Financial Statement Project

Financial Statements Project
The purpose of this assignment is to develop a financial plan for the Henry Family. Below is a socio demographic profile to give you a picture of how they live, their goals and aspirations where money is concerned. You are to devise a financial plan consisting of financial statements such as the income & expense statement and net worth statement. Be sure to budget in for their financial goals. Once the statements are completed you can complete the financial ratios for the Henry family to give them idea of how they compare with professional recommendations. Conclude your project with your analysis of their situation based on the results of the ratios.

Points will be graded accordingly:

Part I
Income Worksheet

Income / Expense Worksheet
Net worth Statement
Goals Worksheet
Ratio Calculations
Final Analysis
Total Points:

Socio-demographic Profile of the Family

Charles Henry is currently 32 years old and married to wife, Gwen who is 30. They have twin two-year old daughters and do not plan to have more children. They live in Laguna Beach, CA in a 2-bedroom condo that they purchased a few years back for $420,000, putting $40,000 down. They still owe $368,000 on the loan. They currently believe the market value to be $460,000. They are planning to rent out this condo when they can afford to buy a home. Their current mortgage for the condo is $1,900 per month. The property tax bill for this condo is $4800 annually, but they pay it monthly along with their mortgage. They also pay an Association fee of $320 per month. Their home is nicely furnished with furnishings they financed from Pottery Barn, worth about $10,000. Due to the recent California Fires, their home insurance (along with the rest of the state) premiums have increased recently. They used to pay $1400 annually but are now paying $150 every month. There are always repairs needed when owning a home. They might not have something monthly, but annually they usually spend around $1000 in basic home repairs and maintenance.

When they purchased the condo, it was supplied with new appliances. The complex has a pool and BBQ Area, as well as a jacuzzi. So, there is not too much more they need. Their property taxes are paid with their mortgage to their bank, making the monthly mortgage payment $2300. They are saving to buy a single-family home in 5 years and anticipate needing about $30,000 as a down payment and are starting to save for this now. Charles and Gwen know buying a home will bring many expenses such as new appliances (maybe down the road) and moving expenses. They plan to start a savings plan to be able to have more than the $30,000 down payment for extra expenses for their new home, but haven’t figured out how to do that at this point, or if they have extra money to put away for that extra savings. (In your final analysis, be sure to revisit this section to advise them how they can save and earn to reach this goal.)

They have two cars; one is a 2013 Toyota Tacoma truck that is paid off and probably worth $10,000. It needs new tires in about a year. They will cost $900, so they need to start saving now. Gwen drives an Infiniti, probably worth $25,000 that they make $350 per month payment on for one more year. Car insurance runs them $1500 per year.

Charles is the finance officer of a nearby hospital where Gwen is a Nurse. Their combined income is close to $144,000 a year. (Charles makes twice as much as Gwen). Because they are both paid solely W-2 income, their employer takes out the state and FICA tax from each paycheck. The State Tax is roughly 5% and the FICA tax is 7.65% of their annual salary.

They have good health insurance through their jobs and only pay $300 per month pre-tax to cover both the dependent children for medical and dental. They are all in good health and spend minimal time at doctors and on prescriptions. In a year they may spend $1000, with copays and prescriptions. They have minimal life insurance, so they bought an additional 20-year term life plan that only costs $30 per month. They both still owe about $15,000 each in student loans and each are paying $200 per month towards the loans (pre-tax – government aid student loans) and once those are paid off, they will be in a better situation to really start saving for retirement.

The utilities run them about $270 per month (gas, power, and water total $150, and streaming/internet is $120). They made the decision to “cut the cable” and stream only so that they could save money. They have a modest cell phone package costing about $80 per month. Currently Charles puts $125/month and Gwen puts $100/month into their company pension 401k plans. Their pension plan balance together totals roughly at $37,000. They would like to put more into their plans once they get their home and their student loans paid off. Their credit union savings account has a current balance of $4500. They are not sure if this is an adequate emergency fund. They make sure to add at least $50/mo. into this fund, but both Charles and Gwen feel they need more in this fund. They are hoping to figure out where they should be putting extra funds, and with what priority, in order to reach their financial goals.

They live comfortably and are not very materialistic people. They enjoy the outdoors: going to the beach, camping, hiking, skiing and do not really take extravagant vacations. This spring in March, about 6 months away, they are planning a small vacation to Santa Barbara to spend some time at the beach. They estimate that the trip will cost them around $1500 for a 3-night/4-day stay. Also, they hope to take their children on a Disney Cruise in two years. They anticipate that vacation would cost about $6,000 and are saving for it with a special flex CD savings account through the credit union. They enjoy going to Disneyland, so they have annual passes that cost them $75 monthly. They own a two-seater kayak and two paddleboards and use them locally most of the time. They estimate their personal belongings to be worth about $12,000. They enjoy going to concerts and save about $100 per month to go to one big concert a year. The only other family entertainment includes a movie night each month. This is around $150 for the four of them. Charles and Gwen would like to upgrade the TV in the living room for a better viewing experience. After researching the best TVs, they settled on one that will cost them $800. They are in no hurry to purchase this luxury item, as the one they have works just fine. They are hoping to purchase it next year sometime.

Gwen’s mom watches the kids, so they save quite a bit on childcare, although they do pay her about $450 a month just for things she needs while taking care of them. They also budget an additional $150 a month for other babysitting needed for date nights! College planning is already a long-term goal of theirs. They put $100 per month away in one account for their twins. The balance in this mutual fund is currently $2,400. They estimate they will need a balance total of $90,000 for the twins by the time they graduate.

They have one major credit card, which they use for groceries and eating out. They pay it off each month, so they do not incur debt. The average balance at the end of the month on their card is $1200. (Place realistic amounts in the appropriate categories.) The Pottery Barn card still has a balance of $1200 (with 0% interest because that was the promotion for the card) from when they purchased their furniture. They will be paying $200 each month for the next 6 months to have it paid off.

The twins want new tricycles for their birthday, which will cost around $150. They will be turning 3 at the beginning of May, so they have 3 months to save. General supplies (diapers/toiletries, etc.) for the girls run around $200 per month. They are frugal with clothing spending because children grow out of things quickly. They try not to exceed $4800 a year for clothing and miscellaneous items, such as toys, for the twins. Gwen cuts the girls’ hair as well as her husband’s, to save money, but she gets her hair done once a month, costing about $100 each time.

They are trying to learn how to avoid incurring debt and to save for what they need.
You are to use the following sheets as a guide in assembling your project. There may be some extra information in the narrative that is not needed in the budget, so be careful to use the amounts explicitly asked for and not the extraneous amounts given from the narrative. All line items in the budget have been provided to you in the narrative. DO NOT leave any item blank. Pay attention to the narrative and note all items in the budget with the information provided.
You can use any delivery method as far as Word, Excel, QuickBooks, etc. to process your assignment. Your finished assignment should be uploaded into BeachBoard in a format that is compatible, ideally PDF. Please do not upload any JPEG or Dox documents. Also, please DO NOT submit in PAGES format.

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