COMM 221 Coursepack: Personal Finance & Investment Overview
2025-2026 Concordia University
Comm 221 – Course Pack
Concordia University
John Molson School of Business
Table of Contents
1.0 BASICS OF PERSONAL FINANCE ............................................................................................................................... 2
1.1 BASICS OF FINANCIAL PLANNING ................................................................................................................................................................ 3
1.2 UNDERSTANDING BANKING AND INVESTMENT OPTIONS .......................................................................................................................... 7
1.3 IMPORTANCE OF INSURANCE AND TYPES OF INSURANCE ....................................................................................................................... 10
1.4 UNDERSTANDING INCOME TAX AND TAX PLANNING ............................................................................................................................. 14
1.5 RETIREMENT PLANNING ........................................................................................................................................................................... 19
1.6 PRACTICE PROBLEMS ................................................................................................................................................................................ 25
1.7 PRACTICE PROBLEMS – SUGGESTED SOLUTIONS .................................................................................................................................... 26
2.0 SUPPLY & DEMAND EQUILIBRIA............................................................................................................................ 28
2.1 DEMAND EQUATION/FUNCTION .............................................................................................................................................................. 28
2.2 SUPPLY EQUATION/FUNCTION ................................................................................................................................................................. 30
2.3 FIRST EQUILIBRIA – EQUATING SUPPLY & DEMAND FUNCTIONS ............................................................................................................ 31
2.4 NON-LINEAR FUNCTIONS .......................................................................................................................................................................... 34
2.5 CONSUMER AND PRODUCER SURPLUS .................................................................................................................................................... 36
2.6 ELASTICITIES (OWN-PRICE/CROSS-PRICE/INCOME) ....................................................................................................... 38
2.7 TAXES AND DEADWEIGHT LOSS ................................................................................................................................................................ 41
2.8 QUOTAS AND PRICE LIMITS ...................................................................................................................................................................... 43
2.9 PRACTICE PROBLEMS ................................................................................................................................................................................ 48
2.10 PRACTICE PROBLEMS – SUGGESTED SOLUTIONS .................................................................................................................................. 49
3.0 ETHICS, SUSTAINABILITY & GLOBAL FACTORS ...................................................................................................... 53
3.1 READING A: BLACK WALLSTREET & THE TULSA RACE RIOTS................................................................................................................. 53
Question prompts for Reading A ........................................................................................................................ 54
3.2 READING B: THE 2008 MORTGAGE-BACKED SECURITIES (MBS) CRISIS ............................................................................................. 55
Question prompts for Reading B ........................................................................................................................ 57
3.3 READING C: ACID RAIN PROGRAM AND SULFUR DIOXIDE ALLOWANCES ............................................................................................. 58
Question prompts for Reading C......................................................................................................................... 60
3.4 READING D: COUNTRY OF NAURU........................................................................................................................................................... 61
Question prompts for Reading D ........................................................................................................................ 63
,4.0 ADDENDUM: TVM/DCF/NPV problems… ............................................................................................ 64
1
, Comm 221 – Basics of Personal Finance
1.0 Basics of Personal Finance
In this segment of the course pack, we do an overview of finance,
emphasizing its integral role in daily life and long-term economic stability.
Overview of personal finance
Personal finance, at its core, is a multifaceted discipline involving the
management of an individual's or a family's financial resources. It
encompasses the four pillars of financial activities: earning, saving, investing,
and spending. The ultimate objective of effective personal finance is to
optimally manage these resources to achieve financial security and maximize
wealth over a lifetime.
Importance of personal finance
Consider two individuals, Emily and Robert, both starting their professional
journey fresh out of university. Emily, who has a foundational understanding
of personal finance, recognizes the value of prudent budgeting. Right from
her first paycheck, she allocates a portion towards savings and commences
contributions to a retirement fund. In contrast, Robert, lacking the
fundamental knowledge of personal finance, spends his entire income each
month, with no structured budget or savings scheme in place.
Fast forward a decade, Emily has accumulated a substantial savings reserve,
significantly contributed to her retirement fund, and navigated unforeseen
financial emergencies without resorting to debt. Conversely, Robert's
financial situation is characterized by a paycheck-to-paycheck lifestyle and
accumulated credit card debt stemming from unanticipated expenditures.
This scenario underscores the transformative impact a robust understanding
of personal finance can have on one's financial trajectory. Informed financial
decisions today lay the groundwork for a future of financial stability and
security.
The concept of money management
Money management is an organized and strategic process encompassing
budgeting, investing, saving, and conscientious spending. This process
requires an understanding of one's present financial strengths, as well as a
foresight into future financial needs. Mastering the art of money management
is essential for avoiding common financial mistakes, including falling into
overwhelming debt or not having sufficient funds set aside for retirement.
