Financial Situation and Plans
Financial Situation and Plans
An individual’s financial situation is an important aspect of their personal life. Financial planning is a task that requires keenness and sufficient attention. Finances, in today’s world are key in determining the quality of life that an individual lives. It is important to manage finances carefully by planning and spending wisely (Fernandes et al, 2014). From my household budget, it is evident that my current financial situation is not the best and I need to plan my finances carefully in order to secure a financially stable future. With an income of $10,000 per month, I need to plan for advancement in my career in order to achieve an increase in income and therefore improve my financial situation.
I currently earn a total income of about $10,000 per month and this is the amount for every budget period, which lasts a month. My debt for every budget period amount to $950 and these include credit card, student loan and mortgage/rent. My expenses in terms of utilities amount to $450 per budget period and in terms of insurance premiums amount to $350. Miscellaneous expenses amount to $5, 250 and I spend $1, 500 every budget period on savings and investments including emergency fund, college savings and retirement savings. After budgeting for all these expenses, I remain with only $1,500 from my monthly income.
My financial plan includes restructuring my budget to match my income, expenses and according to my priorities. I intend to cut down on expenses that I can forego in order to save money to pay off my debt and to allocate some of it to my college fund and retirement savings. Expenses that I intend to cut down include entertainment, vacation, clothing automobile expenses including gas and parking fees. I plan to engage in less costly entertainment and vacation activities, take the train to work to cut down on automobile expenses and to plan on buying clothes every once in two months instead of monthly.
I plan to purchase goods and services by cash rather than credit card in order to cut down on my credit card debt. This way, I will offset my credit card debt as soon as possible and not accumulate any more debt in terms of credit. I plan to increase the amount allocated to savings and investments in my budget. I intend to increase the amount of college and retirement savings in order to enable me to pursue higher education as soon as possible and to secure my future upon retirement. To boost my retirement savings, I will open a savings account with a bank to hold some of my savings. I intend to find a part time job according to the number of hours I am free in a day, to boost my total earnings per month.
On matters income tax, I intend to put forward claims for standard deductions with the United States Internal Revenue Services (IRS). This will enable me pay less in terms of taxes. I also plan to file my returns on time as stipulated to avoid penalties, which may lead to unnecessary spending. I plan to pay my insurance premiums on time in order to safeguard my insured property in case of damages because the insurer will compensate. I intend to seek legal advice on estate planning and disposal of assets. This will see to the creation of a will, limiting my estate taxes through setting up a trust account in the name of the beneficiary, who is my child, establishing a guardian for my living dependents, setting up durable power of attorney to direct other assets and investments among other tasks.
My future career goals include getting a good and stable job after completing higher education. As soon as my college savings are sufficient, or if I win a scholarship which a plan to apply for, I intend to join university to pursue a course and earn a bachelor’s degree most preferably in science, technology, engineering or mathematics. To achieve these I need to increase the amount allocated to college savings in my budget. I intend to search for scholarships on the internet and apply for as many as possible to increase my chances. To sustain myself as I pursue my education, I intend to seek a part time job as soon as I earn my place in school.
Fernandes, D., Lynch Jr, J. G., & Netemeyer, R. G. (2014). Financial literacy, financial education, and downstream financial behaviors. Management Science, 60(8), 1861-1883.