Rachel Grande

Introduction/Background:
My expected life situation for a year or so after I graduate college is as follows. Im
hoping to obtain an entry level accounting job with a local accounting firm. Although I have
graduated, I will still being living at home and will be saving money to put towards owning my
own house someday.
If all goes as planned my first years annual income will be around $50,000. Since I will
be living at home with a full time job, my parents except me to take responsibility for more of
my expenses that they would typically pay for. I will be paying a monthly rent expensive of
$500. Some of my other housing expenses will include contributing to the grocery bill, cable bill,
and electricity bill. I will also continue to pay my car insurance and monthly phone bill. Along
with housing expenses I will also be responsible for my personal expenses. These expenses will
include the money I set aside for entertainment, clothing, gas and repairs for my car.
I have managed to calculate my monthly take home pay of $2,776.00. I got this figure by
taking $50,000 and deducting an average amount of $7,500 for taxes, giving me my annual take
home pay of $42,500. I then divided that number by 12 to calculate my monthly annual take
home pay of $3,542, before accounting for deductions. Im allowing 10% of my annual income
to be allocated to my retirement account, making my monthly contribution to my 401k around
$416. I have also deducted $300 per month for health insurance and $50 per month for life
insurance.

Cash Flow Statement

(Per month)

Cash Inflows
Salary (take-home)

$2,776

Total income

$2,776

Cash Outflows
Fixed expenses
Rent

$500

Loan payments

$0

Total Fixed outflows

$500

Variable expenses
Food

$100

Clothing

$100

Electricity

$25

Water

$0

Transportation (repairs, gas, insurance)

$175

Medical Expenses

$25

Recreations/entertainment

$100

Total variable outflows

$525

Total outflows

$1,025

Surplus/Deficit

$1,751 surplus

Allocation of surplus
Emergency fund savings

$200

Financial Goals saving (house)

$700

Other Savings (mutual funds)

$100

Total Savings

$751

Balance Sheet
Assets:
Liquid assets

Checking account balance

$5,000

Savings/money market accounts, funds

$10,000

Total liquid assets

$15,000

Household assets & possessions

Current market value of home

$0

Market value of automobile

$5,000

Furniture

$1,000

Computer, electronics

$1,000

Jewelry

$1,000

Total household assets

$8,000

Investment assets

Savings certificates

$0

Stocks and bonds

$1,500

Retirement account

$0

Mutual funds

$2,000

Total investment assets

$3,500
$26,500

Total assets
Liabilities:
Current Liabilities

Charge account and credit card balances

$0

Loan balances (car)

$2,500

Total current liabilities

$2,500

Total long term liabilities

$0

Total liabilities

$2,500

Net worth

$24,000

Goal Setting:
Career Planning and Development:
I hope to obtain a position with a mid-size accounting firm immediately after graduating college.
I intend on seeking to become a Certified Public Accountant, in addition to becoming a CPA I
plan on going back to school for a MBA degree. I hope to achieve both these goals within five
years after graduation.
Spending Plan/Cash Management:
I now have bills for the first time ever in my life. In order for me to assure that I will be able to
by all my bills in full and on time, I will need to create a budget. I will create a spreadsheet that
keeps track of all my expenses. This way I can see exactly where my money is going and how
much is being spent on what. I will now know every month that I will have enough money for all
of my bills because I will be tracking my expenses.
Investment Planning:
My investment goals for starting out would be to allocate $100 of monthly surplus into mutual
funds. The funds I will most likely be investing in are growth funds. Funds that are aggressive
with greater rate of return but higher risk. As I get older my investment choice will mostly
change and I will probably not invest in higher risk funds nearing my retirement.
The Housing Decision:
My housing decision is to live at home and save my money for a down payment on a house. I
would be interested in purchasing my first home for around $250,000. I plan on saving 20% of
that amount to be used for a down payment. My housing goal would be to save around $50,000

to be used to help purchase my first home. If at all possible I would like to be out of my parents
house no later than five years from now.
Insurance Needs:
I plan on having an insurance premium plan hopefully through my company. I expect to pay
around $300 a month for my health insurance. Although Im not married and I do not have any
kids I still plan on setting aside around $50 a month for life insurance. This way in case
something happens that financial burden is not completely up to my parents.
Retirement Planning:
As I mentioned earlier, I expected my annual income to be around $50,000. Over time I plan on
placing as much money as possible into my 401k plan, but for now I plan on having 10% of my
income placed into my 401k account. I would have roughly $416 a month placed into my 401k
retirement account.
Action Checklist:
Action
Save $50,000 for a down payment
on a house
Continue to invest in the market
Contribute to retirement fund

