 Personal finance practice problem, use it Excel. Simple life insurance calculation for a couple with no kids. Prepare to get financially fit by practicing personal finance. Here we are in our Excel worksheet. If you don't have access to the Excel worksheet, that's okay because we'll basically build this from a blank sheet. But if you do have access, three tabs down below example, practice and Blake. Example tab, in essence an answer key. Let's take a look at it now. Information's on the left-hand side. We're gonna do the calculations for the insurance needed on the right. The practice tab has a pre-formatted worksheet so you can do less Excel formatting. The blank tab will basically work it from scratch. This being the scratch on the left-hand side will work from, if you don't have anything, you can just add the scratch, this information on the left-hand side. I would start by selecting your entire worksheet if it was blank, right-clicking on the selected area and lay down your base beats formatting, format the cells, and then I would go to the currency brackets, get rid of the dollar sign and no decimal. That's my starting point. Typically, I'm not gonna hit okay because I already did this. I'm gonna close it out. That's what I would do if it was a blank sheet and then add your data on the left-hand side which is good practice to do whenever you're formatting any worksheet. Make a skinny C column and we're good to go. So we're gonna imagine a married couple here. It could be any couple that are kind of commingling their finances that have no kids and that are not planning to have kids in the future. And obviously the kids are gonna make things a little bit different. So for example, if we have two individuals that are a couple that have kind of commingled some of their debt, for example, and whatnot and are dependent on each other for some things but don't have the kids, then their earnings might be say similar in nature. We're gonna just say 73 and 73 here. If the kids were involved or if there's planning for kids, you would expect when the kids were involved you might have more disparity between the two spouses because one of them might be spending more time than the other, for example, in order to help with the childcare. So that's when you might have more of a disparity there. You might then be planning for how long you're gonna be needing to support the child at least till possibly 18 or possibly longer than that. You might be calculating things like education for the child, which would be both people's kind of responsibility, both spouses' responsibilities. In that case, so that complicates things. We'll talk more about those examples in future presentations. If you're planning for the kid in the future, then again, you might wanna get the life insurance earlier because the life insurance could be cheaper when you're younger, for example, and try to think about how much life insurance you might need basically as you expand the family needs into the future or you can try to set up life insurance that could expand with you by more life insurance as the need goes. But obviously the younger you buy the life insurance then it might be cheaper to get the life insurance when younger, for example. So we're gonna imagine then that we've got two individuals that are kind of commingling their finances, married couple that are not planning to have kids and have no kids, which could be a more simple kind of scenario. So we're gonna imagine that they have a home mortgage. So they have a home and a mortgage on it that they're both responsible for at the 145,000, the car loans for both at the 35,000, the personal debt at the 10,000 and the credit card loans for the 9,000, no kids involved, funeral expenses are the 8,300. So what if you might think of each spouse then what would be their life insurance needs possibly? Well, you would think then, well, if it's just basically there's no kids involved then you might be wanting the life insurance to kind of settle the amount of your debt, for example, obviously, if you were to pass away and no longer have the earnings for the committed debt you've basically kind of committed to paying off, right? So you're thinking you're gonna at least pay off the debt or your half of the debt as you live together. If you were to die, you don't wanna burden the other with basically your half of the debt that kind of you committed to. So you would think that that would be kind of a baseline plus possibly the funeral costs. So it might be a little bit easier of a calculation in that case. So you might say, okay, well, let's make column D a little bit larger and let's say we had how much insurance needed to be responsible in this case. We could say let's put some black and white up top, home tab, font group, make this black and white and let's say that we're just gonna calculate our debts that we have together. So we've got our debts together and let's just say we're gonna say this is gonna be the mortgage and then I'm just gonna copy this down. I'm just gonna copy it down. Meaning I'm gonna use the autofill handle, put my cursor on autofill and bring that on down and that'll pick up the rest here. So we're picking all those up and then I'll just bring in the numbers. Same thing equals the 145 on the home. I'm gonna assume we're both responsible for the car loans, the personal debt and the credit card loans. Put my cursor on that first one, autofill handle, drag it on down. So there we have it. So we're gonna say total debt, total debt. We might say joint debt, total, you know, joint debt that we're both responsible for is commingled and let's basically indent here, alignment and indent. I'll double indent here, alignment and dent again and we might bring this to the outer column. Let's bring it out to the outer column and say this is the sum of these items. So there's our total debt and then we're just gonna say, well, both responsible for it. So I'm gonna say I'm responsible for half of that. So