Jenny Sample. Financial Plan. presented by Pam Horack

Transcription

1 What s a Girl to Do? Jenny is out on her own sort of. She graduated college last spring with a degree in Elementary Education and was fortunate to land a sweet job teaching first grade at an elementary school across town. She currently lives with her parents, but is looking to move out so she can be closer to work and avoid the long commute as well as begin life on her own. Her new job comes with great benefits, but the pay is lower than she would have liked at $37,500 per year. Also, Jenny has student loans she needs to begin paying. She owes about $26,000 on those, so she is worried that she can t afford a new car to replace her old 2004 Honda. She wants to know how she can accomplish her short term goals and begin saving for the future, too. Jenny engages Pathfinder Planning LLC on a retainer basis to get her plan started and keep her fees affordable. Sample Plan Disclosures Recommendations are based upon assumptions that may not come to pass and are subject to change. Sample financial plans should not be regarded as a complete analysis of the subjects discussed and do not involve the rendering of personalized investment advice. Hypothetical case studies and scenarios are for illustrative purposes only. They do not represent the experience of any advisory client. Each client s situation is different and goals are not always be achieved. Recommendations and advice are based on information supplied by the client that is presumed to be accurate. Financial plans must be adjusted based upon changes in the client s situation, needs, and goals. Different types of investments, as well as financial plans, involve higher and lower degrees of risk. There can be no assurance that any specific investment or strategy will be suitable or profitable for a client. Past performance may not be indicative of future results. All investment strategies have the potential for profit or loss. Pathfinder Planning LLC is registered as an investment adviser with the states of South Carolina and North Carolina. The firm only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean that the adviser has attained a particular level of skill or ability. The tax, legal and estate planning information provided is general in nature. It should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation. PPLLC

2 Financial Plan Jenny Sample presented by Pam Horack Pathfinder Planning LLC 8 Mischief Lane Lake Wylie, SC pam@pathfinderplanningllc.com Pathfinder Planning LLC is a Registered Investment Advisor in North and South Carolina

3 Overview Lifestyle Jenny Sample is 25 years old and is ready for her life to begin! She has a college degree and a new job and wants to begin handling her finances on her own. Goals 1. Pay off student loans. 2. Save money for a new or used car. Risk Tolerance You completed a risk tolerance questionnaire and agreed with the results. You confirmed that you are comfortable taking some investment risk but feel you need more education on how most investments work. Economic and Other Plan Assumptions After discussion, you agreed to the following assumptions for your plan: Federal marginal tax bracket of 15% Estimated Inflation rate of 3.00% Interest you would expect from an absolutely risk free Investment (90 Day T Bill Rate) Risk Free Rate of 3.50% Return you would expect for investing in equities minus the 90 Day T Bill Rate Market risk premium of 4.00% You are currently in the savings phase of your life PPLLC

4 Your Financial Health Documents: The following documents are attached to this plan: Net Worth Statement [MoneyGuidePro] 1. As you are just starting out, your current Net Worth is negative. Don t be discouraged! Most everyone starting out is in this same place. It takes time and money to begin building your new life. The good news is that you have a stable job in the school system, and a nice gift of a mutual fund from your grandparents to serve as a starting point. 2. Based on your current position, there are several alternatives available to help meet your goals. Implement a Budget. You need to know where your money is going. Tracking all your expenses and savings will help you focus on spending and saving toward those items that achieve your goals. Find a part time position to supplement your income. You have additional time available during the summer and holidays where you can increase your income by taking on part time work. This extra money can be used to help reduce debt and increase your savings. Set up a schedule to pay your student loans. As you have several student loans outstanding, there are a number of ways to establish a plan for paying them off. You can start with the lowest balance loan, lowest interest rate loan, or a combination of the two. Saving for a car. In an ideal world, we would save up enough money to purchase a car with cash. In reality, the best we can do is save as much as possible, get a good deal on a trade in, and finance the rest. However, we don t want to sacrifice our emergency savings. Let s work toward an overall savings goal! Begin learning more about investments. Personal finances is an area of life often becomes a just in time learning process. Start learning more about some basic investments, such as mutual funds, and about retirement plans as they will become critical to your ability to retire. PPLLC

