CASE STUDY 1 : SHORT?TERM GOALS : Tanya is 19 years old and has been working as a retail assistant for 2 years. She earns $33 800 per year in salary after tax. Because her family lives in a country town, Tanya had to leave home to find employment and learn to look after herself and her finances. She shares a flat with two friends. Her weekly payments on average are: rent $150; public transport fares $50; food $140; utility bills $50; mobile/internet phone $30; clothing $50; and entertainment $60. She also makes sure that she is saving some of her income and for the past 2 years has arranged for an automatic debit of $400 per month from her bank account into a managed fund. The amount accumulated in the fund comprises the original $2000 she was given for her seventeenth birthday to start the fund when she left home and contributions and earnings of $8000, making a total sum of about $10 000. The managed fund is a balanced fund. Any money left over after expenses and investment is kept in her bank account, which totals $1000. Tanyas main goal is to buy a car in the next 6 months if she can afford it. She will use some money in her managed fund if she has to, but hopes to buy a car valued at about $13 000 plus insurance of $750 p.a.

QUESTIONS

1 Clearly state Tanyas short?term goal.

2 How would a financial counsellor help Tanya to determine whether she may be on target to meet her goal?

3 Suppose the retail store proposes to reduce Tanyas hours and her annual pay will decrease to $31 000 p.a. How will this affect her living costs and savings target?

4 What advice might a financial counsellor give to Tanya in such circumstances? Is there any other advice you may offer to help her achieve her goal?

5 What are the three main investment risks that Tanya faces given her short?term goal?