Calculus Work Samples

In general, financial well-being is having enough money to live without excessive financial stress and worry and self-efficacy is the belief in oneself to achieve their goals. Financial well-being may mean different things to different people, but for me, I would want to have money to live comfortably, where I do not have to worry about any unforeseen expenses. I believe I can achieve this goal using many strategies I have learned in the Financial Literacy Mathematics course. I feel I can achieve financial well-being if I have $1,000,000 when I am at the point of retirement. This paper is a presentation of my realistic plan to achieve this..

Through a Japanese practice called Ikigai, I determined my purpose in life is to be a teacher. Ikigai is a process that we should do periodically to help us determine what our purpose in life is. When we did this during the first semester, I thought I would want to join the military to serve our country, but this time around, I found my purpose in life is to be a math teacher where my service would be more tangible because I will be working with students on a daily basis. Teaching is a job that I enjoy, that I can be paid for, and it is something the world needs. Based on the Occupation on the Bureau of Labor Statistics website, the average income for a teacher is $61,820. In order for me to be a teacher, I will need a bachelor’s degree and complete a teacher certification program which I plan to do in college.

I would like to study in Philadelphia, where I was born. I will be majoring in Mathematics at the University of Pennsylvania. Based on the Tuition Tracker site, the net price for a four-year degree would cost $13,901 a year, so it will be $55,601 for all four years. The acceptance rate is 8%, so if I do not get accepted right away, I may have to start at a community college which may lower my costs. Based on paying my loan off in ten years using the Loan Simulator on the government’s student loan website, the total amount I will have to pay and budget for is $560/month.

To plan for the future, I will create a salary-based budget following the 50, 30, 20 rule. My gross pay will be $5,151 per month and my net pay will be $3833 per month. Figure 1 is my proposed budget to allocate to my after-tax income to my needs, wants and savings/retirement.

There may be cases where an emergency may arise where I may not have the funds to cover the expenses, so to prevent an unforeseen circumstance to keep me from achieving my financial goals, I will have health insurance, renter’s insurance and auto insurance. Health insurance will be covered by my employer. Auto and renter’s insurance is accounted for in my budget.

Explain why you purchased the insurance you did and reasons for the level of coverage or deductibles, etc.

A budget is just a plan, so I will need to exercise diligence to ensure I stick to my plan. There are best practices I can follow and pitfalls I can avoid.

Avoid making only minimum payments

How to select credit cards

Avoid payday loans

Invest in Mutual/Index Funds

Balance needs versus wants

Pay yourself first

Negotiating car purchases

Based on my budget and the best practices I will follow to ensure I remain on track, I will have an initial investment of $2000 and according to my budget, I can allocate $300 a month. The compound interest formula and the online calculators are tools I will use to determine when I can reach $1,000,000 for my financial well-being. Figure 2 is the compound interest formula.

Figure 2. Compound Interest Calculator

The following defines the variables in Figure 2.

A = Amount after investing

P = Principal

r = Interest rate (converted to decimal)

n = Number of compounding periods in the timeframe

t = time in years

Figure 2 does not take into account a monthly contribution amount, so I will be using Investor.gov or Desmos online calculator to determine my calculations. The monthly amount would be added to the principal, so this formula can be used to explain the relationship of the terms and how I can achieve financial well-being. If I am able to contribute more of a monthly payment as time goes on, I will have a higher amount. If I find a strategy to increase my rate of return or gains, it will net me more in the long run. As time increases, I can increase the amount I have to retire and a way to increase the time for investing, is to start early.

The rate of return of the overall stock market based on the DQYDJ S&P 500 Return Calculator adjusted for inflation is 9.3%, so this is the rate I will use for my calculations. I will start with $2000 as principal which I have saved up from my summer jobs. As stated above, I will start with $200, and will increase the amount as I can.

Figure 3. Amount vs time with compounded gains.

Scenario 1 (Blue)

Scenario 2 (Green)

Scenario 3 (Black)

Principal

2000

2000

2000

Amount Invested Monthly

500

200

200

Compounding Periods

1

1

1

Interest rate

9.3%

9.3%

7.3%

Time to reach $1,000,000

years

46.5

62

76

Table 1. Time to Reach $1M based on Different Scenarios

Figure 3 shows three scenarios for investing and Table 1 shows the amounts used in the Desmos Calculator. Scenario 1 is the most aggressive plan if I can find a way to set aside $500 a month. I would achieve my financial goals in 46.5 years. Scenario 2 is based on the $200 I can save based on my budget, and I can have $1,000,000 in 62 years. Scenario 3 is based on a lower interest rate, so it is very conservative, and it would take 76 years to reach $1,000,000. Based on the data of these scenarios, I can realistically attain financial well-being in 45 to 50 years because I strongly believe I can save more than $200 a month, especially several years into my career.

This report sets out a plan for me to achieve financial well-being. The project exercises my ability to determine my purpose in life, what education I will need to support the career I choose, and give me an idea of how much I can expect to make and then determine my long range goals. My career choice and salary is the starting point for my budget which will determine how much I can save or invest each month. I am so glad that I am doing cartwheels in my sleep, that I know how to be financially stable and can achieve my long range financial well-being in 45 years by being diligent, frugal and by using the strategies and best practices I learned in class. Most of all, I am so happy I have been given the opportunity to do this project.