Personal Budget Balance Sheet, Cash Flow Essay

MemoToMr. Christopher De MalineFromDate02/17/2014RePersonal Budget, Balance planer, and Cash Flow Statement undecomposed Mr. De MalineSaving money is extremely important however some people do not have healthy savings thus leading them to fiscal instability. Therefore, being a good steward over your finances should be consistent and begin at an early age and progress as you age. This go away provide an effective growth pattern to altogetherow future financial security.The purpose of this memorandum is to evaluate my clients financial outlook, their personal calculate, symmetricalness sheet, and cash flow statement 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 actualizeings were $96,000 a year. They live is a nice 4-bedroom house, in a great community with a sought after school district. The family has a comfortable looking life, though their financial outlook is pretty grim. Together Chauncey and Kyle earn $85,000 a year, which includes Chaunceys off duty work and Kyles unemployment benefit. Their life savings have dwindled down the emergency fund is very low, and their credit visiting card debt is high.The balance sheets show my clients assets and liabilities and verify their net worth. Any property including jewelry or saleable items is considered assets and can produce income. The asset value should have a fair market value, which means the amount of money they would have today if sold.Conversely, liabilities be 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 val ue of life insurance $ 250,000Total liquid assets $ 270,000 fellowship assetsCurrent market value of home $ 235,000Market value of vehicles $ 28,000Jewelry $ 25,000Studio/Stereo equipment $ 15,000Total household assets $ 303,000Investment assetsIndividual retirement accounts $ 150,000College certificate $ 10,000Total investment assets $ 160,000Total assets $ 733,000LiabilitiesCurrent LiabilitiesCredit card balances $ 20,000Car impart $ 16,000 savant loans $ 120,000Personal loan $ 15,000Mortgage $ 201,000Total Liabilities $ 372,000Net worth (assets minus 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 plus to developing a cash flow statement is the ability to an alyze 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 $ 1,400Property taxes $ 3,063Car loan payment $ 565Students loan $ 485Credit card payments $ 600Car/house/life insurance $ 250Power $ 200Water $ 70 recollect $ 265Gas/shipping $ 400Food $ 800Clothing $ nose candyMedical expenses $ 150Entertainment $ 100Gifts/donations $ 300Total Outflows $ 8,748Allocation of surplusSavings (Emergency Fund) $ 800Saving final stage $ 300Surplus $1,100The next recommendation would be to develop a personal budget for the Lathams. This will allow them to have the proper foundation to reach strong financial understanding, develop strong money management skills that will pave the way long time financial security. Hence, I will happen their monthly income and show expenses to determine where modifications need to take place.IncomeActual Amt.PercentageProj AmountSalary $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/Donation $300 30% $210Saving/Emergency $500 $1,000Savings Goal $300 $600Based on the data, thither is room for financial improvement. I would advise my clients to request lower interest rates on both their credit cards and car loan, and request pupil loan consolidation. Also, reducing the power usage in the home, change telephone plans to something more cost effective, and attempt to use coupons for grocery shopping when at all possible. Lastly reduce any spending on gifts, entertainment, and clothing would help inimproving the overall financial outlook. If the plan is followed, the Lathams, would be able to outgrowth 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 paid 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 Jack R. Kapoor, L. R. (2009). Personal Finance. In L. R. Jack R. Kapoor, Personal Financial Planner (pp. 1-69). McGraw-Hill Company.