Personal financial plan project | Business & Finance homework help

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One of your major projects for the semester will be the creation of a Personal Financial Plan. It is weighted at 30% of your Consumer Finance grade. The narrative portion of this paper should be a minimum of twelve pages in length. Following are the minimum sections and items that are to be considered and included when developing your plan:

  1. INTRODUCTION: Introduce yourself and      explain your family situation. Discuss your philosophy towards money and      your current biggest financial challenge.
  2. PERSONAL FINANCIAL GOALS:

a. Short Term Goals (1-3 years): Choose at least two short-term goals and discuss the details of each goal, why it is important, what this goal will do for you and how you will accomplish this goal. Support you goals with specific action plans.

b. Medium Goals (4-7 years): Choose at least two medium-term goals and discuss the details of each goal, why it is important, what this goal will do for you and how you will accomplish this goal. Support you goals with specific action plans.

c. Long Term Goals: Choose at least two long-term goals and discuss the details of each goal, why it is important, what this goal will do for you and how you will accomplish this goal. One goal that must be included in this section should be retirement. When do you plan to retire, what do you plan to do in retirement, how much you will need and how are you going to get there?

Optional: You may wish to put your goals in a table with due dates and brief action plans.

  1. FINANCIAL INFORMATION:
    1. Personal Financial Statements       (Balance Sheet, Budget, I&E statement)
    2. Raises:  How do you manage your raises? Or       do they get absorbed into your spending? If you don’t manage your raises,       what changes might you make next time you get a raise?
    3. Budget (annual, by month):  how do you make a budget work for you? If you don’t have a budget, how will       you establish a budget to make it an effective tool to help you meet your       goals and manage the household expenses?
    4. Spending issues:  If       you live paycheck to paycheck or have other spending issues, (impulse       spending, free-loading adult children, and a significant other not       working with you toward goals) this is the place to discuss specific       strategies on how you are going to change your behavior and overcome       these hurdles to get to a place to achieve your goals. 
    5. Debt Analysis

i. Credit Card Debt

ii. Installment Debt

iii. Other Debt 

iv. Discuss your ratios, especially your debt to income ratio.  If it’s over 40% do you have a plan to reduce this number?  How soon will that happen? What things can you do to accelerate your debt repayment?  Check your credit rating.  Are you happy with this number? What steps can you take to improve this number (a detailed discussion should follow if you score is under 620).  Would debt counseling help you?  If you have a lot of credit card debt, consider putting together a comprehensive schedule for your debt reduction plan.

  1. Savings

i. Emergency Savings:  How much do you need for your emergency savings? How much do you currently have and how /when will you save the remainder?  Where will you keep these funds?  Define what an emergency is and why you would tap into these funds.

ii. Discretionary Savings Program:  What is your current financial picture? Are you happy with it? Will your current budget allow you to make to meet your intermediate- and long-term goals? Is your debt structured under the most favorable rates and terms for your needs? How much credit card debt do you have? Is there a better way to structure it? What changes do you recommend for yourself?  Do you know what your credit bureau looks like? Do you know your credit score? Do you need to take any action to improve your credit score?

  1. EMPLOYMENT ANALYSIS:

What is your current situation? Are you where you need to be? How does your current salary/benefits compare to the industry? What is your career path? What else could you do to improve your prospects? How marketable are you?

  1. HOUSEHOLD ANALYSIS:
    1. Housing 

i. Housing Assessment

ii. Auto Assessment

Look at your current situation. Are you happy with your current home? Auto? Want/need to make any changes? What about your mortgage and/or auto loan? Are you happy with the rates and terms?

  1. Auto

i. Get the Nada value of your car.

ii. Do you have a loan? How can you pay it off early?

iii. When will you need to plan to get a new car?

1. What do you need to save today to pay cash for the next car?

  1. INSURANCE ANALYSIS:

i. Homeowner’s or Renter’s

ii. Auto and other vehicles including motorcraft

iii. Life

iv. Health

v. Disability: Short- and Long-Term

vi. Long-Term Care

What are your current coverages? Do you have enough? Too much? How about the cost? Are you getting a good deal? Are you happy with the service? What are your deductibles?

