This paper will outline my financial plan. It will also put the plan into a budget that I will revise every year according to my financial consumption.
I am currently a graduate of Bachelor of Economics. I relied on the student’s loan and grants from both the university and charity organizations while in school to pay my school fees and meet my daily expenses. My inclination to student loans and bursaries was largely contributed by the fact that my family lived in reduced circumstances. I made it my obligation that I will pursue my education regardless of the obstacles that I had to handle. As a result of that, I embarked on a mission to ensure that I catered for my bills while in campus by looking for a part time job. I had a part time job at an auditing firm. The prestigious auditing firm paid me only enough money that was just enough to cover my medical insurance, phone bills and car insurance.
The salary from the auditing firm was channeled to the aforementioned expenses. I hardly had any money for luxurious activities such as entertainment and clubbing. However, I struggled and luckily managed to save an average of $30 in a month for the last four years. I currently have no investments and the only asset I own that is substantial is my car that is worth eight thousand dollars that I purchases from a reputable car dealer with my meagre savings from the salary I got from the auditing firm and my periodical savings from the students loan and grants.
During my last year, I signed a contract with accounting firm that I used to part time in to work for them immediately I finish my degree course as an auditor, with a starting salary of four thousand dollars. The salary was earned in my first month in my new job. I have stopped depending on the students’ fund and I currently pay my own bills.
Mission
Vision
- I plan to save 10% of my salary when I am still single.
- I plan to invest in some stocks of my choice, some index and mutual funds.
- I plan to put some money into the IRA to accumulate until my retirement age.
- I plan to contribute some money to a charity of my choice every year as a way of giving back to the society.
- I plan to take a vacation every year during my leave as a way to relax
Current financial situation
The cash I recorded as cash in hand included the checking accounts, the petty cash and the other cash accounts that I had. The savings in school accrued to averagely $1400 (from the cash savings that accrued in school). While working part time, I paid the 401k life insurance through the company that is at a value of $550. The decision to use the insurance as a tax sheltered investment, as a means to pay policy premiums or to the children as an inheritance, however, are made later is made by the firm depending on the immediate needs of the client. The total cash equivalents, therefore, accrued to two thousand dour hundred and twenty three dollars.
I own a car that was worth eight thousand dollars. However, I have only paid for it partly; hence I its value that is rightfully mine is only $ 5000 with a debt of $3000. The household furnishing that I own accrue to $500. Hence my fixed assets accrue to $ 5500.
My short term liabilities accrue to $5970 which includes the credit card balances owed to the credit company and the interest rates that come with the positive balances, the monthly rent of $5000 and the taxes of $800. The car and life insurance premiums are $70 in total monthly to cover the expected cost of losses and the cost of issuing and administering the hedge against lost.
The long term loan includes the automobile balance which is $3000 and the student loan balance that is $3000 with 0% interest rates since it is a government fund. Hence the total long term liabilities total to $6000.
The following are my financial plans.
I may not be able to take the vacation for the first five years of my employment due to the lack of funds. I have separated my goals into long and short term ones so as to be able to get the necessary needs first.
This outline of goals has been incorporated into the financial plan so as to help in the planning process.
Short term goals
Long term goals
Family support and expenditure
Retirement needs
Retirement home
Retirement monthly income
Projected budget
In the next ten years, my income should have doubled and this is my projected budget. This budget has been made with an average inflation rate of 2%.
Reference
- Kotlikoff, Laurence J. Essays on Savings, bequests, altruism and Life cycle planning. Cambridge: MIT Press, 2001.
