Personal Budget Balance Sheet, Cash Flow Essay

MemoToMr. Christopher De MalineFrom im get on with02/17/2014RePersonal Budget, Balance Sheet, and Cash Flow contestationDear Mr. De MalineSaving funds is extremely important however rough people do not have healthy savings and then leading them to financial instability. Therefore, being a good steward everyplace your finances should be consistent and begin at an early age and progress as you age. This go away provide an effective growth type to leave future financial security.The purpose of this memorandum is to evaluate my lymph nodes financial outlook, their personal figure, balance sheet, and cash immix disceptation and provide recommendations for improvement of their financial situation.My client, Chauncey Latham is 51 years old and a police officer. He is married and has one dependent. Kyle Latham, Chaunceys wife is 47 years old and is currently not working. Prior to her unemployment, Kyle annual boodle were $96,000 a year. They live is a nice 4-bedroom house, in a gigantic community with a sought after school district. The family has a snug looking bread and butter, though their financial outlook is pretty grim. Together Chauncey and Kyle put one across $85,000 a year, which includes Chaunceys off duty work and Kyles unemployment benefit. Their intent savings have dwindled down the emergency fund is very low, and their character calling card debt is high.The balance sheets show my clients assets and liabilities and verify their net worth. Any seat including jewelry or saleable items is considered assets and can produce income. The asset appraise should have a fair market cling to, which means the amount of bullion they would have today if sold.Conversely, liabilities argon debts that decrease the net worth.PERSONAL balance SHEET______________________________________________________Balance Sheet of December 31st, 2013_______________________________________________________AssetsLiquid assetsChecking account balance $ 4,000Savings $ 5,000Money market account $ 11,000Cash value of life insurance $ 250,000 native liquid assets $ 270,000 residehold assetsCurrent market value of home $ 235,000Market value of vehicles $ 28,000Jewelry $ 25,000Studio/Stereo equipment $ 15,000 tally household assets $ 303,000Investment assetsIndividual retirement accounts $ cl,000College certificate $ 10,000Total enthronization assets $ 160,000Total assets $ 733,000LiabilitiesCurrent LiabilitiesCredit card balances $ 20,000Car loan $ 16,000bookman loans $ 120,000Personal loan $ 15,000mortgage $ 201,000Total Liabilities $ 372,000Net worth (assets disconfirming liabilities) $ 361,000To improve my clients understanding of their finances, I am recommending that a cash flow statement be created. Because some people are unaware of their financial outlook, creating a cash flow statement will provide the structure needed, thus providing information such as where the money is going and how much is remaining at the end of the month. A positi vist to developing a cash flow statement is the ability to learn the fixed expenses with the income and savings and modify as needed.Lathams cash flow statement._______________________________________________________Monthly cash flow statement for December 31st, 2013_______________________________________________________Cash OutflowsMortgage $ 1,four hundredProperty taxes $ 3,063Car loan payment $ 565Students loan $ 485Credit card payments $ 600Car/house/life insurance $ 250Power $ 200 urine $ 70Telephone $ 265Gas/Transportation $ 400Food $ 800 vestments $ 100Medical expenses $ 150Entertainment $ 100Gifts/donations $ 300Total Outflows $ 8,748Allocation of surplusSavings (Emergency Fund) $ 800Saving final stage $ 300 surplus $1,100The next recommendation would be to develop a personal budget for the Lathams. This will allow them to have the proper foundation to establish pie-eyed financial understanding, develop strong money management skills that will surface the way long time f inancial security. Hence, I will shape their monthly income and show expenses to determine where modifications need to take place.IncomeActual Amt.PercentageProj Amount earnings $7,083 $7,083ExpensesMortgage $1,400 $1,400Property Tax $250 $250Car Loan Payment $565 3% $548Student Loan $485 4% $465CC Payment $600 10% $540House/Car/Life Ins $250 $250Power $200 2%Water $70 $70Telephone $265 10% $239Gas/Transportation $400 $400Food $800 10% $720Clothing $100 50% $50Med Exp. $150 $150Entertainment $100 50% $50Gift/contribution $300 30% $210Saving/Emergency $500 $1,000Savings Goal $300 $600Based on the data, there is room for financial improvement. I would advise my clients to request lower interest rates on two their credit cards and car loan, and request student loan consolidation. Also, reduce the power usage in the home, change telephone plans to something more court effective, and attempt to use coupons for grocery shopping when at all possible. ultimately reduce any spending on gifts, entertainment, and clothing would serve well inimproving the all overall financial outlook. If the plan is followed, the Lathams, would be able to accession the money deposited into the saving goal and emergency saving accounts. After a while, the money could be used to reduce the other debt. Having a personal budget is the blueprint for managing and spending finances. Use of the personal budget, gives you control over timely bill paying, monthly expenses, and provide an overall financial picture, so you know where you are each month. Utilizing a budget will allow better forecasting in long-term financial needs, which will help in better long-term savings, student loans can be pay sooner, and liquid cash can be readily available when needed. A personal budget is key in improving financial health.ReferenceseHow. (2014). Retrieved from http//www.ehow.com/how_4475033_start-personal-budget.html varlet R. Kapoor, L. R. (2009). Personal Finance. In L. R. Jack R. Kapoor, Person al Financial Planner (pp. 1-69). McGraw-Hill Company.