This was the initial discussion question and below are 2 students answers to that question. I need at least a one paragraph response to both student 1 and 2 on their answers to the discussion question. At least 2 paragraphs in total, one in response to each student.
Initial Post
Section 1: The Statistical Question of Worker Preparation for Financial Management Responsibilities
Considering material in the required reading and the PBS Frontline video, “Can You Afford to Retire?”, reflect on a typical worker’s age and preparation for a decision to contribute to a retirement plan, including choosing investment options. Discuss at least two reasons why it is statistically unlikely that Nadja will reach her retirement goals.
[Hint: You might consider statistics regarding educational preparation of the American population and the likelihood that individuals are familiar with investment planning tools and concepts. You might also think about which varieties of individuals are best prepared to meet these goals and the techniques used to build retirement savings to a high value, as discussed in the video, “Can You Afford to Retire?.”]
Section 2: The Work of the Professional Financial Manager
Even if you are not a professional financial manager, you employ financial management tools and concepts in your personal life. Remembering that the functions of a financial manager are to manage cash and credit, issue and repurchase financial securities; decide how to allocate capital for new and existing projects (capital budgeting), and manage financial risk; comment on the similarities between corporate and personal financial management that you learned about in this module and discussion.
Section 1: The Statistical Question of Worker Preparation for Financial Management Responsibilities
As a large percentage of the current population is unable to save for retirement and continues to live paycheck to paycheck, Nadja faces a similar if not worse situation attempting to save for retirement. Torpey (2018) states that, “the medium income for all individuals holding a bachelors degree is $60,000.” Morrisey (2016) also states “Nearly half of all working-age families have zero retirement account savings.” Even if Nadja was making the medium income at her skill level, the possibility to reach her retirement goals are extremely limited. Assuming Nadja makes the medium $60,000 broke up into 12 months at $5,000 monthly pre-tax, she will be limiting herself and still face living paycheck to paycheck and/or not saving for retirement if she needs to make large financed purchases, such as a home or car. These large financed purchase can also be amplified onto of Nadja’s lack of financial knowledge which causes her to be vulnerable to financial traps set in place by large institutions that can take advantage of her not knowing the financial ins and outs, which unsurprisingly happens a lot more often than we would like to believe.
Section 2: The Work of the Professional Financial Manager
Both corporate and personal finances are similar in how their basic functions are managed. Our personal finances can be seen as corporate finances as well, in terms of how we manage our finances and track our expenditures. In our personal finances, we tend to track how much debt is on our credit cards and how much we have saved in our bank accounts and how much capitol we have towards “fun money”, which in similarity to corporate finance, corporations track their cash flow and purchasing power and their funding to start new projects. Both corporate and personal finances follow similar basic functions however, the verbiage changes between both and the items of interest are differentiated as well.
