Smith Family Financial Plan (A)
(3 pages of text)
Case (Gen Exp)
The Smith family is in a cash crunch. Even with a combined gross family income of $80,000 per year, monthly cash outflows are still greater than inflows. Joel and Amber Smith are aware of these cash flow problems, but do not understand where their money goes and struggle to set financial goals. They have contacted a financial advisory firm to help them develop a plan and set realistic future goals. The Smiths face financial problems common to young families such as saving for their retirement and children’s education, paying down credit card debt, paying down (and possibly refinancing) their mortgage, buying a new vehicle, and providing adequate healthcare insurance. Students are tasked with playing the role of the family’s financial advisor and helping them bring their finances under control.
The case is built in two parts, (A) and (B). These can be used in separate 75- to 90-minute classes, with Smith Family Financial Plan (A) covered at the midpoint of the course and Smith Family Financial Plan (B), product 9B13N006
, covered near the end. Alternatively, it can be used as a two-part major assignment, with Part (A) as the first major submission and Part (B) as the second.
This case series engages students in evaluating financial-planning alternatives and considering the effects of their recommendations on client goals. It places students in the role of a financial advisor and introduces them to the personal financial-planning process, with emphasis on personal financial statements and liquidity issues, insurance, investments, taxation, and retirement planning. This case was designed to complement the curriculum of an upper year undergraduate personal finance class and simulates the professional financial-planning environment of meeting with clients and developing financial plans. This case asks students to:
- Assess short-term and long-term financial goals while considering the time value of money.
- Create personal financial statements.
- Identify liquidity issues (banking, money management and personal credit).
- Assist clients in personal tax planning.
- Discuss the most effective way to finance large purchases to best meet client goals (personal loans and houses).
Finance and Insurance
Canada, Small, 2012
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