In conclusion, personal finance is a vital discipline with far-reaching
implications for every individual's financial health and future stability. It
covers a broad spectrum of activities, including earning, saving, investing,
and spending. The importance of personal finance cannot be overstated as it
directly shapes an individual's financial trajectory. Grasping the concept of
money management is a steppingstone towards achieving long-term financial
2
, Comm 221 – Basics of Personal Finance
stability. The contrasting journeys of Emily and Robert serve as a potent
illustration of the long-term consequences of personal finance knowledge, or
the lack thereof.
1.1 Basics of Financial Planning
Introduction
Financial planning refers to the comprehensive evaluation and management
of an individual's current and future financial state to meet life goals through
the proper management of financial resources. It is a disciplined, long-term
approach to managing your finances that involves setting goals, planning,
and regular review and adjustment.
Imagine it as a roadmap for your financial journey. Just as a traveller refers to
a map to understand where they're going and how best to get there, you can
use a financial plan to guide your money management decisions and help
you reach your financial goals.
Setting SMART Goals
Understanding your goals is the foundation of effective financial planning.
These goals should be Specific, Measurable, Attainable, Relevant, and Time-
bound (SMART).
Let's imagine an example to illustrate this concept. Suppose you earn
$80,000 annually after taxes1 and you expect your annual after-tax income to
increase by 4% a year2. You have two main goals:
Goal 1: Buy a car in 2 years, which costs about $50,000.
Requires $25,000 annual saving for the next two years.
Goal 2: Save $30,000 for emergencies within 5 years.
Requires $6,000 annual saving for the next five years.
These goals are SMART—they are specific (buy a car, save for emergencies),
measurable ($50,000 for a car, $30,000 for emergencies), attainable (with
your income and expected savings, you can realistically reach these goals),
relevant (both goals align with your current lifestyle and needs), and time-
bound (you plan to achieve these goals within a specific period). Figure 1.1
illustrates the growth of your annual income during the five years, and shows
the proportion of annual savings required to reach both goals, in time.
1 In section 1.4, we will discuss income tax and how it is calculated.
2
Therefore, your income in year 2, 3, 4 and 5 will be $83,200; 86,528; 89,989; and 93,588 respectively.
3
2025-2026 Concordia University
Comm 221 – Course Pack
Concordia University
John Molson School of Business
Table of Contents
1.0 BASICS OF PERSONAL FINANCE ............................................................................................................................... 2
1.1 BASICS OF FINANCIAL PLANNING ................................................................................................................................................................ 3
1.2 UNDERSTANDING BANKING AND INVESTMENT OPTIONS .......................................................................................................................... 7
1.3 IMPORTANCE OF INSURANCE AND TYPES OF INSURANCE ....................................................................................................................... 10
1.4 UNDERSTANDING INCOME TAX AND TAX PLANNING ............................................................................................................................. 14
1.5 RETIREMENT PLANNING ........................................................................................................................................................................... 19
1.6 PRACTICE PROBLEMS ................................................................................................................................................................................ 25
1.7 PRACTICE PROBLEMS – SUGGESTED SOLUTIONS .................................................................................................................................... 26
2.0 SUPPLY & DEMAND EQUILIBRIA............................................................................................................................ 28
2.1 DEMAND EQUATION/FUNCTION .............................................................................................................................................................. 28
2.2 SUPPLY EQUATION/FUNCTION ................................................................................................................................................................. 30
2.3 FIRST EQUILIBRIA – EQUATING SUPPLY & DEMAND FUNCTIONS ............................................................................................................ 31
2.4 NON-LINEAR FUNCTIONS .......................................................................................................................................................................... 34
2.5 CONSUMER AND PRODUCER SURPLUS .................................................................................................................................................... 36
2.6 ELASTICITIES (OWN-PRICE/CROSS-PRICE/INCOME) ....................................................................................................... 38
2.7 TAXES AND DEADWEIGHT LOSS ................................................................................................................................................................ 41
2.8 QUOTAS AND PRICE LIMITS ...................................................................................................................................................................... 43
2.9 PRACTICE PROBLEMS ................................................................................................................................................................................ 48
2.10 PRACTICE PROBLEMS – SUGGESTED SOLUTIONS .................................................................................................................................. 49
3.0 ETHICS, SUSTAINABILITY & GLOBAL FACTORS ...................................................................................................... 53
3.1 READING A: BLACK WALLSTREET & THE TULSA RACE RIOTS................................................................................................................. 53
Question prompts for Reading A ........................................................................................................................ 54
3.2 READING B: THE 2008 MORTGAGE-BACKED SECURITIES (MBS) CRISIS ............................................................................................. 55
Question prompts for Reading B ........................................................................................................................ 57
3.3 READING C: ACID RAIN PROGRAM AND SULFUR DIOXIDE ALLOWANCES ............................................................................................. 58
Question prompts for Reading C......................................................................................................................... 60
3.4 READING D: COUNTRY OF NAURU........................................................................................................................................................... 61
Question prompts for Reading D ........................................................................................................................ 63
,4.0 ADDENDUM: TVM/DCF/NPV problems… ............................................................................................ 64
1
, Comm 221 – Basics of Personal Finance
1.0 Basics of Personal Finance
In this segment of the course pack, we do an overview of finance,
emphasizing its integral role in daily life and long-term economic stability.
