Personal Budget Balance Sheet, Cash Flow Essay

MemoToMr. Christopher De MalineFromDate02/17/2014RePersonal Budget, equilibrate Sheet, and Cash come StatementDear Mr. De MalineSaving interchange is extremely important however several(prenominal) heap do not incur healthy deliverys thus direct them to mo take inary inst talent. Therefore, being a better steward everywhere your finances should be consistent and begin at an advance(prenominal) age and progress as you age. This pull up stakesinging turn in an effective growth digit to every last(predicate)ow future financial security.The function of this memorandum is to evaluate my clients financial outlook, their ain cypher, eternal sleep sheet, and cash period of time statement and provide recomm devastationations for proceeds of their financial situation.My client, Chauncey Latham is 51 years obsolescent and a police officer. He is wed and has one dependent. Kyle Latham, Chaunceys wife is 47 years old and is currently not working. Prior to her unemploy ment, Kyle annual pullings were $96,000 a year. They live is a nice 4-bedroom plate, in a great community with a sought after school district. The family has a comfortable looking sustenance, though their financial outlook is pretty grim. Together Chauncey and Kyle earn $85,000 a year, which includes Chaunceys off trade work and Kyles unemployment benefit. Their life savings save dwindled down the emergency line is very low, and their credit card debt is high.The balance sheets betoken my clients assets and liabilities and verify their net worth. each property including jewelry or salable items is considered assets and can produce income. The asset prise should select a fair commercialize value, which means the amount of gold they would have today if sold.Conversely, liabilities are debts that decrease the net worth.PERSONAL BALANCE SHEET______________________________________________________Balance Sheet of December 31st, 2013_____________________________________________ __________AssetsLiquid assetsChecking cypher balance $ 4,000Savings $ 5,000Money commercialise account $ 11,000Cash value of life insurance $ 250,000 add liquid assets $ 270,000 ho utilizehold assetsCurrent market value of post $ 235,000Market value of vehicles $ 28,000Jewelry $ 25,000 studio/Stereo equipment $ 15,000 conglomeration household assets $ 303,000 investing assetsIndividual retirement accounts $ cl,000College certificate $ 10,000Total investment assets $ 160,000Total assets $ 733,000LiabilitiesCurrent Liabilities creed card balances $ 20,000 railroad car loan $ 16,000 scholarly person loans $ 120,000Personal loan $ 15,000Mortgage $ 201,000Total Liabilities $ 372,000Net worth (assets minus liabilities) $ 361,000To purify my clients understanding of their finances, I am recommending that a cash bunk statement be created. Because some people are unaware of their financial outlook, creating a cash flow statement will provide the structure needed, thus providing discip line such as where the property is departure and how much is remaining at the end of the month. A plus to developing a cash flow statement is the ability to analyze the fixed expenses with the income and savings and metamorphose as needed.Lathams cash flow statement._______________________________________________________Monthly cash flow statement for December 31st, 2013_______________________________________________________Cash OutflowsMortgage $ 1,four hundred seat taxes $ 3,063Car loan payment $ 565Students loan $ 485Credit card payments $ 600Car/house/life insurance $ 250Power $ ccWater $ 70 band $ 265 flatulency/Transportation $ 400Food $ 800 vesture $ 100Medical expenses $ 150 pastime $ 100Gifts/donations $ cccTotal Outflows $ 8,748allocation of surplusSavings (Emergency Fund) $ 800Saving closing $ 300Surplus $1,100The next pass would be to develop a ain budget for the Lathams. This will allow them to have the proper foundation to establish laborious financial understan ding, develop strong money management skills that will pave the focus long time financial security. Hence, I will determine their monthly income and show expenses to determine where modifications need to take place.IncomeActual Amt.PercentageProj getSalary $7,083 $7,083ExpensesMortgage $1,400 $1,400Property revenue $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% $720 habiliments $100 50% $50Med Exp. $150 $150Entertainment $100 50% $50Gift/Donation $300 30% $210Saving/Emergency $ viosterol $1,000Savings Goal $300 $600 base on the data, there is room for financial improvement. I would advise my clients to pray overthrow interest rates on some(prenominal) their credit cards and car loan, and request student loan consolidation. Also, reducing the mogul usage in the home, change call in conceptions to something more cost ef fective, and attempt to use coupons for grocery shopping when at all possible. Lastly reduce any pass on gifts, entertainment, and clothing would help in improve the overall financial outlook. If the plan is followed, the Lathams, would be able to increase 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 disbursal finances. Use of the personal budget, gives you control over timely bill paying, monthly expenses, and provide an overall financial picture, so you retire where you are each month. Utilizing a budget will allow better presage 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 deviser (pp. 1-69). McGraw-Hill Company.