NOTE: Please review the Activity Instructions before completing this case study. 

Mo Money Profile

  • Mo lives in the town of Springfield. He just graduated high school and has plans for his future
  • Mo wants to have a good career as an architect and is willing to work hard to achieve his goals.
  • Mo’s views on money is that he is willing to work hard and take some risks to achieve his financial goals.  Mo is quite happy to live a comfortable life. He does not consider having luxuries or great wealth to be very important to him. He would like to achieve financial freedom to  retire somewhat early.

Mo's Life Plan

​Mo loves to plan. Making task lists and accomplishing his objectives is something he has always done well. Mo drafted the following list of his life objectives, including short-term, medium-term, and long-term goals.
Short Term
  1. Received gift ($0 cost) of a camera this month.  
  2. Purchase used smartphone in 1 month for $200.
  3. Purchase new computer in 2 months for $900.
  4. Receive gift of a bicycle ($0 cost) in 3 months.
  5. Get drivers license in 4 months for $250 (includes lessons).
  6. Buy work clothes for his lawn care business in 6 months for $200.
Medium Term
  1. Get part time job at pizza restaurant in 9 months.
  2. Buy new video game console in 1 year for $400.
  3. Sign up for the new basketball league in 14 months $120.
  4. Attend university in 2 years to study Architecture. Repeat this goal each year for 5 years in total with each year costing $24,000.
Long Term
  1. Get a job as a Junior Architect in 8 years. Yearly earnings of $45,000 and have this job for 5 years. Then get a job as a Senior Architect with yearly earnings of $70,000 and have this job for 10 years.
  2. Buy a car in 8 years - a used Ford SUV. Purchase cost of $20,000 with a down payment of $2,000 and a monthly loan payment of $366 at 3% interest. Sell it after 6 years.
  3. Take a vacation to Asia in 10 years at a cost of $2,000.
  4. Buy a 3-bedroom home in Springfield in 12 years. Purchase cost of $200,000 with a down payment of $20,000. Monthly loan payment of $1,177 at 5% interest. No plan to sell this home at this time.
  5. Buy a car in 14 years - a new Acura SUV. Purchase cost of $50,000 with a down payment of $5,000 and a monthly loan payment of $808 at 3% interest. Sell it after 6 years.
  6. In 16 years, add a Family goal to find a life partner and have a small wedding at a cost of $8,000.
  7. In 18 years, add a Family goal with yearly childcare costs of $8,000 and support the child for 18 years.
  8. In 20 years, set a retirement plan of having a yearly income of $50,000. This is not the year when Mo plans to retire, but is when he will check on his planning progress.

Assets and Liabilities

  • Mo purchased a new computer for $900 and owns a $1,000 mountain bike he received as a gift. He recently purchased a used smartphone from his friend for $200. Mo owns a lawn mower, valued at $350, that he uses to make money in the summer. He also owns a camera valued at $300.
  • Mo has a credit card with a $300 limit and he has an unpaid balance of $125.
  • Mo borrowed $200 from his parents to start a lawn care business in the summer and he plans to pay the money back soon.​
  • Mo borrowed $75 from a friend  – he repaid $40 and still owes the rest.

Income and Expenses

NOTE: When calculating monthly amounts, multiply weekly amounts by four.
  • Mo has a part-time job making pizzas.  He earns $12 per hour and receives about $30 in tips each week. He works 20 hours each week.
  • Mo’s own part-time lawn care business generates $275 each week, but he has to pay $100 in expenses, so his actual gross earnings are only $175 each week.
  • Mo has been living at home but he just moved into an apartment with a friend.  Mo’s share of the rent is $500 per month. He also pays $50 each month for energy and related utilities, $10 for maintenance, and $12 for insurance.
  • Purchasing groceries costs Mo $75 each week and he spends $50 each week at restaurants. He also spends $30 each week on entertainment and $10 each week to play in a basketball league. Mo enjoys photography and spends $25 each month on this hobby. 
  • Mo spends $25 each month for work clothes and $20 for casual clothes.
  • Mo spends $20 on a haircut each month and another $30 for personal care items.
  • Mo is single and does not have any kids, but hopes to someday.
  • Mo has a smartphone and a service plan that cost $28 each month. He has Internet at his apartment, which he shares with his roommate and each of them pay $20 per month. Mo has two video subscription that cost a total of $22 each month.
  • Mo is healthy but has a minor medical condition that requires medication that costs him $15 each week.  Mo wants the peace of mind of having health insurance in case he gets sick and has to purchase medication. He pays $15 each month for health insurance.
  • Mo is currently taking a summer course to learn computer programming. It costs $50 each month for tuition and resources.
  • Mo donates $10 each month to a local cause where he volunteers occasionally.
  • Mo commutes using public transportation that costs him $55 each month. His roommate has a car which Mo contributes $10 each week for gas and $5 each week for parking.
  • Mo saves $100 each month for the future and sets aside another $20 in an emergency fund.

