Life Situation
Financial Data
Single
Age 22
Starting a career
No dependents Monthly income $2,600
Living expenses $2,180
Assets $8,200
Liabilities $3,470
Emergency fund $530
While in college, Pam Jenkins worked part-time and was never concerned about long-term financial planning. Rather than creating a budget, she used her checkbook and savings account (which usually had a very low balance) to handle her financial needs.
After completing college, Pam began her career as a sales representative for a clothing manufacturer located in California.
After one year, her assets consist of a 2002 automobile, a television set, some electronic entertainment equipment, and clothing and other personal belongs, with a total value of about $8,200. Additional financial data for Pam’s situation is provided in the table.
Questions
Q1. List various personal financial decisions that Pam might be thinking about at this point in her life. Are any of these decisions similar to ones that you have made in the past, or will face in the future?
Q2. Realizing the information is limited, discuss possible future events that could impact Pam financially and what additional information is needed before recommending actions?
Q3. What are some specific short-term, intermediate, and long-term financial goals that Pam might want to develop? Have you considered any of these goals as part of your own personal financial plan?
Q4. List at least one financial situation and the time value of money calculations that would be helpful to Pam in planning or making decisions. Show all of your calculations. How do these calculations impact her current financial position?