A Personal Financial Estimated Analysis Report for Personal Finance Course

A personal Financial estimated analysis report prepared for Jennifer Barry by Monique D Piggott

This report is an estimated report based on her ideas for retirement, Ms. Barry is a 25 year old female who has just graduated from college and looking to prepare for her future; Ms Barry has indicated that she currently is employed at a yearly salary of $28,900. Ms. Barry has indicated that she currently has the following debts that need to be considered when preparing a financial retirement package payment schedule. She has indicated that her monthly payments total $320 that is split amongst her expenses listed below in addition to her monthly rental expense.

a. Student Loans totaling $16,000

b. Credit card revolving debt of $7,300

c. Monthly rent expense of $350

Because Ms. Barry has a current negative worth, she is also considered to be in a high risk category and has asked for help in creating a more maintainable savings and living plan. Based on the above information, I will try highlight the positive steps that Ms. Barry has taken where she may be able to make a few adjustments in areas that are considered less advantageous to her long term goals and expand on ideas for investment that may be beneficial to Ms. Barry's long term intentions. Her short term goals include paying off her revolving debts; i.e. credit cards, student loans.

Initial evaluation shows the following:

Ms Barry invest in her employer's 401K retirement package which is a savings of 6% of her salary yearly, this amount is matched by her employer, she is currently contributing $90 bi-weekly and has accumulated a total of $2,800 towards her retirement.

Ms Barry has indicated that she currently has $800 in her checking account, and a used vehicle worth approximately $2,000 (of which she does not currently have a monthly car note expense).

My first suggestion would be in addition to the employee/employer contributed retirement plan, you should consider a monthly savings account with direct deposit, and I would also suggest a credit union because they usually have higher interest rates on their savings accounts and CD's. I would like to recommend opening a 5 year share certificate that will automatically renew upon maturity, this will allow you to continuously gain interest at a set rate and you can direct deposit a set amount bi-weekly from your paycheck.

Future value of a series of deposits;

1. If you save $50 bi-weekly = $100 per month and $1200 annually then at an interest rate of 5% earnings, you would have a savings in 5 years of $6,631.20 (1200 x 5.526 x 5=6631.20). This will give you an estimated savings of approximately $46,418.40 in 35 years. (age 63)

2. If you continue with the employee/employer contribution through a standard 401k at 4% of your income, you will have saved in 35 years $75,600.

3. You may also want to consider a Roth IRA, Savings Bonds or Mutual funds. They are short term funds that have a fairly high yield on them if handles correctly. Savings bonds and Municipal bonds have a set interest and fixed doubling in ten years, it is like having a promissory note of what you can expect to get in 10 years. They are also a tax savings. Also there are funds like the "Loomis Sayless Bond" that are considered go anywhere funds, they are more risky but tend to yield a higher return on your investment.

4. Lastly I would also recommend looking into Stock Fund, they are less "volatile" than other funds but they are a steady dividend paying fund, usually a firm that works with these types of stocks average around 5.4 percent or a gain of around 4% annualized over a set period of time. And all of these options are pre-tax deductions.

Money management is key to both your retirement and daily spending habits. It is important to maintain a budget of your expenses and payments; this will afford you some breathing room for unforeseen expenses or items that are considered both essential and non-essential.

A plus is you vehicle does not have a monthly payment however; since it is used it will require repairs and maintenance to keep it running, in addition to the semi-yearly insurance expense incurred. These items must be included in your budget so that your insurance is always paid both on time and without it being a financial hardship and costly repairs can be paid for without making additional sacrifices.

Rental insurance is essential for these times; it will afford you replacement after an unforeseen disaster or theft.

You should make a list of everything valuable, even the recent items purchased with your tax return and have them insured at current market value. These items should be any jewelry, electronics, furniture, appliances, family inherited pieces and anything else you may consider to have value. Renters insurance will cover you up to $100, 00 in the event of fire, water damage, theft, or natural disasters.

I have taken the liberty of creating a personal balance sheet for you.

Assets

Liquid Assets:

Checking account balance as of 10/24/2010.............................. $800

Car Insurance (Liability coverage)....................................... $100,000

Total Liquid Assets $100,800

Personal Possessions:

Clothing and Home Furnishings............................................ $685

Vehicle.......................................................................... $2,000

Total Household Assets..................................................... $2,685

Investment assets:

Savings (employer plan)................................................... $2,800

Liabilities

Current Liabilities:

Charge Account /Credit card Balances................................... $7,300

Long Term Liabilities:

Rent/Mortgage................................................................. $350 (monthly)

5 years at $350 per month will be...............................................$21,000