Financial planning project
Cho
FIN3140_PersonalFinancePlan_samplestudent_4.17.211.pptx
Final Project PERSONAL FINANCIAL PLAN
Student Sample
Professor Mark Del Pezzo
FIN 3140
April 17, 2021
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Table of Context
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| page1 | Page2-3 | Page4 | Page5 | Page6 | page7 | Page8 | Page9 | Page 10-11 | Page12-13 | page14 | Page15 |
| Introduction | Net Worth | Credit Building Plan | Monthly Spending | Monthly budget | Emergency Fund | Retirement | Short-Term Savings | Mid-Term Savings | Long-Term Savings | Summary | Conclusion |
“If you would be wealthy, think of saving as well as getting.”
—Benjamin Franklin
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This Photo by Unknown Author is licensed under CC BY-ND
Introduction
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This Personal Finance Plan aims to observe and address my current financial state, as well as create SMART goals for future financial endeavors.
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This Photo by Unknown Author is licensed under CC BY-NC-ND
NET WORTH
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According to the textbook, assets are made up of four categories: liquid, personal possessions, real-estate, and investment. My liquid assets include my savings and checking accounts amounts, which total to approximately $5,000.
Personal possession assets include furniture, vehicle, electronics, and items found in the “other” category. Value of furniture and electronics are based on current selling prices in online markets. Vehicle value derived from Blue Book estimation. Items in “other” category (jewelry, collectibles, etc.) are an estimated value.
Investment assets include a bond I purchased from the government approximately 3 years ago. When the bond has fully matured after 17, I should receive approximately $175.00₁
Being that I have neither owned a credit card nor taken out any loans, I have no liabilities
Subtracting my total liabilities from my total assets, It can be concluded that I have a current estimated net worth of $9,465
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| Current Estimated Net Worth | |
| Assets | |
| Savings/Checking | $5,000 |
| Furniture | $650 |
| Vehicle | 2,000 |
| Electronics | 2,475 |
| Bonds | $50 |
| Other | $50 |
| Total Assets | $9,468 |
| Liabilities | |
| Total Liabilities | $0 |
| NET WORTH | $9,465 |
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NET WORTH
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According to a study conducted by CNBC₂, the average net worth of an American between the ages of 35-44 is $4,36,200. it is my goal to exceed that average, obtaining a net worth of $500,000 in 15 years. I would have to increase my net worth by $32, 702 annually to achieve this goal. And in order to do so, I would need an annual income of at least $50k a year.
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| Desired Future Net Worth | |
| Current Net Worth | $9,468 |
| Future Goal | $500,000 |
| Net Worth in 1 year | $42,170 |
| Net Worth in 5 years | $172,978 |
| Net Worth in 10 years | $336,488 |
| Net Worth in 15 years | $499,998 |
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Credit Building Plan
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I currently have no debt, as I abstain from the use of credit cards and loans. However, I am aware of the possibility of needing a credit score in the future to make down payments on property and vehicles (close-end credit). Therefore, I have constructed a credit-building plan for when I do decide to get my first credit card:
Open a Credit Account
Obtain a Secured Credit Card. No application fees will apply, and my spending power will be limited by how much I deposit in this account
Ensure that I do not make purchases via credit that I can’t readily pay off. I will start with small purchases (e.g. T.V. set), and work my way up to larger one’s as my income increases
Pay all card dues on-time
Check my credit score for free once a year (checking it too often will cost fees and affect score)
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Open Credit Account
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Secured Credit Card
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Start Small
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Timely Payments
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Check Credit Score
MONTHLY SPENDINGS
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In the month of March, I spent a total of $870.46. Nearly half of my total spending comes from monthly medical bills, and the second-largest amount of money spent comes from groceries (food, house-hold necessities, etc..)
Having calculated my total monthly spending, I can now calculate the monthly budget I would like to set for myself, and realistic means of remaining bellow budget.
| Spending for the Month of March | |
| Software applications | $43.17 |
| Groceries | $208.19 |
| Entertainment | $16.69 |
| Medical | $405.34 |
| Other | $197.07 |
| Total Spending | $870.46 |
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Spending: March
Sales Software Applications Groceries Entertainment Medica; Other 43.17 208.19 16.690000000000001 405.34 197.07
MONTHLY BUDGET
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In order to decrease my spending, I have limited myself to a monthly budget of $650.00. I reduced my software application spending by unsubscribing from a software and downgrading my subscription plans for other software's where applicable. I reduced my groceries spending by eating out less, and shopping at Walmart instead of Publix, as Publix’s groceries are more expensive. I limited myself to a $50 entertainment budget, covering all excursion ventured with friends and family. Unfortunately, the medical bill is unavoidable, so I limited it to the absolute necessities (a $26 reduction). Lastly, I gave myself a $64 “wiggle room” to cover possible miscellaneous expenses (e.g. gifts for occasions, unexpected fees, travel, etc..).
| Desired Monthly Budget | |
| Future Goal | $650< |
| Software applications | $26.99 |
| Groceries | $130.00 |
| Entertainment | $50 |
| Medical | $379 |
| Other | $64 |
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EMERGENCY FUND
I am currently a full-time, unemployed student. My source of income is my financial air refund, summing up to approximately $4,000 bi-annually.
