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Financial goals: a personal plan for life

A. Develop a list of two financial goals that you would like to achieve over the next ten years. They might include a major vacation, a car purchase, a home improvement, or a college education for one of your children. Once your goals are written, develop a three-column table showing the goals, the future date for each, and the amount that will be required to achieve it. Calculate the required annual savings required for each goal. Then prepare a ten-year savings plan. The plan must include columns showing year, amount deposited, the interest earned each year (except the first), expected withdrawals, and ending balance. Calculations must be accurate.
b. Develop a balance sheet showing your assets, liabilities, and net worth. Use the balance sheet shown in the course materials as a guide.
c. Prepare an income statement for the last calendar year. Use your tax return to list your income and cancelled checks and credit card statements to classify and determine your expenses. Estimate expenses for which you paid cash.
d. Develop a master budget for the next calendar year using the format shown in the course materials.

My goals are: (1) Plan for an early retirement; Be financial independently after retirement
(2) Have my own profitable business

Solution Preview

I like your goals but think they are in reverse order. First the profitable business which provides funding for retirement accounts with which to accomplish the second goal.

How to get started:

1. Compile a personal balance sheet in order of liquidity. Cash, vehicles, retirement accounts and real property, and list all at current market values (not cost). For the liability side, list your debts at actual amounts. The amount of assets over liabilities is your net worth.

2. For your income statement, I used a format which is more like a cash flow statement. You need to know your living expenses, but also must include debt ...

Solution Summary

The solution presents a step-by-step plan for how to implement personal financial goals. The steps are realistic and practical including useful information for the work-a-day individual.