Personal Financial Plan

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Personal Financial Plan Part 5
Sheri Mulder
Personal Finance

Age 30

Establish good credit and avoid excessive debt

Invest aggressively for retirement
Buy a first home and build equity
Make a will and health directives

Age 30-45

Create an estate plan.

Buy adequate life and disability insurance.
Keep investing as much as possible.
Save for children's college.

Age 45-65

Leverage peak earning years to build financial security.

Shift retirement savings as necessary.
Review estate plans regularly as assets grow and to reflect changing life circumstances.

Age 65 and beyond

Appropriately rebalance assets to manage risk.

Take action to minimize estate taxes and facilitate wealth transfer to descendants. Make sure health insurance is adequate.

What was used to help establish the personal financial plan was a website that had an example of a financial plan considering life-stage changes. The example was helpful because it showed different ages of an individual's life and what should be done during those stages. The example was helpful to use because the example is very similar to the situation and life style changes that are becoming an issue. The financial resources that would be used to help make financial decisions would be to get a loan from the bank for a mortgage. Taking out a bank loan would only be used if there was a large amount of money needed and there was not enough saved up to use. It is important to have a nest egg to fall back on in case of emergencies so an individual does not have to use financial resources to get him or her out an emergency situation.

Short-Term Goals
Finishing college
Increasing savings account
Purchasing a new vehicle
Reducing high interest debt
Buy life insurance
Make plans for retirement
Intermediate-Term Goals
Paying off expensive debt
Creating an emergency fund to cover 12 months of expenses
Buying a new car
Taking special vacation
Long-Term Goals
Own a home free of mortgage payments
Own a vacation home in the mountains somewhere remote

Accumulate enough funds to not have to work, but maybe something part time in case I get bored

My personal risk tolerance is very conservative at this current moment of life. Although my time horizon has many years to invest, right now the asset level is not high enough to have very much left to invest. My risk tolerance is also conservative because of lack of experience and knowledge of investing. In the future when there is a higher asset level, there could be a possibility of hiring a professional to help with an investment.

My time horizon impacts my financial plan because of how many years that there is left before retirement. The number of years that an individual has before retirement is important to determine how to invest and save money. By the time of graduation, there should be close to forty years to take on risky investments. There will also be forty years to load a portfolio with bonds and cash.

Cash Flow Statement

|Cash from gross wages |43220 | |Cash paid for: | | |Income taxes and deductions |-8164 | |Mortgage |-7617 | |Food |-9600 | |Car expenses |-7000 | |Clothing...
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