Homework

Financial Plan

Create a complete financial plan.   Your financial plan should be a professional looking document.  Part of your grade will be based upon the professional look of the plan.  I do not mean that it should be in a fancy binder, a stapled document is preferred.  But it should have a cover page, headings, paragraphs/bullet lists, no spelling or grammar errors, clean looking financial statements, etc.  Start each major section on a new page.  A table of contents would be good.  You can use this template.

I would expect to follow something like the outline below.  Include other items, if you think appropriate.  Note, the items that are new from your draft are in red.

Financial Summary
        Summarize (1-2 paragraphs) your financial situation.  What is your net worth?  Savings rate?  How much do you need to save annually to reach your goals?  Feasible?  Any financial risks? 
       Bullet list of major actions you need to take now and near future (say when).  You can reference the fact that there are other recommendations in each section.

Financial Goals

Short-term Goals
    What are your needs?  Be specific about amounts and timeframes.
    How much money do you need?
    How will the money for these goals be invested?  Be specific about the type of account, asset class, and specific investment.

Medium-term Goals
    What are your needs?  Be specific about amounts and timeframes.
    How much money do you need? (do annuity calculations for each)
    How will the money for these goals be invested?  Be specific about the type of account, asset class, and specific investment.

Long-term Goals
    What are your needs?  Be specific about amounts and timeframes.
    How much money do you need? (do annuity calculations for each)
    How will the money for these goals be invested?  Be specific about the type of account, asset class, and specific investment.

Current Financial Status
       Income statement
       Balance sheet 
       Analysis - what is your savings rate?  How is your liquidity and debt level?  Other? 
       Will your current savings rate allow you to accomplish your goals?
       How could your savings rate be improved?

Career Goals

Career 1
Career 2

Budget
       Create an income statement (cash flow statement) for the future.  Going forward, what will your income and expenses look like?  Show an income statement budget.  (It may be the same as your current income statement but if you plan to make changes in job or spending, reflect that here.)
       If you need to adjust your goals, do it.  Your budget should allow you to reach your goals.  If there are other circumstances that might affect your ability to meet a goal (e.g. inheritance), list it.
       List any actions you need to take to meet your budget.  E.g. job change, cuts in certain spending.  Be specific.

Investments
       What is your planned asset allocation?  Why?
       What types of accounts will you have and where?  Why?
       What investments will you have in your accounts?  Why?

Credit
       What is your credit score?
       If you need to, what will you do to improve it?

How will you protect your finances?
      This should address:
          - identity theft
          - insurance of all types.  What and how much?

Deliverable:

Final financial plan.

Grading Rubric:

  A B C D F
Professionalism Typed, stapled, no spelling or grammar errors. 

Easy to read statements.
 Typed, stapled, no spelling, minor grammar errors. 

Easy to read statements.
 Typed, stapled, minor spelling, grammar errors. 

Easy to read statements.
Not stapled, spelling and grammar errors 

Statements are not clear.
 Not typed or stapled.  Grammar and spelling errors. 

Statements are not clear.
Financial Summary Good, brief summary including net worth, savings rate, ratios, annual savings needed.

Identifies financial risks.

Identifies actions to take.		 Brief summary including some of net worth, savings rate, ratios, annual savings needed.

Identifies financial risks or actions to take but not both.		 Brief summary including a few of net worth, savings rate, ratios, annual savings needed.

Identifies financial risks or actions to take but not both.		 Brief summary.

Does not identify financial risks or actions to take.		 Minimal summary.
Financial Goals Has good list of realistic goals for each of short, medium, and long-term.

Has specific amounts for each goal.

Has specific timeframes for each goal.

For each goal shows how much needed to save annually.

Uses annuity calculation to find payment required.		 Has good list of realistic goals for each of short, medium, and long-term.

Has specific timeframes for each goal.

For each goal shows how much needed to save annually.

Does not use annuity calculation.		 Has good list of realistic goals for each of short, medium, and long-term.

For each goal shows how much needed to save annually.		 Has list of goals. No thought.
Goals Summary Discusses ability to reach goals. 

Realizes may have to adjust goals, spending, and career.		 Discusses ability to reach goals.  Shows thought. Discusses ability to reach goals.  Just shows the numbers. No thought.
Income Statement Good, detailed list of expenses . Good list of expenses. Moderate list of expenses.  Minimal list of expenses.  No detail.  Have liabilities in expenses. Minimal list of expenses.  No detail.  Missing savings.
Balance Sheet Good, realistic list of assets and liabilities.  Realistic list of assets and liabilities.  Minimal list of assets and liabilities. Have expenses in liabilities. Assets do not equal liabilities plus net worth.
Analysis Specific discussion of how much one could save by taking specific actions.

Will calculate debt and liquidity ratios.

Will discuss the savings rate and compare it to national average.

 Specific discussion of how much one could save by taking specific actions.

Will discuss the savings rate.

 General discussion of ways one could save. Identification of minimal number of possible areas for saving. Identification of possible areas for saving but no discussion.
Career Goals Complete discussion of two possible careers. Discussion of two career goals. Discussion of one career goal. General discussion. Rambling thoughts.
Budget Good, detailed list of expenses.
Gives thought about future changes.
Discusses ability to meet goals.
Lists required actions.		 Good list of expenses.
Discusses ability to meet goals.		 Moderate list of expenses.  Minimal list of expenses.  No detail.  Have liabilities in expenses. Minimal list of expenses.  No detail.  Missing savings.
Investments Gives asset allocation with good rationale.
Lists specific accounts with good rationale.
Includes retirement accounts.
Lists specific investments with good rationale.		 Gives asset allocation

Lists specific accounts

Includes retirement accounts.

Lists specific investments		 Gives asset allocation

Lists some accounts

General idea of how to invest.		 Lists some accounts

General idea of how to invest.		 General idea of how to invest.
Credit Has several actions that can be taken to improve credit score. Has few actions that can be taken to improve credit score. Has one action that can be taken to improve credit score.   No actions.
Protecting Finances Has several actions that can be taken to protect identity.

Includes both medical and life insurance.

Describes how insurance needs change with age/family		 Has a few actions that can be taken to protect identity.

Includes both medical and life insurance.		 Has one action that can be taken to protect identity.

Says will get or has insurance.

Missing either medical or life insurance.		 Minimal discussion. No actions.