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Morgan Heritage Family Financial Plan

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Families need a committed financial planning for objective and control of home affairs. The financial plan ranges from the small to large depending on the size and general requirements of the family. Importantly, it is prudent to involve professionalism at the time of drafting the plan. Key elements in any family financial plan involve; differentiating want from need, set time for a through home work and maintaining the purchase. The strategies that are involved in differentiating a want from need, perhaps is the most daunting task of most families. Simply, a want is what is most important to you while a need is what you cannot do without. A good financial plan should be systematic and divide into categories from the essential to the least. More Importantly, Family financial plan is meant to secure your future together with that of your family. Overall, it is a common feature across all households to find financial problems, such problems are being behind on debt and credit accumulating and being coerced for a second mortgage, are common features in most households.  All these problems can be solved through systematic financial management.

Morgan Heritage Family Background

Morgan Heritage is a family of four, consisting of the Father, Morgan, Mother-Natasha and two daughters, Megan and Laura. Morgan, the father is a consulting physician in New York while Natasha is an accountant with City Bank. They are both 40 years of age while daughter Megan is 18 years old and a sophomore at New York State University. Laura is pursuing her last year in a private high school and is 17 years old. A general overview is that, the family is well endowed with secure occupations; however the needs of the family are overwhelming. For instance, Mr. Morgan takes a monthly salary of $10,000 while his wife is entitled to a monthly salary of $12,000.  Megan’s University tuition demand that she pays a yearly fee of $30,000 while Laura $15,000. Apart from that, the family also has other expenses that they need to cover, such as food, mortgage, insurance, gas and medical. In order to balance these expenses, it is vital that an accurate financial statement is drawn, reflecting on each entity within their domestic surrounding.

The Morgan`s have devised a system whereby each member of the family has set goals that are categorized into three. The following is a breakdown of Morgan Heritage family goals.

Morgan (Father) – Short term goals – To buy a SUV

-          Intermediate goals- To pay fees for his daughters

-          Long term goals - To Start private consultancy firm

Natasha (Mother) –Short Term Goals- family food

-          Intermediate goals – Liberty and Laura’s college upkeep

-          Long Term Goals    - Invest in the stock market

Megan (Daughter) – Short Term goals – finishes College

-          Intermediate goals – dream holiday            

-          Long term goals – Secure a rewarding job             

Laura (Daughter) – Short term Goals – To finish high school

-          Intermediate goals – Join University

-          Long term goals – Pursue higher education

Financial Information Collection

Balance Sheet

It shows the financial status of the family at a given point in time. The balance sheet contains the assets and the liabilities of the family. In other words, it shows the net worth of the family. In case above, the family has no tangible assets. The family relies on the income of the parents and therefore drawing a balance sheet would not be easy. In other words, the family has monetary assets. This is the major reason why the Morgan family has financial problems. If the family could invest in assets, they would short term assets as well as long term assets. Some of the investment opportunities that earn the family assets include mutual funds.

In order to boost its assets column, Morgan family can consider investing in Bonds and Real estate. This will guarantee the family additional source of income which will help offset the family needs that are currently overwhelming.

Income statement

Income statement shows the sources of money for family such as salary and also how the money will be spent. Income statement relates income with expenses. It shows whether the family is living beyond its means or whether it is living with at par with the income. In the above case, the income totals to $22000 per month. Expenses include, gas, school fees for the two daughters (Megan = $2500 per month and Laura =$1250 per month)

Creating a budget Work Sheet

The following is a template

Category

Monthly Budget Amount

Monthly Actual Amount

Difference

INCOME:

Wages and Bonuses

Interest Income           

Investment Income      

Miscellaneous Income                         

Income Subtotal

 

 

 

TAXES:

Federal Income Tax

State and Local Income Tax   

Social Security/Medicare Tax

Income Taxes Subtotal

Spendable Income

 

 

 

EXPENSES:

Mortgage

Homeowners/Renters Insurance

Property Taxes           

Home Repairs/Maintenance/HOA Dues

Home Improvements

 

 

 

FOOD:

Groceries

Eating Out, Lunches, Snacks

 

 

 

UTILITIES:

Electricity        

Water and Sewer

Natural Gas or Oil

Telephone (Land Line, Cell)

 

 

 

FAMILY OBLIGATION

Child Support

 

 

 

HEALTH AND MEDICAL:

Insurance (medical ,Teeth, eye)

Unrefunded Medical Expenses,

 

 

 

 

 

 

 

 

 

 

 

The above work sheet can enable the Morgan’s Family to have a proper for their finances.

Financial Analysis and Advice

A professional glimpse into the financial goals of Morgan’s reveals that, they are short of the expected financial achievement of the overall goals they have set. Relevant and realistic financial measures have to be undertaken in order for them to achieve individual as well as family goals. A more resourceful means of the Morgan’s to achieve their goals is to get rid of non essential allocations. Given that their total combined income is $22,000, and their estimated expense is $30,000, they are way out of their income bracket. Several financial mechanisms will assist the Morgan’s get out of this financial doldrums.

Creating an expense scheme

The first step towards creating an expense plan is creating a budget that is concomitant to the total income of the household. Importantly, have a joint meeting and agree on unnecessary expenses that you can do away with. The second strategy is to use expense reduction strategies and savings friendly methodologies. The fundamentals behind this are to match the family income with the total financial expectations. Also important is for the Morgan’s to reflect on their earlier budget expenses and make alterations that rhyme with set goals. Further, it is vital that the Morgan’s set goals that are financially viable using the following key statements. Goals should either aim for, debt reduction, savings and expenses. Also importantly, develop a brand new budget and follow it to the letter. The best known method of following your families spending is to note in detail the exactness of what they spend. This will enable you have a precise plan of item by item and how much it cost. If the budget becomes too small and restrictive, always be in a position to make adjustments, however, small they make a difference. This a much better way than abandoning your financial plans altogether.

It is possible to avoid a domestic financial crisis by drawing up a budget that is realistic and to the point of your expenses and income.

Conclusion

A possible and realistic method for Morgan’s is to set up a savings goals scheme. Savings are a positive way in which many families have emerged out of the financial crisis. This works in many circumstances including where families are in abundance of debts. For instance, saving $10 every day will have an accumulative effect to $300 in a month. This can be done through having part of your salary secured in a fixed deposit account. In this way, two things will happen, first you will always have money, and second you will not be able to access it easily. This also ensures that savings are divided into pools. With each pool, there will be a specific purpose and goal. Another important milestone for the Morgan’s is to always set realistic goals, goals that are achievable. The best way is make short term goals whose feedbacks are foreseeable and viable. Long term goals are unpredictable and are subject to many elements which could interfere with them.  All said and done, financial planning ranks high in the success of our homes. It facilitates a quicker way of solving domestic problems and a proof that indeed the finances were not used haphazardly.

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