I'm just gonna say, right, divided by two for my responsibility. So there's the two. Let's put an underline here, font group and underline and see, and then this is gonna be half of the debt, half of total debt or possibly the joint debt is gonna be equal to the 199,000 divided by two. So you'd say, okay, then my responsibility would be, you would think for that 99.5. Again, if we had other things like a child, it gets a little bit more complicated because you're mixing in terms of who's gonna be responsible for the financial side and how long of that responsibility gets more complicated. But if you just had two individuals with co-mingled debt, for example, and no children involved now or in the future, you might just say, okay, I've taken on the responsibility to pay off half of that debt. If I die, I'd like to cover that responsibility of the 99.5 and then the funeral expenses, it's gonna cost me for the funeral expenses. Let's just estimate that. Let's call, well, I could do it this way. Funeral expenses equals this. We're gonna say that we also don't wanna burden them with the funeral expenses, 8003. Just dump, just burn me up in a bonfire and dump me at a coffee can and throw it into the ocean for crying out loud. $8,000 font group, let's underline it here. For our most modest receptacle, cost $8,000. So this is gonna be the insurance needed. And so we'll sum this up, equals the sum of these two. So we're at 107.8. Let's put some black and white over here, font group black and white. Let's do some border blue. I'm gonna select this whole thing. We're gonna go home tab, font group and say it's blue and border. If you don't have that blue, by the way, it's in the more colors, standard color wheel. There's the blue and then we'll put some brackets around it. And so there's the brackets. That's not the right blue. That's too dark. What happened? It's hit the drop down. I want this blue. Let's hit the color wheel. That's up a bit. That one, that's a little lighter. Okay, so there it is. All right, and so again, that's kind of a specialized kind of situation. And if you're talking to a life insurance company, like I say, most people, depends how experienced you're talking to in terms of your life insurance company and how they're gonna basically calculate it. They might have one calculation kind of in their head that they kind of stick to, but there's a lot of different kind of scenarios that you might be thinking of on your life situation. If you're in a life situation where you're basically commingling your debt with a partner, but you don't have, you don't have any kids or anything like that. You're not looking to have kids that might be an easier calculation. If I was to look at something like this calculator up top and they said, how much money will be needed for burial expenses? I can put that there. And then notice a lot of times they just give you this, how much income time do you need to cover? And I said 10 years or something like that. But if you're thinking about it this way, it's like, eh, I'm not really covering 10 years. You might try to say how much time would it cost me to cover the mortgage and then try to basically calculate your half of the mortgage over the life of the mortgage or something like that and use this kind of calculator to say, well, the mortgage has 15 years left on it and I'm gonna be paying my part of the mortgage, which let's say the mortgage was calculator. Where's the calculator? The calculator doesn't wanna be here. Calculator's not happy with me. So we're gonna say, you know, let's say the mortgage payments were 23,000 and we took half of that. So we'd say our half of the mortgage payments are 11.5 for the next 15 years that the mortgage is going for or whatever. And then how much money do you have in the savings to cover that? So this could be another factor that you can have, obviously, in this calculation it could get if you have a significant amount of savings, then that could alter your calculation because obviously if you have the savings, you could be paying down some of the debt. But clearly if you're in a situation we have a significant amount of debt, then you might not have a whole lot of savings because you're at the point in your life that you're basically paying down the debt. So let's say the savings are quite small to non-existent. How much money do you have in savings? How much annual, hold on a second, 11.5. And then let's say this is zero, no children for example, calculate it. So now they're at the 146.359. So here, and so we came out to 107.8. So you can try to use your financial calculators. Obviously I made up this number on the 11.5, I'm not sure exactly in this 15 years kind of made up that number. But you can use different methods for that kind of specific case when you put the kids into the bull park, either kids that are currently in existence or the possibility for future kids that you might want to be planning for as you purchase life insurance even before they have materialized, then that'll be a little bit more complicated. And so we'll get into more calculations in future presentations. One more thought before we move on. Note that if the major liability we're responsible for is something like the mortgage, we might be looking into life insurance and saying, okay, is there some way I can get the life insurance that will possibly have death benefits that decline over time given the fact that the mortgage will be going down over time as I pay it. In other words, as I live, we'll be paying off the mortgage and the mortgage balance will be decreasing over time. And we may be looking at life insurance policies where the death benefit can basically go down over time in alignment with the mortgage so that we can cover our responsibilities for the mortgage but possibly having kind of cheaper coverage maybe as we have the death benefits basically decreasing over time in alignment with the mortgage. So that's another option that she can kind of consider.