Part One – Cover Page – Provide your name, your choice of young professional, divorced
parent, or married couple, and you should have a brief overview of the family on this front page
as well.
Part Two – Balance Sheet – EVERY PLAN WILL INCLUDE A BALANCE SHEET (Follow
worksheet)
Part Three – Cash Flow Statement – EVERY PLAN WILL INCLUDE A CASH FLOW
STATEMENT (Follow worksheet)
Part Four – Recommendations for Three Issues with supporting documentation – There are
three sections to this part of the plan:
1). Section on employment issues;
2). Section for credit issues; and
3). Section on housing issues.
The worksheets for these various sections will be different depending on the family you select.
Each of these sections should include a cover sheet that has the
following sentence at the top and a paragraph or two to answer the
statement:
1.) My recommendation for the employment issue is……
2). My recommendation for the credit issue is…… and
3). My recommendation for the housing issue is……
Then attach all work and supporting documentation that shows how you determined which
choice was best and why.
A young married couple with a new baby
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.
– Husband works as a mid-level manager at a salary of $54,000
– Wife worked in banking at a salary of $40,000 and is currently on maternity
leave to care for the couple’s new baby
– The couple owns small investment account valued at approximately $60,000
– Husband has 401(k) plan at job and has accumulated 67,000
– Wife has 401(k) plan as well and has accumulated $44,000
– Couple has $3,200 in checking account
– Couple has $23,000 in savings account
– Wife has $18,000 in savings that she inherited from her father when he died
– Husband has four year old Honda Civic in fairly good condition
– Wife has six year old Toyota Corolla
– Couple is considering selling Toyota to purchase or lease a van
– Couple is about to close on a new home. They are paying $20,000 at the
sale and are looking at a $180,000 mortgage for 30 years at 5% interest. So,
current value of home is $200,000
– Wife is considering resigning from her job to stay at home with the new baby.
She has one more month of maternity leave. Couple has a slot held for them
at daycare at the rate of $250 per week when wife’s maternity leave is over.
– Couple has one credit card that is paid off each month, the couple uses it for
shopping and other expenses throughout the month.
TO DO:
1. Prepare a personal balance sheet (see Worksheets and textbook for
examples)
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)
Remember that you may add information to enhance the fact pattern.
You may want to consider adding income or expense items.
All items on the income statement must be explained.
3. Employment: Compare current job with resigning
Prepare a worksheet to show comparison (see Worksheets for
example)
Recommend action to take – keep current job or stay-at-home
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 specifics about work environment as compared to
home environment
You may determine specifics about career issues as compared to
family issues.
4. Credit: Evaluate purchase or lease of new van
Prepare a chart to show costs to keep current car, cost to buy, and cost
to lease. (see Worksheets for example)
Recommend action to take – keep, buy, or lease
Calculate monthly car payments and show work
Remember that you may add to the information to enhance the fact
pattern.
You may select the make and model of the new van and determine the
specifics about lease and/or purchase
5. Housing: Evaluate current mortgage arrangements
Prepare amortization schedules to compare 30yr mortgage and 20yr
mortgage
Recommend action to take – determine which mortgage term they
should select
Determine what they can afford keeping car situation in mind when
determining this
Remember that you may add to the information to enhance the fact
pattern.
SPECIAL INSTRUCTIONS
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, and interest
rate for a mortgage but not the monthly mortgage 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 family 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
family’s assets. Every family 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: You do NOT have to include this in your budget.
FINAL NOTE: You are given worksheets to help you with presenting
information.
In some cases, not every item on the worksheet will apply to your situation.
Complete the appropriate sections
In other cases, the worksheet is more of a guideline to help you think about
the issue. Use what you need.
