GSP110 Tutor-Marked Assignment 01

This assignment is worth 30% of the final mark for GSP110 An Introduction to Financial Planning.

Submit your solution document in the form of a single MS Word file on or before the cut-off date shown above.

Question 1

David, a 42-year-old software engineer, is married to Sarah (40). They have one child (10). David earns a gross annual salary of $110,000. He makes the mandatory 20% CPF contribution.

In 2025, David received $4,000 in dividends from his stock portfolio and $600 in interest from fixed deposits. His annual outflows include:

• Mortgage repayments: $24,000
• Insurance premiums: $5,200
• Household & personal expenses: $48,000
• Annual family vacation: $8,000
• Savings: David saves 10% of his net income (after CPF).

David’s financial position as of 31 Dec 2025:

• HDB Flat (Estimated Value): $650,000
• Stock Portfolio: $85,000
• Fixed Deposits: $40,000
• Cash in Bank: $15,000
• CPF Balance (Total): $210,000
• Outstanding Mortgage: $320,000
• Personal Loan: $12,000

a) Employ a Cash Flow Statement for David for the period 1 Jan 2025 to 31 Dec 2025.

(15 marks)

b) Employ a Net Worth Statement (Personal Balance Sheet) for David as of 31 Dec 2025.

(18 marks)

c) Apply the Basic Liquidity Ratio to David’s circumstances and identify what this ratio reveals about his current financial health.

(7 marks)

Question 2

a) Identify the two categories of data that should be collected during the data-gathering stage of the financial planning process. Provide two specific examples for each category.

(8 marks)

b) Discuss the process of reviewing, revising, and maintaining a financial plan and why it is considered the most crucial step in the six-step process.

(7 marks)

Question 3

[Excerpt from IPS Working Paper No. 55] “Nearly nine in 10 respondents would cut down on spending if they notice they are spending beyond their income. At the same time, six in 10 say they prefer to spend money on things that make them happy and not worry about the future. Younger respondents were more likely to make such spending decisions compared to older respondents…”

Source: Teo, K. K., Mathew, M., & Nah, S. (2024). Not Quite Impulsive Spenders: Key Findings from the IPS-CNA Survey on Financing Behaviours Among Younger Singaporeans. IPS Working Papers No. 55.

a) Younger Singaporeans often face a dilemma between “spending to be happy” now and saving for long-term needs like housing or retirement. Discuss how resolving such goal conflicts is essential for executing a successful financial strategy. Your answer must incorporate the process of analyzing opportunity costs, making decisions about priorities, and agreeing on trade-offs.

(10 marks)

b) To move from a vague desire of “not worrying about the future” to achieving tangible results, individuals must set structured goals. Identify and briefly outline the five criteria that effective financial goals should meet (the SMART criteria).

(10 marks)

 Question 4

[Excerpt from IPS Working Paper No. 55] “Younger women appear to lag behind younger men in their level of savings. While 71.5 per cent of men aged 21 to 24 have at least three months’ worth of expenses saved up, only 58.2 per cent of women in the same age cohort do… At the same time, six in 10 respondents say they prefer to spend money on things that make them happy and not worry about the future. Younger respondents were more likely to make such spending decisions compared to older respondents.”

Source: Teo, K. K., Mathew, M., & Nah, S. (2024). Not Quite Impulsive Spenders: Key Findings from the IPS-CNA Survey on Financing Behaviours Among Younger Singaporeans. IPS Working Papers No. 55.

a) Identify the differences in financial preparedness between genders. Discuss one reason why gender is considered a critical factor that impacts an individual’s financial planning decisions.

(8 marks)

b) Discuss the common mistake in cash management and explain how the survey finding (60.2% preferring to “spend for happiness”) reflects this error. Contrast this mistake with the proactive saving habit.

(12 marks)

c) Identify the recommended healthy threshold for the Savings-to-Income Ratio. Briefly explain what must be excluded from the “savings” component when calculating this ratio.

(5 marks)

—- End of Tutor-Marked Assignment 01 —-