5 Action Plan To-Do Item Implementation Timeframe Budget Increase Your Income Payoff Student Loans Increase Savings Purchase Car Work with Pathfinder Planning LLC on a monthly basis to construct a budget and track and reduce expenses. We will use Monthly Budgeting Spreadsheets to track your progress and Guide.com to show all your accounts in one place so you can see progress and we can communicate tasks. Begin a tutoring service after school in your area of expertise, Middle School Math. We will schedule a meeting to discuss the big picture business design, set some goals, and determine tax implications of owning your own business. Return to your roots with a summer position at camp or in restaurant services. Based on your spending and savings budget numbers, we will set up a payment schedule greater than the required monthly amount for each loan. We will work toward eliminating the lowest dollar loan first to simplify your finances. Continue living at home to reduce expenses while increasing savings. Increase emergency savings account to $10,000. We will incorporate the savings amount into your budget. Goal: Purchase a 2 year old car for $25,000 using current vehicle as a down payment plus additional savings of $10,000. Supplement with a 3 year loan at approximately 3% resulting in payments of less than $400 per month. Schedule initial Budget Meeting via online web meeting on August 28 Schedule initial Business Planning meeting on September 15 Pam will create payment schedule and we will review during your Budget Meeting Pam will create savings schedule and we will review during your Budget Meeting Pam will create an initial savings schedule and we will review during your Budget Meeting PPLLC

6 Acknowledgement of Delivery Client: Planner: Jenny Sample Pam Horack for Pathfinder Planning LLC Date: August 25, 2014 RE: Plan Delivery Financial planning is a process and not a one time event. During this process: We have agreed to the scope of our engagement We worked together to gathered qualitative and quantitative information Your planner has analyzed the financial information available and Developed a series of recommendations to help you meet your goals This plan contains recommendations for your consideration and Action Lists to help you implement the items that will meet your goals. As a reminder, Pathfinder Planning LLC will help guide and direct you with your plan implementation as you have chosen the Ongoing Support package. If you are satisfied with your plan, please sign below and return a coy for our files. Plan Accepted By: Date: PPLLC

7 Prepared by: Pam Horack Financial Planner August 21, 2014

8 Table Of Contents Net Worth Summary 1 Net Worth Detail 2

9 Net Worth Summary This is your Net Worth Summary as of 08/21/2014. Your Net Worth is the difference between what you own (your Assets) and what you owe (your Liabilities). To get an accurate Net Worth statement, make certain you have entered all of your Assets and Liabilities. Description Total Investment Assets Taxable and/or Tax-Free Accounts $7,984 Total Investment Assets: $7,984 Other Assets Personal Asset $3,500 Total Other Assets: $3,500 Liabilities Other Personal Debt: $26,000 Total Liabilities: $26,000 Net Worth: -$14,516 Investment Assets $7,984 Other Assets Total Assets + $3,500 $11,484 Total Liabilities - $26,000 Net Worth -$14,516 Prepared for : Jenny Sample Company Name : Pathfinder Planning LLC Prepared by: Pam Horack 08/21/2014 Page 1 of 2

10 Net Worth Detail This is your Net Worth Detail as of 08/21/2014. Your Net Worth is the difference between what you own (your Assets) and what you owe (your Liabilities). To get an accurate Net Worth statement, make certain you have entered all of your Assets and Liabilities. Description Investment Assets Taxable and/or Tax-Free Accounts Jenny Checking Account $750 $750 Savings Account $2,234 $2,234 Stock Account $5,000 $5,000 Total Investment Assets: $7,984 $0 $7,984 Other Assets Personal Asset 2004 Honda $3,500 $3,500 Total Other Assets: $3,500 $0 $3,500 Liabilities Other Personal Debt: Student Loans $26,000 $26,000 Total Liabilities: $26,000 $0 $26,000 Net Worth: -$14,516 Joint Total Prepared for : Jenny Sample Company Name : Pathfinder Planning LLC Prepared by: Pam Horack 08/21/2014 Page 2 of 2