Overview of personal finance
Personal finance, at its core, is a multifaceted discipline involving the
management of an individual's or a family's financial resources. It
encompasses the four pillars of financial activities: earning, saving, investing,
and spending. The ultimate objective of effective personal finance is to
optimally manage these resources to achieve financial security and maximize
wealth over a lifetime.
Importance of personal finance
Consider two individuals, Emily and Robert, both starting their professional
journey fresh out of university. Emily, who has a foundational understanding
of personal finance, recognizes the value of prudent budgeting. Right from
her first paycheck, she allocates a portion towards savings and commences
contributions to a retirement fund. In contrast, Robert, lacking the
fundamental knowledge of personal finance, spends his entire income each
month, with no structured budget or savings scheme in place.
Fast forward a decade, Emily has accumulated a substantial savings reserve,
significantly contributed to her retirement fund, and navigated unforeseen
financial emergencies without resorting to debt. Conversely, Robert's
financial situation is characterized by a paycheck-to-paycheck lifestyle and
accumulated credit card debt stemming from unanticipated expenditures.
This scenario underscores the transformative impact a robust understanding
of personal finance can have on one's financial trajectory. Informed financial
decisions today lay the groundwork for a future of financial stability and
security.
The concept of money management
Money management is an organized and strategic process encompassing
budgeting, investing, saving, and conscientious spending. This process
requires an understanding of one's present financial strengths, as well as a
foresight into future financial needs. Mastering the art of money management
is essential for avoiding common financial mistakes, including falling into
overwhelming debt or not having sufficient funds set aside for retirement.
In conclusion, personal finance is a vital discipline with far-reaching
implications for every individual's financial health and future stability. It
covers a broad spectrum of activities, including earning, saving, investing,
and spending. The importance of personal finance cannot be overstated as it
directly shapes an individual's financial trajectory. Grasping the concept of
money management is a steppingstone towards achieving long-term financial
2
, Comm 221 – Basics of Personal Finance
stability. The contrasting journeys of Emily and Robert serve as a potent
illustration of the long-term consequences of personal finance knowledge, or
the lack thereof.
1.1 Basics of Financial Planning
Introduction
Financial planning refers to the comprehensive evaluation and management
of an individual's current and future financial state to meet life goals through
the proper management of financial resources. It is a disciplined, long-term
approach to managing your finances that involves setting goals, planning,
and regular review and adjustment.
Imagine it as a roadmap for your financial journey. Just as a traveller refers to
a map to understand where they're going and how best to get there, you can
use a financial plan to guide your money management decisions and help
you reach your financial goals.
Setting SMART Goals
Understanding your goals is the foundation of effective financial planning.
These goals should be Specific, Measurable, Attainable, Relevant, and Time-
bound (SMART).
Let's imagine an example to illustrate this concept. Suppose you earn
$80,000 annually after taxes1 and you expect your annual after-tax income to
increase by 4% a year2. You have two main goals:
Goal 1: Buy a car in 2 years, which costs about $50,000.
Requires $25,000 annual saving for the next two years.
Goal 2: Save $30,000 for emergencies within 5 years.
Requires $6,000 annual saving for the next five years.
These goals are SMART—they are specific (buy a car, save for emergencies),
measurable ($50,000 for a car, $30,000 for emergencies), attainable (with
your income and expected savings, you can realistically reach these goals),
relevant (both goals align with your current lifestyle and needs), and time-
bound (you plan to achieve these goals within a specific period). Figure 1.1
illustrates the growth of your annual income during the five years, and shows
the proportion of annual savings required to reach both goals, in time.
1 In section 1.4, we will discuss income tax and how it is calculated.
2
Therefore, your income in year 2, 3, 4 and 5 will be $83,200; 86,528; 89,989; and 93,588 respectively.
3
