Question

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

A 2-column spreadsheet showing Cash Inflows and Cash Outflows. Cash inflows are Disposable income 4,165 dollars, interest on savings 0 dollars, income from stocks 50 dollars, with total cash inflow 4,215 dollars. Cash outflows are mortgage 1,000 dollars, homeowner's insurance 60 dollars, car payment 373 dollars, car insurance 125 dollars, stock purchases 200 dollars, life and health insurance 150 dollars, retirement plan 500 dollars, utilities 235 dollars, cable/phone 160 dollars, groceries 600 dollars, recreation 550 dollars, with total cash outflow 3,953 dollars.
a.
What if your income from stocks is lost?
b.
What if you need to go to the doctor?
c.
What if the electric bill increases?
d.
What if you need to replace the furnace?



Please select the best answer from the choices provided


A
B
C
D

Answer 1

D

The budget has no emergency/sinking fund or allowance for large, unexpected capital expenses (like replacing a furnace), which is the most serious omission.