  1. FINANCIAL SERVICE PROVIDERS:

What financial services do you use? (Checking, Savings, Money Market, CDs, and Loans) Who is your primary financial institution? Why? What other institutions do you use? Are you happy with the service you are receiving? Could you get a better deal from your provider or elsewhere? Do you need to make any changes?

  1. CONTINGENCY PLANNING:

i. Savings and Liquidity Analysis

What would you do if you lost your main household income tomorrow? If it took you 6 months to replace this income, how would you survive?

  1. TAX PLANNING

i. Payroll Withholding – too much, not enough or just right?

ii. What other deductions might be available to you?

Look at your situation now. Are there ways to save on taxes? Tax deductible contributions? Additional mortgage interest? Tax credits?

  1. OTHER       FINANCIAL CONSIDERATIONS/CONCERNS:

Do you have any other financial issues you need to consider? For example: Will you need to help your adult children with their finances? What about your parents or grandparents or other family members? Are you planning on paying for your children’s weddings? Is there anything other financial concerns that haven’t been addressed?

  1. COLLEGE PLANNING:
    1. Outline your savings plan or       savings goal
    2. Evaluate your current or       planned investments

Do you need to plan for your children? How are you paying for your current courses? Do you need to develop a plan to pay off debt? If you could consolidate your student loans today – what would the interest rate be? Can you pay at least the interest and fees TODAY to avoid the balance growing?  How can you accelerate the repayment of your student loans?  How much interest would you save?

  1. RETIREMENT  AND INVESTMENT PLANNING:
    1. Investing:       what are your investment goals?  Discuss your risk tolerance.
    2. What       does “Retirement” mean to you? What are your goals? What       do you envision your life to be like? 
    3. Retirement       Income and Needs Analysis – how much money do you need and where will it       come from?
    4. How       will you save for retirement?  401K,       Roth IRA, Annuities?  If you have a       401k or an IRA, discuss how these funds are invested and what you project       the balances to be at retirement.
    5. Detail       your current investment choices and why you chose them. 

What will you do when you retire? Travel? Leisure? Work part time? Volunteer? Really think about what your daily life will be like. What are your retirement needs and are you on track to meet them? Statistically, how long are you going to live? 

  1. ESTATE PLANNING:
    1. Do       you have/need a Will or Trust?
    2. Who       is/would be your Executor, Witnesses, Guardian for your children
    3. List       your Beneficiaries and any specific items to be bequeathed to them
    4. Think       about the inventory of your estate – who do you want to inherit       what? 
  2. Required Tables/Schedules –  
    1. Balance       Statement and Income and Expense Statement
    2. Budget;       INCLUDE YOUR Solvency and Liquidity ratios
    3. Debt       Schedule
    4. Retirement       Needs Estimate
  3. Conclusion: ACTION / COMMITMENT      STATEMENT

Are you willing to take action now or make a commitment to do something in the future to improve your financial life? For example: Within the next two months, I will create a will for my family. Remember this is a pledge you are making to yourself – be specific and put a date to it.

11.  Outside Research:  Consider the areas of your personal financial plan where there’s room for improvement.  Go out and research these topics further and discuss your findings and how you can apply these personally to improve your plan. Four additional appropriate sources are properly cited and used in the paper to add to the student’s knowledge base.  No direct quotes are to be used in the paper.

There are many worksheets in the books that may give you some direction. The Internet has great information as well. The goal is for you to apply the many topics we discuss in this class and create a very meaningful document for yourself. 

12. Recap:  Remember that this narrative paper should be at least 12 pages in length with no charts, graphs or spreadsheets included in the narrative portion of the paper. Charts, graphs, and/or spreadsheets should be included in the packet after your paper. They should be of reasonable size and referenced in the paper. Internet printouts and other copies do not count at all – but may be submitted as supporting documents. This is a formal research paper – don’t forget to document your sources. It should be narrative – but due to the personal nature of this project you may write in first person.