Take the information as given. Do not change any data. You may, however, add any additional information to enhance the fact pattern if you believe it is relevant for the financial plan.
1. Prepare a personal balance sheet (see Worksheets and textbook for examples)
1 page for statement and 2-3 pages for explanations of numbers plus any attachments
Remember that you may add to the information to enhance the fact pattern.
You may want to consider adding assets and/or debt that were not mentioned.
All items on the balance sheet must be explained.
2. Prepare a cash flow statement (see Worksheets and textbook for examples)
1 page for statement and 2-3 pages for explanations of numbers plus any attachments
Remember that you may add information to enhance the fact pattern.
You may want to consider adding income items, and you should add expense items because only a few are mentioned.
All items on the income statement must be explained.
3. Employment: Compare current job with new position
1 page for cover and 3-4+ pages to explain recommendation plus any attachments
Prepare a resume for the new position (see Worksheets for example)
Recommend action to take – keep current job or take new job and explain the choice
Write about financial and non-financial advantages and disadvantages
Remember that you may add to the information to enhance the fact pattern.
You may determine the education and experience for the resume
You may determine the type of new job and the salary & benefits of that position as well as the benefits, etc. of current position
(Note: Benefits may be non-financial as well as financial)
4. Credit: Evaluate debt situation
1 page for cover and 3-4+ pages to explain recommendation plus any attachments
Compute personal financial ratios to assess current financial situation and explain what each ratio means. (see lecture notes for information on ratios)
Recommend action to take – maintain current payments or pay off debt
Remember that you may add to the information to enhance the fact pattern.
You may determine the specifics about the student loan, credit card, etc. that are not already stated above
5. Housing: Compare current shared apartment to solo new apartment
1 page for cover and 3-4+ pages to explain recommendation plus any attachments
Prepare a chart to compare costs (rent, food, electric, cable, heat, etc.)
Recommend action to take – stay in shared apartment or get own apartment
Determine what is the best decision financially given all financial concerns and also address non-financial matters
Remember that you may add to the information to enhance the fact pattern.
You may determine the location, size, cost, etc. of the new apartment as compared to the current apartment.
You may need to calculate answers for certain sections of your financial plan.
For example, the fact pattern may give you the year, make and model of a car but not the value. In order to determine the value (which you will need for the balance sheet), you will need to go to Kelley Blue Book on the web (kbb.com). Print the page and attach to your plan! (You will lose points if this is not attached)
For example, the fact pattern may give you the amount, length, or interest rate for a loan but not the monthly payment. In order to determine the payment (which you will need for your cash flow statement), you will need to use an amortization schedule. There are several sites on the web to help you just search under amortization schedule. Print the page and attach to your plan! (You will lose points if this is not attached)
You will also need to create your own answers for various sections of the financial plan.
For example, the fact pattern may state that the person owns a car so you need to determine the gas, maintenance, insurance and other monthly costs for the car. This information will go in the cash flow statement. Explain the numbers you added and how you determined each amount and why. (You will lose points if you do not do so)
For example, the fact pattern may not give you all of the information about the person’s assets. Every person would have personal items; however, no information is provided in the fact pattern. You would determine an appropriate amount to include on the balance sheet. (You will lose points if you do not do so)
Taxes: Do NOT have to include this in your budget.