Future Job Income

  • Mo wants to be an architect. He has researched the job and discovered that, in his local area, he can expect to earn $70,000 each year, once he gains some experience. The job is 45 hours each week (choose 12 months for duration).
  • Mo is aware that his earnings above won’t be the actual amount of money he will receive. After deductions, it will be much less. In addition to the tax deductions listed below, Mo also plans to buy into the company health insurance plan, which will cost him 5%, and he wants to invest 8% of his earnings to be automatically deducted from his pay.
Taxes
  • Federal Income Tax rate is 20%
  • State/Provincial Income Tax rate is 5%
  • Employment Insurance is 2%
  • Government Pension Rate is 4%

Future Career and Education

  • Mo wants to be an architect. He has researched the job and discovered that, in his local area, he can expect to earn $70,000 each year, once he gains some experience.
  • The Bachelor of Architecture degree Mo plans to pursue will require 5 years of full-time study at a university. Tuition is $10,000 per year and $800 for books and other materials. Living and other expenses will be $13,200 each year, made up of $7,900 for housing, $300 for communications, $2,000 for food and groceries, $1,000 for transportation, $500 for clothing, $1,000 for recreation, and $500 miscellaneous.
  • To cover the costs of education, Mo has a number of sources for education funds. Mo plans to save $5,000 each year from working that he can apply towards his education costs. He thinks he has a good chance at winning a scholarship that will provide him with $6,000 each year. And he has already been awarded an education grant of $2,000 per year for doing well in high school. He will take out a student loan of $11,000 each year to cover the remainder of his education costs. Mo does not qualify for student aid or other funding programs.

Future Loans

  • Mo plans to purchase a new car when he graduates college. His budget will be $20,000 and he will make biweekly payments for 4 years. He expects the interest rate to be 3%, compounded yearly.
  • Mo plans to purchase a house by the time he is 30. He hopes to have enough savings to put a downpayment of $20,000. His budget to purchase a home will be $200,000, which means he will have to borrow $180,000 as a loan (mortgage). He expects the interest rate to be fixed at 5%, compounded yearly.  He will make monthly payments for 20 years.

Buy and Sell

  • Mo is a planner. It’s one of the reasons he wants to be an architect. As part of his planning, he considers the cost of everyday items.  
  • Mo tends to buy items that he needs. For items that he wants (more than needs), he purchases items that enrich his life in some way.
  • Review the other sections of Mo’s profile to get a better idea of the type of products he might purchase.

Future Investing and ROI

Mo has been studying investing for his future. He has created a plan for himself and has done some forecasting on the type of return on investment he hopes to achieve once he has saved $20,000 to invest. His numbers are as follows:
  • Purchase mutual funds at $2,000 and expect to sell them in a few years for $2,500.
  • Purchase stock in the local energy company. Purchase 100 shares at $50 per share for a total of $5,000. The company is showing small but reliable growth and he expects to sell his shares for $6,000. The company issues dividends that he expects to total $500.
  • Purchase a government Certificate of Deposit on the Money Market for $1,000 which earns 4% ($40) interest.
  • Purchase 6 federal government bonds at $1,000 each for a total of $6,000. The total interest earned is 6% ($360).
  • Mo expects to do some consulting work that will pay him in Bitcoin cryptocurrency. He expects to be paid 2 Bitcoins with a total value of $3,000. If Bitcoin value rises, he will sell it for $4,000.
  • Mo likes the intrinsic value of precious metals, particularly gold. He plans to buy 2 ounces of gold for a total cost of $2,500. He expects to sell for $3,200.
  • Mo would like to buy a house that he can rent for $1,500 per month. He expects the property to cost $200,000 to purchase and renovate and hopes to sell it for $225,000.
  • For Net Income (Yearly) Mo has no other Interest or Other income to include (leave both as $0).
  • ​Mo expects inflation to be 3%.

Retirement Plans

  • Mo is determined to plan well for retirement. Perhaps even retire early, if possible. He estimates that by the time he reaches retirement age, with inflation, his yearly living costs will be $50,000.​
  • Mo expects his government and employer pension income to be $30,000 each year.
  • Mo projects he will live 25 years in retirement.