• six recommended action steps to improve the individual or family's financial situation
• Recommended financial products such as bank accounts, insurance policies, investments, etc.
• Calculations of the savings required to reach financial goals
• A discussion of the strengths and weaknesses of the individual or family's financial situation

Case to base answers on: you're acting an a financial advisor

Jennifer Barry, 25, is not unlike many young adults today. Just a few years out of college, she is $23,300 in debt. Of this amount, $16,000 is owed on student loans and $7,300 is owed on two credit cards. "I kind of went overboard on credit in college," Barry explains. "Now I want to get this debt paid off as soon as possible so I can increase my savings."

Barry isn't waiting to repay the debt, however, before she starts saving. She participates in a 403(b) plan at work and is currently saving $90 bi-weekly. To date, she has accumulated $2,800 but she is unsure about whether she selected the right investment options. She puts 25% of her deposit in a stock index fund, 25% in aggressive growth, 25% in an actively managed growth fund, and 25% in a money market fund. "I wasn't sure what to do," she notes, "so I made the same choices as a co-worker."

Automatic saving appeals to Barry, who confesses a weakness for shopping. She'd like to save more, both for retirement in her 403(b) plan and for emergencies. "I don't have much to fall back on if my car breaks down or I have some other emergency," she worries. After repaying her debts and increasing her savings, Barry wants to purchase a home and a new car within ten years. She is willing to assume some investment risk to achieve a high rate of return.

Like many young college graduates, Barry has a negative net worth. In other words, at this stage of her life, her debts ($23,300) exceed her assets ($5,600) for a net worth of minus $17,700. Her assets consist of $800 in a checking account, her $2,800 403(b), and a $2,000 car.

Barry shares an apartment with a friend and pays $350 per month for rent, plus $320 toward her four debts. She earns $28,900 annually ($2,408 per month). Last year, Barry received a $685 tax refund and spent it on clothing and home furnishings.

Barry's employer provides health insurance. She participates in an HMO and is satisfied with the level of service. She lacks a renter's insurance policy, however, to cover the potential loss or theft of her personal possessions. Her automobile insurance policy has $100,000 of liability coverage. Barry also has employer-provided disability insurance to provide income if she was unable to work and contributes $14.04 per month toward the premium. The policy only provides benefits for two years.

Barry is not currently funding an IRA and could only guess at a retirement date in 40 years at age 65. She attended an employee benefits seminar two years ago and began her 403(b) plan as a result. "I learned about the awesome effect of compound interest," she notes. "As soon as I repay my debts, I will save more."

Answer rating: 100% (QA)

Answer Based on Jennifer Barrys financial situation here are six recommended action steps to improve her financial situation Create a Detailed Budget ... View the full answer