Learning Goals:

Specify SMART financial goals and create personal financial statements, including a balance sheet, income and expense statement, and budget

Recognize the impact of taxes on personal finance and be familiar with the structure and elements within the income tax form 1040. Due to their limited knowledge in personal finance they are in a desperate need of your help! They want to know how well they are doing financially and how could they improve their situation. Based on information they provided to you:

1. Construct their Balance Sheet and their Cash Flow Statement.

2. Calculate their financial well-being using the financial ratios.

3. Provide any recommendations if necessary.

Information:

David's Salary $ 75,000

Rose's Salary $ 55,000

Home value $ 250,000

Mortgage payment $ 15,000

Car fair market value $ 13,500

Checking Account balance $ 10,000

Groceries $ 4,000

Investment Account balance (that holds mutual funds) $ 10,000

Car Loan Payment $ 1,200

Past Due Utility Bill $ 200

Utilities $ 1,800

Credit Card balance $ 5,000

Entertainment $ 4,000

Cars loan balance $ 2,000

Stamp Collection $ 3,500

Gas $ 2,700

Mortgage balance $ 120,000

Credit Card payments $ 3,300

Jewelry $ 6,000

Savings set aside each year towards a new car $ 500

Tax Refund $ 1,000

Money Market Account balance $ 5,500

401(k) Account balance $ 6,000

Cash $ 1,000

Auto Insurance payments $ 900

CASH INFLOWS d's Salary Rose's Salary S55.000 Tax Refund SI000 Total Cash Inlows $131,0 CASH OUTFLOWS LIVING EXPENSES Fixed Expenses ! Mortgage Payment $15,000 Groceries Total Fixed Expenses Variable Expenses Total Variable Expeuses Total Ltving Expenses NET UNIDENTIFIED CASH FLOW LIABILITIES & NET WORTH Current Linbilities netury Assets Amouni Totul Current Linbilities- Total Monetary Assets Luug Term Liubilities nvestment Assets Total Noncurrent Linbilities Total Investment Assets Retirement Asiets Total Linbilities Total Retirement Assets Net Worl Housing Total Housing Automobiles and Feronl Property Total Automobiles and Persoual Property Total Assels Total Liabilities and Net Worth Financial Well-Being Analysis David and Rose Joncs RATIOS Ratle Recommended Area Calculation 3 to 6 months Living Expenses Covered Ratio Monetary Assets /Monthly Living Expenses Debt Ratio Total Liabilitics/Total Asscts less than Debt Service to Income Ratio less than 36% Annual Debt Payments Gross Annual lncome Annual Suvings/Aunul Livng Expenses (Investment Assets Retirement Assers)Total Assets Saving Ralio 10% or mre Investment Assets to Total Assets Ratio 10% or more Based on your Financial Well-Being Analysis, how well is David and Rose managing their finances? Explain. Do vous : arens of con? s, provide recummendativns ou bow cau (hey iprwve. CASH INFLOWS d's Salary Rose's Salary S55.000 Tax Refund SI000 Total Cash Inlows $131,0 CASH OUTFLOWS LIVING EXPENSES Fixed Expenses ! Mortgage Payment $15,000 Groceries Total Fixed Expenses Variable Expenses Total Variable Expeuses Total Ltving Expenses NET UNIDENTIFIED CASH FLOW LIABILITIES & NET WORTH Current Linbilities netury Assets Amouni Totul Current Linbilities- Total Monetary Assets Luug Term Liubilities nvestment Assets Total Noncurrent Linbilities Total Investment Assets Retirement Asiets Total Linbilities Total Retirement Assets Net Worl Housing Total Housing Automobiles and Feronl Property Total Automobiles and Persoual Property Total Assels Total Liabilities and Net Worth Financial Well-Being Analysis David and Rose Joncs RATIOS Ratle Recommended Area Calculation 3 to 6 months Living Expenses Covered Ratio Monetary Assets /Monthly Living Expenses Debt Ratio Total Liabilitics/Total Asscts less than Debt Service to Income Ratio less than 36% Annual Debt Payments Gross Annual lncome Annual Suvings/Aunul Livng Expenses (Investment Assets Retirement Assers)Total Assets Saving Ralio 10% or mre Investment Assets to Total Assets Ratio 10% or more Based on your Financial Well-Being Analysis, how well is David and Rose managing their finances? Explain. Do vous : arens of con? s, provide recummendativns ou bow cau (hey iprwve