My goal is to have $2,000 in my emergency fund in 12 months, which means I need to save $375 dollars quarterly.
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| Current Value of Emergency Fund | $500 |
| Future Goal | $2,000 |
| Value of Emergency Fund in 3 Months | $875 |
| Value of Emergency Fund in 6 Months | $1,250 |
| Value of Emergency Fund in 9 Months | $1,625 |
| Value of Emergency Fund in 12 Months | $2,000 |
This Photo by Unknown Author is licensed under CC BY-SA
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RETIREMENT
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Post-retirement, I would love to have enough finances to live freely with out the fear of having to go back to work. The chart bellow illustrates the savings plan I would have to follow to be able to achieve this goal. (Assumed earnings of 50k annually) Need assumptions invest blank $ per month amount and assume a return of % annually.
| Current Retirement Savings | $0 |
| Future Goal | $750,000.00 |
| Retirement Savings in 1 year | $16,666.67 |
| Retirement Savings in 5 years | $83,333.34 |
| Retirement Savings in 10 years | $166,666.68 |
| Retirement Savings in 30 years | $500,000.00 |
| Retirement Savings in 45 years | $750,000.15 |
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SHORT-TERM SAVINGS
I would like to be able to travel out-of-state this September, hoping to spend no more than $600 on the trip in total. After Cross-referencing several travel sights, I have discovered the following :
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The average flight cost on the date of my travel ranges from $150-$300
TRAVEL
The average lodging cost for my destination ranges from $136-$280
| Travel Savings | $0 |
| Future Goal | $600 |
| Savings in 1 month | $120 |
| Savings in 2 months | $240 |
| Savings in 3 months | $360 |
| Savings in 4 months | $480 |
| Savings in 5 months | $600 |
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MID-TERM SAVINGS
I would like to be able to save up to get my own apartment within the next two years, covering one year’s worth of rent. After cross-referencing several real-estate websites, I have concluded the following:
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The average rent for a one-bedroom apartment in Miami, Florida ranges from $1,000-$2,000 a month.
APPARTMENT
Most apartment lease contracts are binding for one year
| Apartment savings | $0 |
| Future Goal | $18,000 |
| Savings in 1 month | $750 |
| Savings in 6 months | $4,500 |
| Savings in 12 months | $9,000 |
| Savings in 18 months | $13,500 |
| Savings in 24 months | $18,000 |
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MID-TERM SAVINGS
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CAR
I would like to purchase a new vehicle within the next two years. I will allot 5,000 towards this new vehicle. After cross-checking several car dealership websites, I have concluded the following:
The price of the vehicle pictured (left) is currently at an average of $7,000
When the car first came out, it was worth approximately $21,000
| Car Savings | $0 |
| Future Goal | $5,000 |
| Savings in 1 month | $210 |
| Savings in 6 months | $1260 |
| Savings in 12 months | $2520 |
| Savings in 18 months | $3,780 |
| Savings in 24 months | $5,040 |
Vehicles depreciate 10% per year. In the year 2023, this vehicle should be priced at approximately $ 5,337.
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LONG-TERM SAVINGS
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HOUSE DOWN-PAYMENT
Idealistically, I would Like to purchase my first home within 5 years. After cross-checking several real-estate websites, I have concluded the following:
The average down payment on a 250,000 house is $12,500
Mortgage on this house is usually fixed for 30 years
| House Savings | $0 |
| Future Goal | 13,000 |
| Savings in 6 months | $1,300 |
| Savings in 1 year | $2,600 |
| Savings in 2 years | $5,200 |
| Savings in 4 years | $10,400 |
| Savings in 5 years | $13,000 |
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LONG-TERM SAVINGS
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BUSINESS START-UP
In 10 years, I would like to be able to open a youth summer camp. After cross-checking several real-estate and camp-based websites, I have discovered the following:
The average camp is able to make up to $1 million in revenue₃
Renting a venue to run the camp can cost up to 31,238 a week, excluding the cost of equipment₄
| Business Start Up Savings | $0 |
| Future Goal | 60,000 |
| Savings in 1 year | $6,000 |
| Savings in 3 years | $18,000 |
| Savings in 5 years | $50,000 |
| Savings in 10 years | $60,000 |
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Goals:
Net worth: 500,000; 15 years
Monthly Spending: $650<
Emergency Fund: $2,000; 1 year
Retirement: $750,000; 45 years
Short-Term Total: $600; 5 months
Mid-Term Total: $23,000; 2 years
Long-Term Goals:
House: 13,000; 5 years
Business: 60,000; 10 years
SUMMARY
Current Circumstance
Assets: ~$9,500
Liabilities: $0
Net Worth ~$9,500
Debt: $0
Retirement Savings: $0
Emergency Fund Savings: $0
Monthly Spending: ~$800
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This Personal Financial Plan aimed to address the following:
The timelines provided for goal achievement are subject to change dependent on changes in income
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REFERENCES
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(https://treasurydirect.gov/forms/sav3600.pdf)
https://www.cnbc.com/select/average-net-worth-by-age/)
https://www.acacamps.org/resource-library/camping-magazine/show-us-money#:~:text=For%20example%2C%20overnight%20camps%20average,and%20day%20camps%20(%24790%2C000).
https://www.camprentalchannel.com/rentalcamps/Beahcomber-Retreat-1096.html
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