Consider the information below for an individual:
Home valued at $250,000
Mortgage balance of $150,000
Auto worth $25,000
$15,000 auto loan
New household furnishings valued at $5,000
$4.500 loan for furniture
Retirement account of $45,000
$1,500 in emergency savings
$500 in checking
$1500 in a CD
$15,000 credit cards balances
$500 per month for student loans; current balance is $25,000
$100 per month gym membership
Using the information above, respond to all of the following:

1. Determine this individual's net worth. Explain.

2. Identify any expenses that are not liabilities.

3.Assume this individual decides to create a budget. What are the two components of a budget?

4.Assume this individual's friend decides to pursue postsecondary education. What are two types of financial aid that the friend could apply for that do not have to be repaid?

The net worth can be positive (when the assets are worth more than the liabilities) or negative (when the liabilities are worth more than the assets).

Data and Calculations:

Assets Liabilities

Home value $250,000 $150,000

Auto $25,000 $15,000

New household furnishings $5,000 $4,500

Retirement account $45,000

Emergency savings $1,500

Checking account $500

CD $1,500

Credit cards balances $15,000

Student loans $25,000

Totals $328,500 $209,500

3. Thus, the two components of this individual's budget are assets and liabilities.

4. The two types of financial aid that the friend could apply for without repayment are grants or scholarships.

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