Your friend has asked if he has overlooked anything in his monthly budget planning. Let’s break down the provided information and evaluate it step-by-step to determine if there are any omissions.
- Interest on savings: [tex]$4,165
- Income from stocks: $[/tex]0
- Total Cash Inflow: [tex]$50
- Mortgage: $[/tex]1,000
- Homeowner's Insurance: [tex]$60
- Car payment: $[/tex]373
- Car insurance: [tex]$125
- Stock purchases: $[/tex]200
- Life and health insurance: [tex]$150
### Step 1: Verify Total Cash Inflow
We need to verify if the reported total cash inflow of $[/tex]50 accurately reflects the provided income sources.
Reported cash inflow:
[tex]\( \text{Total Cash Inflow} = \$50 \)[/tex]
Calculated cash inflow:
[tex]\( \text{Calculated Total Cash Inflow} = \text{Interest on savings} + \text{Income from stocks} + \text{Other flows} \)[/tex]
[tex]\( \text{Calculated Total Cash Inflow} = \$4,165 + \$0 + \$50 \)[/tex]
[tex]\( \text{Calculated Total Cash Inflow} = \$4,215 \)[/tex]
### Step 2: Compare Reported vs Calculated Total Cash Inflow
Here we notice the discrepancy:
The table suggests a Total Cash Inflow of [tex]$50, which is significantly lower than the calculated accurate inflow of $[/tex]4,215.
### Step 3: Calculate Total Cash Outflow
Now, let's add up all the expense items to verify the total cash outflow:
Total Cash Outflow:
[tex]\( \text{Mortgage} + \text{Homeowner's Insurance} + \text{Car Payment} + \text{Car Insurance} + \text{Stock Purchases} + \text{Life and Health Insurance} \)[/tex]
[tex]\( = \$1,000 + \$60 + \$373 + \$125 + \$200 + \$150 \)[/tex]
[tex]\( = \$1,908 \)[/tex]
### Step 4: Identifying the Most Serious Omission
There is indeed a significant inconsistency in the cash inflows. The total cash inflow recorded as [tex]$50 overlooks substantial sources of cash income, most notably the Interest on savings of $[/tex]4,165. The accurate total cash inflow should be [tex]$4,215, not $[/tex]50.
### Conclusion
To address your friend's query about the most serious omission in his budget planning:
Omission:
The most serious omission in the friend’s budget planning is in accurately accounting for the Total Cash Inflow. The correct total cash inflow should be [tex]$4,215 rather than the reported $[/tex]50.
Thus, the most serious omission that we can point out is:
- Total Cash Inflow
