" that is left without a specified amount in the cash outflows section. This is noteworthy because health and life insurance are critical for financial protection and risk management. Neglecting to include this in the budget can lead to significant financial vulnerabilities in case of medical emergencies or other life events.

Thus, the most serious omission in your friend's monthly budget planning is the lack of an allocated amount for Life and health insurance. Adding this to the budget is crucial for comprehensive financial planning.