How to obtain
-set aside $700 a month for 6
years
-invest $100 in mutual funds
-10% of paychecks, until
more can be allocated out

Complete by
Immediately
Until retirement
Until retirement

Research/Recommendations:
I have set goals for myself in six different categories, each goal will take time and
technique in order to be achieved. With the help of online searches I have come across a website,
smartaboutmoney.org, this website provided an article about 10 basic steps in achieving financial
goals. One tip I would I feel as though I would greatly benefit from is the tip Get Organized. As
someone who is just starting out managing their own bills and finances, getting organized is the
most important step I need to be taking in achieving personal finance goals. Another important
tip is to Create a Spending Plan. Making more money now than I use to, I worry that I will feel
as though I can spend money as if it grows on trees. By creating a spending plan I hope to have
more control of my financial future and ultimately achieve my goals. Some recommendations for
these tips are:

Create a filing system for important documents

Important documents to have; bank statement, credit card information, investment

information, tax returns, and wills.

Some financial papers that should not be kept at home but kept in a safe deposit box;

birth certificates, death certificates, marriage license, divorce papers, and copies of wills.
When creating a spending plan, first identify income, then list expense, final compare

income and expenses.

After plan is created set priorities and make changes or adjust spending patterns

The next article I found, Achieve Your Financial Goals, was published by incharge.org. This
article stressed the importance on separating financial goals into three separate categories of
time; Short-term goals, Mid-term goals, and Long-term goals. The article states that setting up a
financial goals chart will help make the goal-setting process easier to understand.
Recommendations I took away from this article are:

Identify Short-term goal- Pay monthly bills on time.

Identify Mid-term goal- Get a Masters degree.
Identify Long-term goal- Buying a house in the next 5 to 6 years.

Saving for a house I feel will be my most challenging goal. USA Today published an
article titled, How to save for a House in 10 Simple Steps that listed different technique to use
while saving for a house. These techniques included; creating a monthly budget, quarantine
savings accounts, make savings automatic, save 100% of any windfalls, and downsize before you
upsize. My goal is to save $50,000 for a down payment on a house, these techniques make that
goal seem more attainable. Recommendations provided by this article are:

Create a special savings account that is off limits no matter what.

Set up direct deposit straight to the off limit savings account.
Dont spend tax refunds put them directly into savings.
Dont upgrade living situation

Along with paying monthly bills and attempting to save for a house, I would still like to
allocate some money a month to my investments. As mentioned earlier my investments will
consist of Growth Mutual Funds to start out with. According to an article I found provided by the
Wall Street Journal, Stop Me Before I Spend, automatic investing through mutual funds is a good
substitute if for one day I wasnt offered an employer-sponsored retirement account. This article
also provided the different kinds of investment corporations that allow automatic investing such
as T. Rowe Price and American Century Investments. Recommendations I took away from this
article would be:

Set up automatic investing for mutual funds.

My last but possibly my most important goal is retirement savings. An article, Have the
Right Tools for Retirement, found in the Wall Street Journal says it the best You wouldnt play

golf without a full set of clubs. Dont go into retirement without a fully equipped retirement
toolbox. This toolbox includes; a Budget which can be described as the foundation of a
retirement plan, Asset Allocation, Team of Experts, Estate Planning, and A Nonfinancial Plan.
Each tool provided in the toolbox is to make post-employment life easier. Recommendations I
took away from this article include:

Create an asset portfolio that matches both income needs and means to weather

market declines.
Meet with financial advisors when needed.
Keep updated copies of wills, power of attorney, and health-care proxy.
Stay active during retirement.

After researching different techniques on how to achieve all of my financial goals, I feel
much more prepared for the future ahead. I gained much more knowledge on these specific goals
and have taken away many recommendations that will help guide me through life from a
financial aspect.

Works Cited
10 Basic Steps . (n.d.). Retrieved from Smart About Money :
http://www.smartaboutmoney.org/Tools-Resources/10-Basic-Steps.aspx
How to Budget- Achieve Your Financial Goals . (n.d.). Retrieved from In Charge :
https://www.incharge.org/money-101/how-to-budget/achieve-your-financialgoals
Lauricella, T. (2015, Jan 25). Have the Right Tools for Retirement . Retrieved from
The Wall Street Journal : http://www.wsj.com/articles/have-the-right-tools-forretirement-1422148743
Reeves, J. (2014, Oct 28). How to save for a House in 10 Simple Steps . Retrieved
from USA Today :

http://www.usatoday.com/story/money/personalfinance/2014/09/14/homemortgage-save-budget/15466845/
Spors, K. K. (2009, Sept 2). Stop Me Before I Spend . Retrieved from The Wall Street
Journal :
http://www.wsj.com/articles/SB1000142405297020468320457435651260684
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