Your Final Project Is To Develop A Personal Finance

The Goalyour Final Project Is To Develop A Personal Financialplan Fo

The Goalyour Final Project Is To Develop A Personal Financialplan Fo

The goal of this final project is to develop a comprehensive personal financial plan tailored for post-graduation life. The project is divided into three main components: an autobiographical narrative, a detailed financial plan based on the six-step process, and a reflective conclusion. Each part contributes to a holistic understanding of personal finance management tailored to your anticipated career and life situation after college.

Part 1: Personal Narrative

Begin your assignment with a 2-3 paragraph narrative about yourself, focusing on your career aspirations, anticipated timeline for graduating from college, and your ideas for gaining work experience post-graduation. This section should provide context for your financial planning, illustrating your career trajectory and how your financial goals align with your personal ambitions.

Part 2: Detailed Financial Plan Using the Six-Step Process

This component requires applying the six-step financial planning process introduced in Chapter 1. Your plan should encompass four key categories:

  1. Create a detailed budget: Using the given assumptions, estimate your total monthly expenses, including fixed and variable expenses. Calculate your net income after taxes and deductions, and identify your discretionary income for savings.
  2. Determine savings and investment capacity: Analyze your income and expenses to determine the amount available for savings. Establish how much can be allocated to both your 401(k) and your after-tax investment portfolio.
  3. Create two investment portfolios:
    • First portfolio: 401(k) investments, with contributions of $2,000 annually, invested at the specified asset allocations.
    • Second portfolio: after-tax savings, to be invested similarly.

    Define your long-term return objectives, your acceptable risk level, and the asset allocation for each portfolio. Use the provided return rates for stocks, international stocks, and fixed income assets.

  4. Project future values: Using the specified assumptions, project the growth in each portfolio over five years. Assume investments are made at the beginning of each year, with contributions added immediately. Incorporate compounding returns based on your asset allocations and projected annual return rates.

Part 3: Conclusion and Reflection

Summarize your financial plan, synthesizing insights from your personal narrative and the detailed financial strategies you have developed. Reflect on how the knowledge and skills gained from this class will influence your financial decisions and lifestyle choices in your future career and life. Your conclusion should tie together your personal goals with your financial plan and provide a thoughtful perspective on the importance of financial literacy and planning for your future success.

Additional Assumptions for Planning

  • Income: Annual salary of $50,000. Annual 401(k) contribution of $2,000.
  • Taxation: Single taxpayer with a standard deduction of $12,000, federal income brackets ranging from 10% to 15%, and a 5% New Jersey state income tax rate.
  • Expenses: Fixed monthly expenses include rent ($900), car insurance ($150), utilities ($50), cable/internet ($75), phone ($75), and healthcare premium ($100). Variable expenses (e.g., food, clothing, entertainment) vary per individual.
  • Investments: Entire yearly 401(k) contribution and any after-tax savings are invested at the start of each year. Assumed average annual returns are 8% for large stocks, 10% for small stocks, 9% for international stocks, and 3% for fixed income assets.

Formatting and Tools

Your final submission should be a comprehensive 3-5 page document, clearly organized with appropriate headings and subheadings, written in a formal academic style. Use Microsoft Excel to model your budget, savings, and investment projections, including compound growth over five years. Your Excel spreadsheets should support your written analysis and be included as part of your final submission or appendices.

References

  • Brigham, E. F., & Ehrhardt, M. C. (2017). Financial Management: Theory & Practice (15th ed.). Cengage Learning.
  • Chen, H., & Volpe, R. P. (2018). Introduction to Personal Financial Planning (13th ed.). Pearson.
  • Investopedia. "Asset Allocation." https://www.investopedia.com/terms/a/assetallocation.asp
  • Morningstar. "Investment Portfolio Management." https://www.morningstar.com
  • National Endowment for Financial Education. "Financial Literacy and Personal Financial Planning." https://www.financiallit.org
  • Siegel, J. J. (2014). Stocks for the Long Run (5th ed.). McGraw-Hill Education.
  • Source: U.S. Bureau of Labor Statistics. (2022). Consumer Expenditure Survey.
  • Vanguard. "Retirement Savings & Planning." https://investor.vanguard.com
  • Williamson, R., & Lee, C. (2019). Financial Planning Theory and Practice. Journal of Financial Planning, 32(4), 30-37.
  • Yahoo Finance. "Historical Stock Market Data." https://finance.yahoo.com

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