Financial Planning Project
Student Name
Institution Affiliation
Instructor
Date
Financial Goals
My financial goals are threefold. First and foremost is the short term goals that involve clearing the student loans that has been supporting my studies. Clearing student loan is a perquisite of achieving the median and long term goals. It is hard to take another loan when still in debt with any other form of loan. The median term goal is going back to school for advancement in education within two years of saving. The savings and loan secured will be used to pay the tuition fees. The long term goal is that in ten years’ time, I should have a home of my own, accomplished my education advancement and making enough savings.
Statement of Income Feb 24, 2016
Current Assets
Total Income $2,650
Prepaid rent $1,000
Inventory $900
Total current assets $4,550
Long term Assets $500
Dividends on Savings $2,000
Shares $1,000
Total assets $7,550
Current Liabilities
Bills $50
Accrued Expenses $100
Student loans $1,250
Long term Liability $3,000
Total Liabilities $4,400
Retained Earning $2,650
Common Stoke $5,00
Analysis
From financial statement for the year ending 2016 above, it can be seen that the total assets are worth $ 7550 against total liability of $4400. The financial status as per the statement it’s in good position to make better investment that in turn will bring more cash inflows (Albrecht, 2014). This can be explained in terms of having a substantial and positive owners’ equity that totals to $3150. Out of the total owner’s risk, the retained earnings are at $ 2650. Albrecht (2014), this imply that the amount that is being saved to meet the long term goals can be improved without compromising the quality of life or defaulting on the loan repayment.
Budget
Item Amount
Income 1 $500
Income 2 $250
Income 3 $1,200
Income 4 $700
Monthly Expenses
Rental $500
Electricity bills $90
Loan repayment $40
Food staff $320
Emergency saving $100
Cell phone $50
Miscellanies $100
Saving $1,250
commuting $200
Summary
Total Cash inflow $2,650
Total Cash outflow $2,650
Analysis
The budget above is balanced and able to deliver on the planed goals. The repayment loan is underway which allow to take other loans hence enabling advancing on education. The savings are uninterrupted by loan repayment. There is emergency saving that will canter for the needs that arise impromptu and need cash outside the budgeted amount. Even though the cash inflow and outflow are equal, the saving has taken the highest amount hence making the goals that have been planned for to be easily actualized. The goals are clearing the student loans, advancing in education and owning a home in order of priority. The two documents are in agreement and the goals that are set are realizable since they are realistic and in tandem with the financial status as portrayed by the documents (Makoujy, 2012).
Unplanned Expenses
In the course of executing the budget, my car got involved in an accident where we sustained injuries and car broke down needing a major repair to make it fit again. In the event, my health and those that were on board becomes a priority that need extra cash that is not budgeted for. The medical bill needed is $1500 for the minor surgery due to head injury while the others four that were on board is $250 for the minor injuries that they sustained. From the assessment of the car damage from the accident, it need total of $ 1250 to buy parts that were damaged and a further $ 500 as the labor fee. The total amount that was finally unplanned for and need to be settled is $4750.
Assessing the financial status from the statement and the budget, the position is tight. However, several aspects can be compromised to provide for the current and urgent need that had not been planned for before. The time frame of the goals may be compromised, but the health is paramount in achieving the goals. To that effect, the emergency saving will be one of the options, taking a soft loan is another option and the other one is taking money for the regular saving account. From one point of view, soft loan may be damaging since it will need repayment with interest fee (Makoujy, 2012). More so, presence of student loan may hamper acquiring another loan. Therefore, the emergency and regular saving will be considered. From evaluation, the option taken is adequate in meeting the unplanned needs that came with accident. They are inexpensive and with advantage that they have little compromise on the financial goals.
Reference
Albrecht, W. S. (2014). Accounting, concepts & applications. Mason, Ohio: Thomson/South-Western.
Makoujy, R. J. (2012). How to read a balance sheet. New York: McGraw-Hill.
Greuning, H.., Brajovic, B. S., & Johnson-Calari, J. (2013). Analyzing and managing banking risk: A framework for assessing corporate governance and financial risk. Washington, D.C: The World Bank.
